Entourage Reports Record Fiscal Year 2021 Financial Results with $55.2 Million in Total Revenue for a 56% Year-Over-Year Increase and Preliminary Q1 2022 Record Revenue of $17.4 Million
- Net revenue increased to $42.2 million for the full year ended December 31, 2021
- Preliminary unaudited Q1 2022 total revenue $17.4 million(1) representing 35% YOY growth
- Upsized credit facility with LiUNA Pension Fund further improves liquidity position
Toronto, Canada, May 9, 2022 – Entourage Health Corp. (formerly WeedMD Inc.) (TSX-V:ENTG) (OTCQX:ETRGF) (FSE:4WE) (“Entourage” or the “Company”), a Canadian producer and distributor of award-winning cannabis products, announced today its financial results for the fiscal year ended December 31, 2021. The Company also announced preliminary unaudited first quarter 2022 total revenue of $17.4 million(1), which represents a direct-to-consumer and patient record increase of approximately 35% on a year-over-year basis. The Company expects to file its first quarter 2022 financial results on or before May 31, 2022.
“Entourage achieved impressive growth in 2021 including expanded market share and increased retail brand recognition with Color Cannabis as a top 10 performer for the year, which drove a 56% growth in revenues. Strong consumer sales in our main product categories included notable increases in premium flower & pre-roll market segments, with a 535%(2) sales increase over the prior year,” said George Scorsis, CEO and Executive Chair, Entourage. “This was also a breakout year for our medical business, with 20% patient growth and an expanded product portfolio of over 40 SKUs. Our preliminary Q1 results are noting another record increase with $17.4(1) million in total revenue representing a milestone achievement for Entourage. Based on our strong early-year momentum, we expect these favourable trends will continue through 2022 even as we realize the benefits of expanding our tissue culture business with the acquisition of CannTx Life Sciences.”
Summary of Results
*Adjusted EBITDA is not a recognized measurement under International Financial Reporting Standards (“IFRS”) and this data may not be comparable to data presented by other companies. Management defines Adjusted EBITDA as EBITDA adjusted to exclude interest, tax, and depreciation, stock compensation, fair value changes and other non-cash items, and non-recurring items. This data is furnished to provide additional information and does not have any standardized meaning prescribed by IFRS. The Company uses this non-IFRS measure to provide shareholders and others with supplemental measures of its operating performance. The Company also believes that securities analysts, investors and other interested parties, frequently use this non-IFRS measure in the evaluation of companies, many of which present similar metrics when reporting their results. As other companies may calculate Adjusted EBITDA differently than the Company, this metric may not be comparable to similarly titled measures reported by other companies. We caution readers that Adjusted EBITDA should not be substituted for determining net loss as an indicator of operating results, or as a substitute for cash flows from operating and investing activities. See the Company’s management’s discussion and analysis for the 12 months ended December 31, 2021 (the “2021 MD&A”) for a detailed reconciliation of Adjusted EBITDA to Net Income / (Loss). The Company’s financial statements for the 12 months ended December 31, 2021 and the 2021 MD&A are available on SEDAR at www.sedar.com.
Full Year 2021 Financial Highlights
For the fiscal year ended December 31, 2021, Entourage recorded sales of $55.2 million, compared to approximately $35.4 million for the fiscal year ended December 31, 2020, a 56% increase year-over-year.
The weighted average cost per gram from clone to harvest of plants on hand was $0.68 in Q4 2021 compared to $0.89 in the comparable 2020 period. Weighted average cost per gram of inventory on hand increased to $0.61 in Q4 2021 compared to $0.46 in the comparable 2020 period mainly due to inventory write-downs recorded in 2021.
Gross loss before changes in fair value was $3.6 million for full year 2021 versus gross loss of $22.0 million for full year 2020. The improvements were mainly due to lower cost to produce higher grade products, sold at higher margins across expanded distribution channels.
Gross margins of (-8%) improved 66% over prior year also a result of lower cost to produce higher grade products, sold at higher margins. The preliminary number of 7% initially reported was adjusted as a result of an inventory provision in Q4 2021.
