On Friday, Entourage Health Corp. (TSX-V: ENTG) (OTCQX: ETRGF) released its financial results for the three months ending September 30, 2024. Entourage reported total revenue increased by 11% to C$13.6 million over last year’s C$12.2 million. Entourage trimmed its losses to C$8.3 million from last year’s loss of C$9.9 million.
Behind the revenue
CFO Vaani Maharaj said on the company’s earnings call, “On a consecutive basis, total revenue increased by C$1.4 million or 11.5% compared to Q2 2024, reflecting a pickup in the adult use channel due to a new product offerings as well as partial recovery in our BC sales channel. Our year-over-year net revenue growth was largely driven by growth in the bulk use channel of $1.1 million slightly offset by a decrease in medical revenue of C$0.2 million or 7%, while adult use was flat. Lower medical revenue was driven by lower patient renewal rates and reduced basket sizes.”
He added, “Whereas we’ve previously maintained a belief in the eventual stabilization of selling price per gram, general market price compression due to inflation and other factors indicate a continued decrease in selling price in the adult use market.” He went on to say that the new value brand Dime Bag continues to grow but noted that the company’s average selling price would be impacted.
Cash burn
Despite the company’s improved revenue, it still is in a precarious situation. Entourage ended the third quarter with cash and cash equivalents of C$3.5 million, a drop of C$7.6 million compared to the cash of C$11.1 million at the end of December 2023 due to operating losses. The company stressed that the cash burn continues to decrease with each quarter due to disciplined cost management and opportunities sought to grow margins.
Maharaj told investors that Entourage continues to work with its largest lender to negotiate a resolution to the current forbearance letter in place. He said that the current agreement expires on January 15, 2025, and the company continues to simplify its structure. He said, “All-in-all, the financial results of the quarter reflect market conditions, which are forcing sales prices down and biomass costs up.”
The company continues to report as a going concern. As of September 30, 2024, it had a working capital deficiency of C$171,377,696 and an accumulated deficit of C$390,525,487.
Looking ahead
The company is committed to pushing forward despite the financial headwinds it faces. It continues to cut costs and increase operations. It has expanded its adult-use portfolio with 23 new SKUs across Color Cannabis, Dime Bag, and Saturday in key markets, including Ontario, British Columbia, and Alberta. It significantly enhanced its pre-roll manufacturing capabilities, producing over 2 million pre-rolls per month.
Entourage said it will expand its portfolio in early 2025 with new cultivars and formats, including ‘Chromatica’ (10 x 0.35g and 7g), ‘Sour Grapefruit Haze Live Resin’ infused pre-rolls (3 x 0.5g), a 20-pack Mega Pack (20 x 0.5g pre-rolls), and two new Pocket Puff flavours: ‘Citrus Burst’ and ‘Minty Melon.’
“Over the past year, we’ve focused on creating products that truly meet the needs of our customers and patients,” said George Scorsis, CEO and Chair of Entourage. “With the holidays approaching, we are excited to introduce several highly anticipated products, demonstrating our commitment to delivering meaningful and timely offerings. As the cannabis industry stabilizes, our team’s creativity and operational focus on optimizing the business will position us as a market leader. We look forward to the year ahead with a strong product pipeline planned for 2025.”
[[{“value”:”The company’s cash burn is slowing as it works with lenders on debt payments.
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