Entourage Health Corp. reported net revenue of $9.3 million before excise duties and discounts, but a loss of $10.3 million in its Q2 filing for 2024.
For the three months ended June 30, 2024, the Ontario-based cannabis producer’s revenue decreased by 9% to $12.2 million, compared to nearly $13.4 for the same period in 2023.
Entourage’s loss and comprehensive loss in Q2 2024 increased from a $6.3 million loss in Q1 2024, and a $9.9 million loss in Q2 2023.
“Overall, our year-to-date performance aligns with our expectations and prior achievements. As we move into Q3 and beyond, we are optimistic about the opportunities ahead,” said George Scorsis, CEO and Chair. “This quarter, we focused on the launch of new products and offerings under all our Entourage Brands. The expansion of Dime Bag resulted in significant traction, achieving over 90% distribution in Ontario. We remain dedicated to bringing variety to our consumers and are confident that these efforts will drive improved financial results as we progress through the year.”
The company says the higher loss in Q2 2024 is the result of lower sales and gross margin across its portfolio, which was offset by lower SG&A expenses due to effective cost management and operational efficiencies.
Most of the company’s $9.3 million in sales in the three months ended June 30, 2024, were split evenly between the medical and non-medical supply streams (~$4.1 million each), while about 11% were bulk B2B sales ($1 million).
While revenue from non-medical sales dropped 29% compared to the same period in the previous year, bulk sales increased by 351%. Medical sales stayed relatively level, with a slight 1% decrease compared to Q2 2023.
This amounted to nearly 1.4 million grams of cannabis sold in the medical stream in the three months ended June 30, 2024, 2.1 million grams sold in the non-medical adult-use supply stream and 2.5 million grams sold in bulk, for a total of more than 6.1 million grams of cannabis. This represented a 40% increase in total grams sold compared to the same period in 2023.
The average selling price of a gram of cannabis sold in the medical supply stream was $2.97, while adult-use was $1.95, and bulk sales were $0.39 a gram, for a total average price of $1.52 a gram. This represented a 7% decrease in price in the medical supply stream and an 83% decline in the price in the bulk supply stream, while adult-use non-medical sales stayed level compared to Q2 2024.
The company had $8.4 million worth of cannabis on hand as of June 30, 2024, along with $2.2 million in extracts.
Entourage sells under the brands Color Cannabis, Saturday Cannabis, and Dime Bag in the non-medical stream and through its Starseed Medicinal medical platform and its health and wellness brand Syndicate Cannabis.
Entourage produces dried flower, pre-rolls, oils, capsules, edibles, topicals, vapes, and a heat-free “micro inhaler” for sale in Canada in the medical and adult-use markets.
It sells non-medical products in the Ontario, Alberta, BC, Manitoba, and Saskatchewan markets. Medical sales in Canada are nationwide. The company also has an arrangement with Australia Pty Ltd., a fully-owned subsidiary of Lyphe Group Ltd., for the sale, execution, and fulfillment of its first international order of medicinal cannabis to Australia
“We have achieved stability despite a challenging environment, highlighting the resilience of our business model and the strength of our long-term strategy,” said Vaani Maharaj, CFO. “Although Q2 presented its share of market fluctuations, our steady performance over the past six months demonstrates our commitment to overcoming these obstacles. As we move forward, our focus on execution and capital efficiency will be key to driving future growth and success.”
As a going concern, Entourage reports it has material debt obligations that come due within the next twelve months, noting that it has suffered recurring losses from operations and requires additional financing to fund its business and operations.
If Entourage is unable to raise the additional capital needed and subsequently renegotiate the payment terms of its outstanding loans and borrowing, the company’s financial report says it will be unable to meet its financial obligations. As of June 30, 2024, the company had a working capital deficiency of $163,248,157 and an accumulated deficit of $382,153,256. Management plans to fund the operations through existing cash positions, as well as looking at different strategies with its lender.