EBITDA improved by $1.8 million to $(39.8) million for full year 2021 from $(41.6) million for full year 2020, also primarily driven by business transformation initiatives to lower costs and partly due to generating higher-margin revenue and spending lower selling, general and administrative expenses.
Preliminary Q1 2022 Revenue(1)
Entourage also announced preliminary unaudited revenue highlights for the three months ended March 31, 2022. First quarter 2022 record total revenues of $17.4 million represent 35% growth year-over-year, reflecting continued increased sales of higher-margin, direct-to-consumer and direct-to-patient products. Revenue from adult-use and medical channels increased substantially quarter-over-quarter, driven by expanded product availability across retail outlets, broader distribution channels and customer acquisition initiatives.
Revenue Highlights
Corporate Highlights During and Subsequent to 2021
Leadership Appointments and Corporate News
In 2021, the Company announced a corporate name change and rebranding from “WeedMD Inc.” to “Entourage Health Corp.” The Company’s common shares are publicly traded on the TSX Venture Exchange under the new ticker symbol “ENTG” and U.S.-based OTC market under “ETRGF”.
Appointed Executive Chairman, George Scorsis, as interim Chief Executive Officer in January 2021, and subsequently named permanent CEO in 2022.
Also in January 2021, Jason Alexander was appointed to the Company’s Board of Directors and named Chair of Governance Committee and SVP of Legal Affairs Vincent Doré named Corporate Secretary.
In November 2021, the Company announced the appointments of: Joseph Mele to Chief Commercial Officer; James Afara (formerly Chief Operation Officer of CannTx Life Sciences) to SVP of Strategic Sourcing and Quality Assurance; and Pat Scanlon (co-founder of CannTx Life Sciences) as Head of Cultivation.
Following the closing of the CannTx acquisition, Entourage announced on November 1, 2021 the appointments of new Board directors Andrew Bulmer and S. Randall Smallbone.
In December 2021, the Company confirmed its certification as an Ontario Living Wage Employer, becoming one of only three cannabis cultivators with this distinction.
In April 2022, Entourage announced the appointment of veteran finance executive Vaani Maharaj as CFO, succeeding Beth Carreon, effective May 4, 2022.
Business Transformation Initiatives and CannTx Life Sciences Acquisition
In early 2021, the Company relocated its medical packaging, labelling and distribution activities from Bowmanville, to its Aylmer, Ontario facility which also houses the Company’s extraction hub. The move improved operational efficiencies and aligned its cost structure, following the subsequent news in June 2021 that Entourage sold its fully licensed Bowmanville operating assets to Final Bell Canada Inc.
Entourage announced in July 2021, it had signed an acquisition agreement to purchase Guelph-based craft cultivator CannTx Life Sciences Inc. The acquisition closed on November 1, 2021.
Financing and Credit Facilities
In March 2021, Entourage announced and closed its oversubscribed $17.25 million bought deal equity financing.
In December 2021, Entourage and LiUNA Pension Fund announced the upsizing of its previously announced credit facility with an additional $20 million of non-dilutive financing. The funding will be used for general working purposes and to upgrade and standardize its cultivation practices for high-margin products expected to drive commercial growth in 2022. Subsequent to that, on April 29, 2022, Entourage and LiUNA Pension Fund further upsized the existing credit facility with an additional $15 million in funding availability.
The Company announced in March 2022 that it secured an extension of the maturity date of the credit facility from March 28, 2022 to May 31, 2022, and a deferral of certain of its financial covenants to May 31, 2022, subject to certain conditions.
Sales, Marketing and Business Development Highlights
The Company announced the expansion of its Color Cannabis products into Quebec in early 2021 and subsequently, added the province of New Brunswick, making Color accessible to over 95 percent of Canada’s retail market from coast to coast.
Consumers in Quebec, one of Canada’s largest markets, may purchase Color products via the Société québécoise du cannabis (SQDC) in partnership with local producer ROSE LifeScience, subsequently adding Saturday Cannabis to the local portfolio.
In May 2021, Entourage released celebrated CannTx cultivars “Rockstar Tuna” and “Royal Goddess” for its Starseed Medicinal patients.
