Delivra Health Brands Q2 sales dampened by shifting consumer patterns

Sales of Delivra’s cannabis-infused topicals was a bright spot.

Delivra Health Brands Inc. (TSXV: DHB) (OTCQB: DHBUF) net revenue fell 14% in its second quarter, which ended Dec. 31, 2023, but the company was still able to boost its gross profit for the period.

The consumer health and wellness company saw a net revenue fall to C$2.1 million from C$2.4 million in the same period last year. The decrease was attributed primarily to lower sales of Dream Water in the U.S., driven by shifts in customer ordering patterns.

Conversely, sales in Canada, particularly of the company’s LivRelief cannabis-infused creams, showed improvement.

Despite the revenue downturn, Delivra Health reported an increase in gross profit to C$1.1 million, up from C$987,000 year-over-year. That boosted the company’s gross profit margin to 54% from 41%. The company cited a shift towards higher-margin products and more profitable customer segments.

Operating expenses rose by 30% to C$1.3 million, up from C$968,000 in the corresponding quarter of the previous year, largely due to higher spending on marketing and digital advertising.

The company recorded an adjusted EBITDA loss of C$84,000 compared to a profit of C$140,000 in the same period the previous year. The lower adjusted EBITDA was linked to the reduced net revenue and higher operational expenses.

Still, CEO Gord Davey said that the company’s earnings results are “on track” with its goals.

“The results demonstrate that the company’s business model is a resilient model that works well with changes in sales volume when it comes to producing sustainable margins,” Davey said in a statement.

He also noted that Delivra Health is focused on expanding its marketing efforts and introducing new products to extend its market presence both in North America and internationally.

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