Adastra Holdings (CSE:XTRX) Ltd reported a third consecutive quarter of record revenues, boosted by significant demand for its cannabis concentrate brands and products as it continues to build on the transformational strategy it set out earlier this year.
"I am beyond proud of the team's innovative mindset and hard work, as Adastra continues to build on the transformational strategy set out earlier this year," said Michael Forbes, Chief Executive Officer of Adastra in a statement.
"Q3 2022 included the receipt of two important licenses from Health Canada, enabling Adastra to possess and formulate with the controlled substance psilocybin and sell medically-formulated cannabis products. We expect this will add additional revenue streams to the business, further bolstering our income statement and maintaining long-term value for our shareholders."
READ: Adastra Holdings receives controlled drug and substances dealer's license, positioning it for future growth
It recorded a 110% increase in gross revenues of $9.14 million for the year-to-date 2022, up from $3.64 million for the year-to-date 2021.
In the third quarter, gross revenues came in at $3.80 million, compared to $1.81 million in 3Q 2021, and $3.05 million for 2Q 2022, representing a year-over-year increase of 110% and quarter-on-quarter rise of 25%, demonstrating significant demand for Adastra's cannabis concentrate brands and products.
Gross profit stood at $1.63 million in 3Q 2022, compared to $0.82 million in 3Q 2021 and $1.09 million for 2022, representing a year-over-year increase of 100% and a quarter-on-quarter rise of 50%.
Total operating expenses for 3Q 2022 increased to $2.06 million compared to $0.93 million for 3Q 2021, primarily due to continued emphasis on product and brand launches, and marketing initiatives for in-house brands Phyto Extractions and Endgame last quarter.
Higher non-cash depreciation expense was a factor from the Phyto Extractions and PerceiveMD acquisitions.
Continued development of the commercialization and sales team, broadening the sales footprint, and the cost of engaging professional counterparties contributed to the increase in costs.
Indicative of the firm's low leverage credentials, interest expenses underwent a sequential year-over-year decline of 42% and a quarter-on-quarter slide of 11% in an environment of monetary tightening.
Highlights
The key 3Q 2022, future-looking corporate and business highlights included:
- Adastra's in-house brands, Endgame and Phyto Extractions concentrate products currently rank as the top 2, 3, 8, 9 & 10 best-sellers in BC as per Headset Data;
- Received Controlled Substances Dealer's License on August 24, 2022, enabling Adastra to possess and formulate products containing psilocybin;
- Received medical sales license approval from Health Canada in August 2022, enabling Adastra to distribute patient-formulated cannabis products to the medical market; and
- Automated pre-roll equipment for infused pre-roll production was installed and operational in September 2022.
Adastra is a leading manufacturer and supplier of innovative ethnobotanical and cannabis science products designed for the adult-use, medical markets and forward-looking therapeutic applications.
The Company also operates Adastra Labs, a 13,500 square-foot agricultural-scale Health Canada licensed facility located in Langley, British Columbia, focused on extraction, distillation, and manufacturing of cannabis-derived products.
Contact the author at jon.hopkins@proactiveinvestors.com