Ayurcann Holdings Corp is in a rarefied position in the Canadian cannabis sector – a profit-making business without ever touching the plant.
The Toronto-based company is carving out a niche for itself in the cannabis industry with its post-harvest solutions for licensed producers. Its B2B processing facility in the Greater Toronto Area provides services for Canadian licensed producers – anything from extraction and refinement to bulk oil sales and white label manufacturing.
It also offers oil-infused products on its Marketplace like vape products, topicals and tinctures, which they work with other licensed producers to bring to market – think an Amazon for medical cannabis.
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The company debuted in the public sphere in April 2021, listing first on the Canadian Securities Exchange followed by a Frankfurt listing in August.
Since it came onto the scene, Ayurcann has reported strong earnings and consistently been in the news with new contracts from partners around the world. Its first results as a public company were highlighted by growing revenue and strong margins. Net revenue came in at C$2.6 million over the three-month period ended March 31, 2021, the group’s fiscal 3Q, compared to $1.6 million in the previous to end December 2020. Gross margins were $1.84 million, or 70%, compared to $302,000 in 2Q 2021 and adjusted EBITDA grew to around $1.1 million.
In an era where cannabis companies are still struggling to generate income, what’s behind this pace of growth? CEO Igal Sudman credits the company’s focus on running a lean, successful operation.
“Our most recent financials showed us to be one of the only profitable cannabis companies in Canada with great growth margins,” Sudman told Proactive exclusively. “It’s a sustainable trajectory, especially on the B2B segment where we acquire clients and contracts to produce for other licensed producers but also introduce new brands in the medicinal and recreational space. We don’t have any brands or products that we manufacture directly, but as soon as that happens we think we could see exponential growth in terms of revenue and profitability.”
That puts Ayurcann amongst only a handful of publicly-traded cannabis companies that are making a profit, even as the industry approaches its third anniversary of legalization in Canada.
“The heydays of saying that you’re in the cannabis space and watching your stock rocket are behind us, and I think there are more investors that are looking at the companies' financials, management and opportunity. We felt that showcasing our company to investors is a great option at this time.”
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Extraction companies, in particular, are in favour amongst investors right now. The global cannabis extract market size is expected to be valued at $28.5 billion by 2027, according to a new report published by Grand View Research.
As a refiner, Ayurcann’s facility has the capacity to process around 200,000 kilograms annually, but the company is in the midst of an expansion program that should increase that capacity to 300,000 kilograms – on a par with the largest licensed producers that are in the space in Canada.
On the consumer side, Ayurcann’s Marketplace allows new shoppers to fill out a patient registration form with their prescription to access the product selection. Auyrcann’s Marketplace allows these prescription holders to source medicinal products from across the country and offers them the chance to choose from a selection of different brands and offerings from all of the licensed producers on its platform.
The firm hopes to have hundreds of options for the consumer, all competitively priced with better variety. Sudman estimates that there are upwards of 400,000 patients in Canada with prescriptions for medical cannabis.
Upcoming catalysts from the company include the completion of the second phase of its facility expansion to 300,000 kilograms of processing capacity and up to 3,000,000 product fills, and its 2021 year-end results which should give investors more insight into the firm’s growth trajectory.
Sudman is confident that the demand is there for Ayurcann’s offering.
“We are focused on running a successful, profitable company. We are out there making deals and creating some buzz, running a company that investors will be proud to own.”
Contact Angela at angela@proactiveinvestors.com
Follow her on Twitter @AHarmantas