Irwin Naturals Inc. (CSE:IWIN) told investors it moved closer to becoming the world’s largest chain of dedicated psychedelic mental health clinics in its fiscal third quarter.
Releasing results for the three months to September 20, 2022, CEO Klee Irwin said the company was also rapidly on its way to doubling profits from last year on an annualized basis based on potential acquisitions in the psychedelic mental healthcare space.
“The mental healthcare industry is a $1.5 trillion behemoth in desperate need of a disruptive sea change,” Irwin said in a statement.
“With standard treatments having an average effectiveness of approximately 17%, the drastic improvements of results from psychedelic treatments is that sea change. We currently have no meaningful competitors in our rearview mirror and intend to be the world’s first chain of clinics in this sector to exceed 100 locations,” Irwin added.
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The company said a 7% decline in overall operating revenues to $22 million was due largely to supply issues in the CBD segment, related to a reduction in supply at a key supplier. The decline, though still down from the prior year, is recovering quarter over quarter, it added.
Other factors impacting sales related to order timing and the loss of distribution of certain non-CBD mass market products.
Income from operations came in at $600,000, down from $1.2 million in 3Q 2021, primarily due to the decrease in business volume and startup costs related to Emergence by Irwin Naturals (ketamine clinics) and Irwin Naturals Cannabis (intellectual property licensing to the cannabis industry), the company said.
The overall decrease in business volume paired with startup costs related to the company’s initiatives in cannabis and the aforementioned startup costs resulted in a decrease in adjusted underlying earnings (EBITDA) to $500,000.
Despite cost pressures continuing through the quarter, the company attributed year-over-year growth in its gross margins of 4.8% to its sales mix coupled with the early success of a targeted price increase across the market.
In addition, it said it was able to maintain positive operating profits despite the additions in the cost base to support the early phases of its Emergence and Licensing businesses.
“Our balance remains strong, and have access to considerable working capital to fund our accelerated growth plans,” chief financial officer Sean Sand added.
“To date, we have closed or announced agreements to acquire entities or assets amounting to 18 clinics and anticipate several more closing as we exit 2022 and in the coming quarters. In addition, we are continuing our rollout of our licensing deals, which now sees us in six states and in Canada.”
Founded in 1994, Irwin Naturals provides best-in-class nutraceutical products which are stocked on the shelves of more than 100,000 storefronts in North America.
Contact the author at stephen.gunnion@proactiveinvestors.com