ECS Botanics reported a net cash operating deficit of A$1.5 million in the three months to March 31 as the company continued to build the market presence of its in-house brands.
The firm delivered Q3 revenue of $4.8m, up 1% on the second quarter and 19% higher than the previous corresponding period (pcp).
Direct to consumer sales, via prescribing medical practitioners, climbed 38% from Q2 to $2.2m, and now represent 46% of total revenue. The company launched its retail strategy last year and is currently working with 540 prescribers.
Meanwhile, B2B sales fell by an undisclosed amount despite ECS adding two customers during the quarter.
Managing director Nan-Maree Schoerie said the revenue growth from its B2C division “demonstrates the company is transitioning well” from its B2B roots to a “more balanced model which gives us the platform to achieve a stronger market presence”.
“The benefits of our strategic shift to a B2C and B2B hybrid model are beginning to materialise,” she said.
Schoerie added that the firm’s brands were beginning to gain traction in the market.
However, despite the positive outlook, and with export volumes “continuing to strengthen”, shares dipped sharply in Monday morning trading, falling 15% to $0.011c.
The quarter saw the company report a $1.5m net operating loss, largely a result of increased production and its focus on retail sales, up $200k from the previous quarter. It takes its nine-month net operating loss to $3.6m.
Reporting on its cultivation operation, ECS said low rainfall helped deliver a “high quality outdoor crop” which will provide product for its OzSun value range.
In previous years, a “large proportion” of ECS’s outdoor harvest has been used for extraction, leaving the firm unable to meet demand for dried flower.
“The decline in oil sales has also reduced the requirement for biomass for extraction,” Schoerie said. “The company has focused this year’s cultivation and harvest on producing quality flower and less biomass and the results to date are extremely encouraging.
“This will allow ECS to continue to process last year’s biomass for oil production and sell this year’s flower as both A grade and B grade which will assist in meeting the high demand for ECS’s OzSun value range.”
In addition to its outdoor crops, ECS said seven of its nine protective cropping enclosures are now in operation with six set to grow plants over winter.
ECS had $3.2m of available funding at the end of March, a figure bolstered earlier this month after National Australia Bank (NAB) increased the firm’s loan facility by $2m to $5.2m.