Signed the sixth LiUNA local with the addition of Manitoba Local 1258 to Company’s medical cannabis program operated by Starseed Medicinal.
Entered into agreements with BBCCC, Inc., a subsidiary of The Boston Beer Company, Inc. and Ontario-based Peak Processing Solutions to launch a new portfolio of non-alcoholic cannabis-infused beverages in Canada in 2022.
The Company announced in fall 2021 that it regenerated some of its prized cultivars and genetics unique to Entourage’s brands: Color Cannabis, Saturday Cannabis, Royal City Cannabis Co., and Starseed Medicinal with the goal of meeting evolving consumer preferences for premium product.
Adult-Use Highlights
"Top Selling Vape Cart" in Ontario with Saturday Cannabis terpene-infused, one-gram carts in Sour Pineapple and Lemon Haze (data: Ontario Cannabis Store “OCS”).
Released one-gram, strain-specific Saturday pre-rolls in Ghost Train Haze (GTH); Color Cannabis dried flower in 15-gram pouches.
Color Cannabis, Live Resin vape carts in Pedro Sweet Sativa reached #2 top selling unit sales in Ontario (data: OCS Q2).
Introduced Color's strain-specific single-session pre-roll products in Mango Haze, GTH and Pedro's Sweet Sativa; and Color Cannabis GTH pre-roll multi-packs landed #4 top-seller in BC Q3 (data: BC Liquor Distribution Branch).
Introduction of Saturday Cannabis 28-gram, large format in Quebec and British Columbia resulted in 500% sales increase of the format over first quarter; and Ghost Train Haze landed as #4 top-selling pre-roll in British Columbia in Q3.
Pre-roll products in Mango Haze and Pedro Sweet Sativa continue to be top-sellers in BC with 10-pack pre-roll products a top seller in Q3 with new cultivars Black Sugar Rose and Blueberry Seagal introduced in 2022.
Launched Pedro’s Sweet Sativa Live Sugar and new cultivar Space Cake in 2022.
Color Cannabis brand refresh debuted in March 2022 centered around Color Theory meant to educate consumers on the correlation between the colour associated with a particular strain and its potential effect on moods.
The Company partnered with Cannabis Amnesty in March 2022 to launch “Joints for Justice” retail campaign to raise awareness and funds with $1 of every Royal City Cannabis Co. pre-roll sold going to the advancement of Cannabis Amnesty’s initiatives.
Medical Highlights and Products Releases
Mary's Medicinals Topical Balms in 1:1 (CBD/THC) and CBD compounds.
Aurum 4 Indica in Juicy-Fruit strain; Strain-specific PAX Vapor Pods in Pedro Sweet Sativa, Mango Haze and Black Sugar Rose.
CBD Softgel capsules in 1:1, THC and CBD formats; and new strains Lemon Z and Hybrid Reserve whole flower.
Mary's Medicinals Transdermal Patches - as the exclusive manufacturer and licensed distributor for Mary's suite of products in Canada, Entourage launched patches in CBD, THC and 1:1 formulation.
Fire & Flower-branded CBD softgel product line.
Launched a suite of premium CBD and THC soft chew products.
New cultivars that included Mandarin Cookies, Gelato33, Royal Goddess (Crown), Rockstar Tuna, Hybrid Reserve.
Starseed added three partner clinics to its medical cannabis program, which now totals 24 clinics.
In May 2022, Entourage announced it has entered into an agreement with Pineapple Express – a wholly owned subsidiary of Fire & Flower – to launch same-day/next-day medical cannabis delivery services to the Company’s Starseed Medicinal patients.
To read Entourage’s recent Shareholder Newsletter 2022, visit our website here. To access our corporate video, visit us here and to access our latest investor presentation and corporate deck here.
About Entourage Health Corp.
