Heritage Cannabis Cuts Q2 2022 Comprehensive Loss By 90.28% YoY, What About Gross Revenue?

Heritage Cannabis Holdings Corp. CANN HERTF gross revenue in Q2 2022 was CA$10.45 million ($8,13 million), an increase of CA$5.85 million compared to gross revenue of CA$4.6 million for the Q2 2021, representing an increase of 127%.

Q2 2022 Financial Highlights

Cost of sales for the three months ended April 30, 2022 was CA$4.3 million, an increase of CA$2.22 million compared to CA$2.08 million for the three months ended April 30, 2021. Cost of sales increased as a result of increased sales but decreased on a percentage of sales basis as a result of improved biomass purchasing and improved operational efficiencies.

Comprehensive loss in Q2 2022 was CA$500,614 or nil per share compared to a comprehensive loss of CA$5.15 million or CA$0.01 loss per share for the Q2 2021, a decrease of 90.28%. The improvement over the prior period was due to gross margin gains and the cost management in general and administrative expenses combined with a CA$410,000 unrealized decrease in loss on contingent payables.

Net revenue (net of excise tax) in Q2 2022 was CA$7.5 million, compared to CA$3.57 million in Q2 2021.

Gross margin in Q2 2022 was CA$3.18 million compared to CA$1.5 million in Q2 2021.

“We are excited to release these financials which show us reaching cash-flow positive territory ahead of schedule. The Heritage team continues to deliver on product innovation, distribution, and new revenue channels which has been a driving force to allow us to reach our targets - a major achievement during the recent choppy markets - and we remain focused on building a strong platform that can both generate top-line growth without sacrificing strong business fundamentals,” stated David Schwede, CEO of Heritage.

“We have signaled our drive to success over the past year, and with our continued solid execution of our business strategy we have crossed an important milestone ahead of our committed time frame. Our total gross revenue for the first half of this year is up over 210% from the same time a year ago – a strong signal of what is ahead for Heritage and our innovative, in-demand products,” added Schwede.

Other Highlights

Heritage continues to add new stock keeping units (“SKUs”) across all provinces, with recent new product launches in Ontario, PEI, Nova Scotia and Newfoundland, and is participating in regular product calls. Heritage proactively manages its offerings to stay price competitive in all segments, while also delivering innovative products and new flavor profiles to keep up with consumer demands, and successfully win provincial product calls.

On June 6, 2022, Heritage announced that it had signed a definitive agreement for the supply of its products to a major LP with one of the leading market share for sale on its medical platform. The major LP has completed its initial purchase of Heritage brands, including RAD, Premium 5, and CB4, and are now offering Heritage products on the platform with the first shipment of 12 stock keeping units (“SKUs”) completed in May. The relationship will also encompass white labeling of some products based on Heritage’s product quality, variety, consistency, industry proven technology and innovation.

Photo by Mackenzie Marco on Unsplash

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