HempFusion (TSX:CBD.U, OTCQX:CBDHF) Wellness Inc has reported a strong rise in fourth-quarter and full-year 2021 revenue and said cost-saving initiatives will continue to reduce its operating expenses.
The company said 4Q net revenue increased by 66% to $3.7 million from the same quarter a year earlier. Gross profit was $1.6 million, or 43% of net revenue, unchanged from the prior quarter.
Cost-saving initiatives announced during the quarter helped reduce operating expenses by over $1.1 million, HempFusion said, adding that the quarter included only a partial impact from recent cost savings initiatives. It now expects its ongoing efficiency efforts will drive at least a $6 million reduction in operating expenses in 2022 versus prior expectations of $4 million.
READ: HempFusion subsidiary Sagely Naturals launches at 3,700 stores of top US retailer
“After quarter-end, the company implemented a strategic price increase that is expected to drive gross margins directionally towards its goal of 50% or greater for 2022,” HempFusion said in a statement.
For the full year to December 31, 2021, the company reported net revenue of $9.1 million, a 36% increase over the prior year. Including the impact of acquisitions, consolidated proforma net revenue for 2021 was $12.1 million. The preliminary gross profit margin for 2021 more than doubled from 16% to 36%, mainly due to the addition of the higher-margin acquisitions.
Preliminary operating expenses for the year increased 12% on a proforma basis. Cost-saving initiatives implemented late in the fourth quarter resulted in a 15% reduction in operating expenditure with cost savings expected to carry into 2022 and beyond, it said.
Other key highlights include:
- Due to organic expansion and through the acquisition, the company and its family of brands can be found in more than 18,000 retail locations.
- The company's brand Probulin Probiotics achieved MOH (Ministry of Health) Registration and assigned DDCs (Dubai Drug Code) numbers authorizing four of its products to be sold as drugs in the United Arab Emirates.
- On December 31, 2021, HempFusion's exclusive and proprietary hemp-derived CBD extract achieved self-affirmed Generally Recognized as Safe (GRAS) status making the company one of the select few that stand fully prepared to meet or exceed US and global compliance standards.
- Probulin Probiotics finished 2021 as the fastest-growing probiotic company in the top 12 brands according to SPINS data and has achieved this for approximately three years in a row.
- Sagely Naturals maintained its number 1 spot in Drug with over 25% market share and number 1 in MULO (Multi-Outlet) with an over 14% market share, according to SPINS IRI data.
Due to unavoidable delays in the filing of its 2021 annual financial reports, the company said it voluntarily applied the applicable securities regulatory authorities for a management cease trade order on its securities by its CEO and chief financial officer. It expects to complete the filings on or before April 29, 2022, it added.
HempFusion Wellness is a leading health and wellness company whose family of premium consumer brands include HempFusion, Sagely Naturals, Apothecanna, and Probulin Probiotics, one of the fastest-growing probiotics companies in the US, according to SPINs reported data.
Utilizing the power of whole-food hemp nutrition, the HempFusion family of brands’ product portfolio comprises 112 SKUs including USDA Organic Certified Tinctures, proprietary FDA Drug Listed Over-The-Counter (OTC) Topicals, probiotic supplements and skincare products, a Doctor/Practitioner line, a White Label division and more. With a strong focus on research and development, HempFusion Wellness has 43 products under development.
Contact the author at stephen.gunnion@proactiveinvestors.com