Aleafia Health Q4 Revenue Declines 42.1% QoQ To $8.8M, Reports Narrower Net Loss

Aleafia Health Inc. AH ALEAF reported its financial results for the three and 12 months ended Dec, 31, reporting quarterly revenue of $8.8 million compared with $15.2 million in Q4 2020.

"The core strategic objectives that will drive Aleafia Health to sustained profitability reflect a pivot to focus on branded cannabis revenue. Branded revenue is comprised of ‘sticky,’ recurring medical revenue at attractive gross margins and robust growth in adult-use cannabis revenue where Aleafia continues to aggressively take market share,”  Aleafia Health CEO Tricia Symmes stated. “We are focused on achieving Top 10 in total LP market share in 2022, driven by leadership in the value cannabis category. "

Financial Highllithts

• Net revenue was $36.1 million for the 12 months ended December 31, 2021, compared to $44.5 million in the 12 months ending December 31, 2020. The decline in net revenue was based on shifting from lower margin, higher volume bulk wholesale commodity cannabis revenue to higher margin, higher potency and innovative adult-use products, offering a unique value proposition.
• Net loss for the quarter amounted to $71.51 million, comapred to a loss of $217.30 million in the same period last year, while for the fiscal year 2021 the company reported net loss of $165.72 million, versus a loss of $247.24 million in the coresponding period of the prior year.
• Quarterly EBITDA was a loss of $65.61 million, comapred to a loss of $208.70 million in the same quarter of 2020, and for the fiscal 2021 EBITDA was a loss of $150.13 million, comapred to a loss of $227.98 million in the same period of 2020.
• Branded cannabis net revenue increased 96% to $28.7 million in 2021 compared to $14.6 million in 2020, and increased 60% to $8.3 million in Q4 2021 compared to $5.2 million in Q4 2020, largely attributable to the launch of the Sunday Market House of Brands.
• Adult-use net revenue increased 396% to $16.0 million in 2021 compared to $3.2 million in 2020, and increased 326% to $6.0 million in Q4 2021 compared to $1.4 million in Q4 2020.
• Medical cannabis net revenue increased 33% to $10.6 million in 2021 compared to $8.0 million in 2020, driven by strong ordering patterns from its flagship Emblem cannabis brand.
• Bulk wholesale net revenue declined 75% to $7.4 million in 2021 compared to $29.9 million in 2020, which was offset in part by strong growth in branded cannabis revenue. This was driven by the Company’s redirection of its cultivation flower from the bulk wholesale sales channel towards its higher net revenue per gram branded cannabis products.

EBITDA Profitability

The company evaluated all facets of the organization and realigned executive management to focus on achieving EBITDA profitability. Significant non-recurring one-time costs were incurred in 2021 as the company developed, built, and launched its Sunday Market House of Brands. Most of these costs are not expected to be recurring. Over the last four quarters, Aleafia saw significant progress and is trending towards achieving breakeven Adjusted EBITDA profitability in the second half of 2022.

Repositioning The Balance Sheet

• The company completed two senior secured debt financings in Q4 2021, including a $10 million senior secured term credit facility in August 2021 and a new $19 million credit facility in December 2021. The new credit facility consists of a $12 million term loan and a revolving receivables facility of up to $7 million. The revolving receivables facility remains undrawn, providing the company with liquidity to fund working capital investments required to continue rapidly scaling its adult-use sales.

Price Action
Aleafia shares closed Monday market session 2.45% higher at 11 cents per share.