Auxly Cannabis Group, based in Toronto, lost 18.4 million Canadian dollars ($14 million) in its quarter ended Dec. 31, 2021, on record net revenue of CA$29.3 million.
Sales improved by 20% over the third quarter, which is the best among competing marijuana producers, according to a Thursday news release.
However, the adjusted EBITDA loss of CA$6 million in the fourth quarter was 30% worse than the same period one year earlier.
Auxly said it maintained the No. 1 market share position in Canada’s so-called Cannabis 2.0 products in 2021, which include vapes and edibles, increasing its market share to approximately 15%.
Overall, Auxly was the fifth-largest licensed producer in Canada by market share, securing 7.4% in the quarter, according to the release.
“We value the company’s market position, which could make it attractive to others, but debt leverage, cash burn, and ongoing negative EBITDA are concerns,” analyst Pablo Zuanic, an analyst with New York-based investment banking firm Cantor Fitzgerald, wrote in a note to investors.
“We remain concerned about cash burn and debt load. All that said, we see value in the company’s brands and market position.”
Selling, general and administrative expenses, or SG&A, was relatively flat at CA$45.7 million in 2021, compared with CA$46.6 million for the same period in 2020.
For the year ended Dec. 31, 2021, net sales were CA$83.8 million, an increase of approximately CA$37.1 million over the same period of 2020.
The net loss for the year ended Dec.31, 2021, was CA$33.7 million, better than 2020’s CA$85.4 million loss.
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Auxly had aimed to become adjusted EBITDA-positive by the end of 2021 but was unable to do so. The company cited issues such as:
- Global supply-chain constraints.
- Increased cost of goods.
- Price compression.
- Equipment delays.
Auxly said its objectives for 2022 are to:
- Improve revenue and gross profit margin to reach positive adjusted EBITDA.
- Win with consumers and increase brand traction.
Earlier this year, Auxly said it was closing its Nova Scotia marijuana cultivation facilities in Kentville and Hortonville, affecting roughly 55 jobs.
The company had cash and equivalents worth CA$14.8 million as of Dec. 31, 2021.
Shares of Auxly are traded on the Toronto Stock Exchange as XLY.
