Shares in Vitura Health plunged more than 26% as the company reported a sharp decline in profits amid increased competition and falling prices of medicinal cannabis.
Despite a 4% rise in revenue to $60m in H1 FY24, after tax profit tumbled 59% to A$3.12m, down from $7.66m in the previous corresponding period.
Vitura described the six months to December as a “more challenging trading environment” as distribution competition intensified, average prices fell and pharmacy rebates became “commonplace”.
The market reacted sharply, with the share price closing yesterday at $0.165c, down 26.6% and wiping more than $35m off the valuation of the company.
While the number of units sold through CanView hit almost 500,000, up 11% from H1 FY23, revenue generated through the distribution platform fell 0.5% to $58.3m. It was the first half-yearly decline in three years.
Compared to H2 FY23, sales were down 4.5% while units sold climbed only 0.7%.
The company said rising competition hit the business, along with a “proliferation” of products in the Australian market that saw average prices fall from $130 to $110.
“During the past year, the Australian medicinal cannabis industry has experienced considerable average selling price compression across all SKUs as a result of increased competition, price discounting and the addition of new suppliers bringing with them a marked increase in the number of medical cannabis products offered,” Vitura said.
“Vitura has also entered into a number of commercial rebate agreements with larger customers which the company anticipates will drive increased sales and revenues in future noting that, in a number of cases, the relevant suppliers contribute to reduce the amounts paid.”
Gross margins were also impacted as a result of the market dynamics, falling 6% to 29.4%, although Doctors on Demand, the business acquired by Vitura in October, reported margins of “closer to 35%”.
The addition of Doctors on Demand helped increase revenue from clinic consultations by 348% to almost $3m.
During the six month period, the number of prescriber accounts on CanView climbed from 978 in H2 FY23 to 1,401, while pharmacy accounts jumped to 4,180, up from 3,649.
Meanwhile, the platform now offers 295 SKUs, 45 more than the prior half.
Vitura will hold an investor briefing on Wednesday morning.
