Indiva reported a net loss of $1.8 million from $9.3 million in net revenue in the first three months of 2024 as the Ontario producer maintained its market position as top edibles sales in several major provinces.
The company’s gross and net revenue increased from the same reporting period in 2023, while its net loss decreased by 27% year-over-year.
Indiva holds the top market share in the edibles category in BC, Alberta, and Ontario with the sales of its Pearls by Grön gummies, No Future gummies, Bhang Chocolate, 1432 Chocolate, and Doppio Sandwich Cookies.
The company’s net revenue in Q1 2024 of $9.3 million was a 14.1% sequential decrease from Q4 2023 and a 0.9% decrease year-over-year from Q1 2023.
While edibles sales were driven by its Pearls brand, which saw net revenue grow by more than 160% year-over-year, revenues were tempered by an 85% decline in year-over-year sales of its Wana Sour Gummies line of products, as well as the loss of revenue from its lozenges, which Health Canada determined were not compliant in the edibles category.
Indiva says the loss of revenue from this latter product category being removed from shelves reduced net revenue in Q1 2024 by more than $1.3 million compared to the same quarter in 2023.
Net revenue from edible products was the majority (89.7%) of Indiva’s revenue at $8.4 million in Q1 2024, up 14.5% from $7.3 million in the same period in 2023.
Gross profit increased by 18% to $2.8 million, 29.7% of net revenue, compared to $2.3 million or 24.8% of net revenue in Q1 2023.
The company sold products containing 186 million milligrams of cannabinoids in the first three months of 2024, a 14.7% decrease when compared to the 218 million milligrams in product sold in Q4 2023, but a 66.3% increase from the 112 million milligrams sold in Q1 2023.
EBITDA was a loss of $0.2 million in the quarter. In comparison, adjusted EBITDA decreased to a profit of $0.1 million in Q1 2024, compared to a profit of $1.5 million in Q4 2023, and a profit of $0.4 million in Q1 2023.
Indiva’s Blips products, which come in 25 and 55 pack options, have somewhat replaced sales of the company’s lozenges line, offering consumers tablets of 10 mg THC per serving. The company launched its 55-pack to its existing 25-pack of these tablets in Alberta and British Columbia, and expects them to hit Ontario in June 2024.
Indiva also expanded its offering of Indiva Blips Tablets with two additional new 20-count SKUs, one with a cannabinoid ratio of 1:2 THC:CBG that will ship to British Columbia and Alberta in May, and the other with 1:1 THC:CBD, which will also ship to Alberta in May.
In April 2024, Indiva repaid $2 million of the principal amount outstanding from a strategic investment of $22 million provided by cannabis company SNDL.
The Company expects that it will need to raise additional financing in the form of debt and/or equity to continue funding its operations, as well as its convertible debenture repayments and capital expenditures.
The Company also expects its Q2 2024 net revenue to be higher on a sequential basis and year-over-year, exceeding $10 million. This is partly based on record net revenue in April 2024, driven by sales of its Pearls gummies, as well as its No Future gummies and Indiva Blips tablets. It also expects margins to improve sequentially in Q2 2024 due to higher sales, improved product mix, and improved overhead absorption. The company also expects record net revenue for fiscal year 2024.
“We are very pleased with our performance in the first quarter of 2024, our seasonally weakest quarter,” said Niel Marotta, President and Chief Executive Officer of Indiva. “Indiva’s business has transformed in the last year, as greater than 50% of our net revenue, specifically the revenue from Wana which has declined due to the transition to contract manufacturing, and the elimination of revenue from lozenges, has been replaced in the last 12 months.
“Now that these difficult cross currents have subsided, Indiva is positioned to demonstrate sustainable organic growth in its core brands without fighting against the loss of revenue from Wana and lozenges. Growth in our core brands, namely Pearls gummies, where depletions in the big three provinces have more than doubled year-over-year, and the continued growth of the No Future and Blips brands, more than offset the loss of net revenue caused by the movement to contract manufacturing of Wana and the discontinuation of lozenges caused by regulatory requirements. Greater than 30% of our net revenue in Q1 2024 was derived from brands created and owned by Indiva, including Indiva 1432 Chocolate, Indiva Blips tablets, Indiva Doppio Sandwich Cookies, and No Future Gummies and Vapes, up from 20% of net revenue in Q1 2023. Indiva remains committed to product innovation that will support both industry and edible category growth and we have a robust pipeline of new products across No Future, Pearls and Indiva Blips brands which will hit market between June and September of 2024.”