Entourage Health Corp. is the publicly traded parent company of Entourage Brands Corp. (formerly WeedMD RX Inc.) and CannTx Life Sciences Inc., licence holders producing and distributing cannabis products for both the medical and adult-use markets. The Company owns and operates a state-of-the-art hybrid greenhouse and processing facility located on 158-acres in Strathroy, ON; a fully licensed 26,000 sq. ft. Aylmer, ON processing facility, specializing in cannabis extraction; and a micropropagation, tissue culture and genetics centre-of-excellence in Guelph, Ontario. With its Starseed Medicinal medical-centric brand, Entourage has expanded its multi-channeled distribution strategy. Starseed’s industry-first, exclusive partnership with LiUNA, the largest construction union in Canada, along with employers and union groups complements Entourage’s direct sales to medical patients. Entourage’s elite adult-use product portfolio includes Color Cannabis, Saturday Cannabis and Royal City Cannabis Co. – sold across eight provincial distribution agencies. The Company also maintains strategic relationships in the seniors’ market and supply agreements with Shoppers Drug Mart. It is the exclusive Canadian producer and distributor of award-winning U.S.-based wellness brand Mary’s Medicinals sold in both medical and adult-use channels. Under a collaboration with The Boston Beer Company subsidiary, Entourage is also the exclusive distributor of cannabis-infused beverages in Canada, expected to launch in 2022.
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Twitter: Entourage, Color Cannabis, Saturday Cannabis, Starseed & Royal City Cannabis Co.
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For further information, please contact:
For Investor Enquiries:
Valter Pinto
Managing Director
KCSA Strategic Communications
1-212-896-1254
entourage@kcsa.com
For Media Enquiries:
Marianella delaBarrera
SVP, Communications & Corporate Affairs
416-897-6644
marianella@entouragecorp.com
(1) Preliminary and unaudited financial results are subject to customary financial statement procedures by the Company and its auditors. Actual results could be affected by subsequent events or determinations. While the Company believes there is a reasonable basis for these preliminary financial results, the results involve known and unknown risks and uncertainties that may cause actual results to differ materially. These preliminary fiscal results represent forward-looking information. See "Forward Looking Information" and “Financial Outlook”.
(2) Ref: Hifyre Data as of Dec. 31, 2021, published Jan. 2022.
Financial Outlook
This news release contains a financial outlook within the meaning of applicable Canadian securities laws. The financial outlook has been prepared by management of the Company to provide an outlook for the Company’s forecasted revenue for the fiscal year ended December 31, 2021 and may not be appropriate for any other purpose. The financial outlook has been prepared based on a number of assumptions including the assumptions discussed under the heading “Forward Looking Information” below. The actual results of the Company’s operations for any period will likely vary from the amounts set forth in these projections and such variations may be material. The Company and its management believe that the financial outlook has been prepared on a reasonable basis. However, because this information is highly subjective and subject to numerous risks, including the risks discussed under the heading "Forward Looking Information" below, it should not be relied on as necessarily indicative of future results.
Forward Looking Information
This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation which are based upon Entourage's current internal expectations, estimates, projections, assumptions and beliefs and views of future events. Forward-looking information can be identified by the use of forward-looking terminology such as "expect", "likely", "may", "will", "should", "intend", "anticipate", "potential", "proposed", "estimate" and other similar words, including negative and grammatical variations thereof, or statements that certain events or conditions "may", "would" or "will" happen, or by discussions of strategy. Forward-looking information included in this press release includes, but is not limited to, statements in respect of the Company’s forecasted revenue for the fiscal quarter ended March 31, 2022.
The forward-looking information in this news release is based upon the expectations, estimates, projections, assumptions and views of future events which management believes to be reasonable in the circumstances. Forward-looking information includes estimates, plans, expectations, opinions, forecasts, projections, targets, guidance or other statements that are not statements of fact. Forward-looking information necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; loss of markets; future legislative and regulatory developments; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the cannabis industry in Canada generally; the ability of Entourage to implement its business strategies; the COVID-19 pandemic; competition; crop failure; and other risks.
Any forward-looking information speaks only as of the date on which it is made, and, except as required by law, Entourage does not undertake any obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for Entourage to predict all such factors. When considering this forward-looking information, readers should keep in mind the risk factors and other cautionary statements in Entourage’s disclosure documents filed with the applicable Canadian securities regulatory authorities on SEDAR at www.sedar.com. The risk factors and other factors noted in the disclosure documents could cause actual events or results to differ materially from those described in any forward-looking information.
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