CanadaBis Capital Inc. (TSXV: CANN) reported revenue of C$4.9 million for its second quarter of its fiscal 2025, up from C$4.3 million versus the same period last year, but the company saw a slight decline in net income for the period.
The cannabis producer and processor posted net income of C$96,917 for the quarter that ended Jan. 31, down from C$109,901 in the comparable period of fiscal 2024. For the first six months of the fiscal year, net income fell more substantially, to C$418,486 from C$817,018 in the prior year.
The company’s adjusted EBITDA also declined to C$434,158 for the quarter, versus C$564,609 in the corresponding period of fiscal 2024. For the six-month period, adjusted EBITDA dropped to C$1.1 million from C$1.68 million a year earlier.
“Our Q2 results showcase the continued momentum in our operations as we focus on growing revenue and optimizing margins across our portfolio,” CEO Travis McIntyre said in a statement. “The increase in gross revenue of approximately (C$2 million) year-over-year is a testament to the hard work and strategic initiatives we’ve undertaken to strengthen our position in the market.”
According to its MD&A, the company’s profitability has been “negatively impacted by excise tax as a percentage of sales due to selling extract products with higher THC and an increase in milled flower revenue.” Excise tax as a percentage of sales rose to 45% for the three months ending on Jan. 31, versus 39% for the corresponding period of fiscal 2024.
The company in response discontinued sales of milled flower during the quarter “due to high excise tax, low contribution margin and the increased inventory and administrative burden of expanding product lines.”
CanadaBis said that its international flower sale to Portugal and bulk extract sales of diamonds and shatter obtained gross margins ranging from 50%-60%. The product lines aren’t subject to excise tax, which the company believes will lead to higher gross margins in future quarters.
Despite the declining profit metrics, the company is moving forward with its previously announced acquisition deal with Simply Solventless Concentrates Ltd., which values CanadaBis at around C$16 million, a 78% premium over its recent trading price.
“The combined entity is estimated to rank second and fifth in the Canadian concentrates and preroll categories respectively, excluding Quebec,” Green Market Report reported at the time of the announcement.
The company launched additional cost-saving measures during the latest quarter, including renegotiating input material pricing and working in new procedures in its production lines to reduce operational costs. Management expects the initiatives to deliver measurable benefits throughout 2025.
While Canadian producers continue to deal with headwinds and consolidation, the firm touted its butane hydrocarbon (BHO) extraction process as a key differentiator.
CanadaBis operates through several wholly owned subsidiaries, including Stigma Grow (cultivation and wholesale operations), Stigma Pharmaceuticals, Full Spectrum Labs (operating as Stigma Roots), and a retail division operating under 2103157 Alberta Ltd. The company also holds a 95% stake in Goldstream Cannabis.
[[{“value”:”The Canadian company sought to offset the impact of excise taxes by streamlining its product lineup during the quarter.
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