Canadian Weed Edibles Producer's Q2 Financial Results Show Drop In Revenue & Gross Profit, Here's Why

Author: Jelena Martinovic | August 29, 2023 12:06pm

Canadian cannabis edibles producer Indiva Limited (TSXV:NDVA) (OTCQX:NDVAF) reported on Tuesday its second quarter financial results for the three months ending June 30, 2023.

"This was a transitional and busy quarter for Indiva, with several cross-currents impacting our results, including the negative impact from the loss of revenue from our Indiva Life Lozenges and partial revenue loss in the quarter from the transition to contract manufacturing of Wana gummies, offset by continued growth and excellent market share gains from Pearls by Grön gummies," Niel Marotta, president and CEO of Indiva, said.

Marotta was a guest speaker at Benzinga Cannabis Capital Conference in April 2021. The event returns to Chicago this September and will feature a slew of top cannabis CEOs, executives, entrepreneurs and lawmakers in the space.

Q2 2023 Financial Highlights

Gross revenue was CA$ 8.1 million ($5.9 million), representing a 21.6% sequential drop and an 8.5% year-over-year decrease.
Net revenue totaled CA$7.5 million, representing a 20.3% sequential decrease and a 7.6% decrease year-over-year.
Net revenue from edible products declined to CA$6.9 million, down 6.2% from $7.3 million in the prior quarter and down 5.5% from $7.3 million in the prior year period.
Gross profit before fair value adjustments, impairments and one-time items declined year-over-year by 18.2% and quarter-over-quarter by 30.3%, to $CA2.2 million, or 29.3% of net revenue, versus 33.1% in the same quarter of 2022 and 33.6% in the prior period.
Operating expenses in the quarter increased 0.2% sequentially and decreased 7.2% year-over-year, representing 43.1% of net revenue, versus 34.3% in the prior period and 42.9% in the corresponding quarter of 2022.
Adjusted EBITDA declined sequentially to a loss of CA$600,000, versus a profit of CA$400,000 in the previous quarter and a loss of CA$100,000 in the same quarter of 2022 due to lower sales and lower gross margins.
Comprehensive net loss of CA$1 million included a one-time gain of CA$2.1 million on the sale of license rights offset by non-cash charges for impairment of inventory and assets held for sale totaling CA$800,000. Excluding these amounts, comprehensive loss increased to CA$2.3 million versus an adjusted loss of CA$1.3 million in the prior quarter and CA$2 million in the same quarter of 2022.

"While we maintain that the Lozenge products were compliant with the Cannabis Act and had the positive effect of migrating dollars from the illicit market to the legal market, we complied with regulatory orders and discontinued production and packaging of these products in March 2023, and completed all sales of finished goods to provincial wholesalers in May 2023," Marotta continued.

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The Benzinga Cannabis Capital Conference, the place where deals get done, is returning to Chicago this Sept 27-28 for its 17th edition. Get your tickets today before prices increase and secure a spot at the epicenter of cannabis investment and branding.

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