Heritage Cannabis posts C$20 million loss for 2023 fiscal year

Toronto-based Heritage Cannabis Holdings Corp. (CSE: CANN) (OTCQB: HERTF) reported a C$19.9 million net loss for its latest fiscal year, which ended on Oct. 31, 2023.

Most of the losses, C$14.1 million, were incurred in the fourth quarter alone, Heritage reported. The company highlighted that despite the staggering loss, the results were an improvement from 2022, when it lost C$26.8 million in the fourth quarter and C$23.9 million for the full fiscal year.

Heritage said the trimmed losses were due to “increased non-excisable sales, decreased inventory costs and production efficiencies” in the fourth quarter.

Net revenue, meanwhile, hit C$7.9 million for the quarter and C$29.7 million for the full fiscal year, the company reported.

CEO David Schwede said in a statement that the company, through 2023, “continued to optimize our products” and improve “production efficiencies, operational spending, and high gross margin sales, all of which were key in achieving growth in gross margin of over 50% for the year.”

Schwede exuded confidence heading into 2024, saying demand for Heritage cannabis products continues to grow among consumers. He also noted that the company entered the New York market in October with six product SKUs, and Heritage product sales topped C$3.5 million in the medical marijuana markets of Missouri and West Virginia for the fiscal year.

“With first quarter revenues and gross margins expected to continue this trend and SG&A expected to be down, we are keen to build on these successful ventures throughout 2024 and continue to explore additional revenue channels both in the U.S. and internationally,” Schwede said.

Heritage has also continued expanding across its home country of Canada, the company noted in its year-end summary. It launched new product sales in Quebec just in September, bringing its Canadian cannabis footprint to every province in the nation.

The company also ramped up its cannabis extraction production capacity last fall, with the intent of shipping internationally to markets such as the United Kingdom, Germany, Australia, “and others as cannabis legalization continues to expand across the globe,” it said in a release.

Just before the end of the fourth quarter, Heritage signed a sale-leaseback deal with BJK Developments Ltd. for two of its Canadian manufacturing and processing properties in Ontario and British Columbia. Heritage already owed BJK Developments a hefty debt, and the deal slashed the remaining debt to C$7.3 million.

The deal also brought in C$9.7 million in cash to Heritage’s balance sheet. The company will still operate at the two properties it sold, having signed two 10-year lease agreements with BJK Developments, the company said.

At the close of its fiscal year, Heritage had C$55.8 million in total assets, including C$3.9 million in cash, against C$34.9 million in total liabilities.

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