Althea maintained it is on track to achieve operating profitability and cashflow break-even in March despite worsening losses in the first half of the financial year.
A 26% jump in revenue to nearly A$12 million could not prevent after-tax losses rising 32% to $9.4m.
However, its net loss used in operating activities between July and December fell from $5.54m to $5.37m, a result of the revenue increase and “tight financial controls”, the company said.
Althea had $3m in cash and cash equivalents at the end of the period, down from $6.2m at the end of June.
Despite the mounting headline loss, Althea chief executive Josh Fegan said the company remained in a “solid financial position” and insisted shareholders would see a “significant upside” in the near term.
In Australia, revenue climbed to $6.2m, while its Canada-based recreational division, Peak, delivered revenue of $4.5m. Both results were up a quarter on the previous corresponding period.
While oil remained its major revenue driver in Australia, Fegan said sales of flower products were rising sharply. Over the long term, however, softgel capsules, which Althea launched in September, are expected to overtake oil “given its superior performance and ease of use”, he added.
UK sales dipped to $955,000 which the company blamed on stock outages caused by an industry-wide product review by the Medicines and Healthcare Regulatory Agency (MHRA).
“As a result of the review, a number of suppliers in the UK had products removed from sale due to a lack of conformity, a situation Althea intends to take full advantage of,” the firm said, adding that its own products had been cleared by the MHRA.
In Germany, meanwhile, sales hit $40,000 and were “continuing to build at a steady rate”.
The company said it expects 2023 to be a “breakout year [in Germany] as smaller brands retreat and Althea’s medical education program begins to bear fruit”.
Fegan said: “The company continued to grow revenue during the first half of FY23 despite encountering some transitory headwinds and supply chain issues in the second quarter.
“Althea is in a very solid financial position, is fast approaching cashflow positivity with improved margins, and envisions significant upside for shareholders in the short term and beyond.”
Gross profit margins during the period hit a record 61%, a result of falling flower prices and the firm’s “buying power”, Althea added.
