LONDON - Indiva Limited (the 'Company' or 'Indiva') (TSXV: NDVA), the leading Canadian producer of cannabis edibles and other cannabis products, is pleased to announce its financial and operating results for the first fiscal quarter ended March 31, 2023.
Indiva's financial statements are prepared in accordance with International Financial Reporting Standards ('IFRS').
'We are pleased to report record gross profit and positive adjusted EBITDA in the first quarter of 2023, and continued gross margin improvement on a sequential and year-over-year basis, as Indiva begins to realize the benefits of our investment into automation for production and processing of edible products,' said Niel Marotta, President and Chief Executive Officer of Indiva. 'We are extremely pleased as well to see the continued growth in revenue contribution and market share from Pearls by Gron gummies, which are now finally available in Alberta. Indiva remains the edibles leader in Canada, holding the #1 overall market share position in the edibles category, including in aggregate the #1 position in the gummies, chocolate, and baked goods sub-categories. Looking forward, Indiva will continue to leverage its core strengths, low-cost production platform and capability to launch and scale new products on a national basis, while leaning more heavily on in-house innovation of new products. Over time we expect our revenue mix to shift away from licensed products, as we continue to introduce new products that delight of-age cannabis consumers.'
HIGHLIGHTS
Quarterly Performance
Gross revenue in Q1 2023 was $10.4 million, representing a 0.7% sequential increase from Q4 2022, and a 6.9% increase year-over-year from Q1 2022.
Net revenue in Q1 2023 was $9.4 million, representing a 1.1% sequential increase from Q4 2022, and a 6.0% increase year-over-year from Q1 2022, driven primarily by new product introduction.
Net revenue from edible products declined to $7.3 million, down 2.6% from $7.5 million in Q4 2022 and down 14.2% from $8.5 million in the prior year period. Edible product sales represent 77.7% of net revenue in Q1 2023.
Gross profit before fair value adjustments, impairments and one-time items improved year-over-year by 20.3% and sequentially by 15.8%, to a record $3.2 million, or 33.6% of net revenue, versus 29.3% in Q4 2022 and 29.6% in Q1 2022. The improvement in gross margin percentage was due to the commissioning of automated equipment in edibles processing and packaging, as well as product mix.
In Q1 2023, Indiva sold products containing 111.9 million milligrams of cannabinoids, the active ingredient in edible products, which represents a 36.7% increase when compared to the 81.8 million milligrams in product sold in Q4 2022, and a 105.2% increase compared to 54.5 million milligrams sold in Q1 2022. The increase was a function of higher sales and a mix shift towards products with higher average cannabinoid content.
Inventory impairment charges in the quarter totaled $0.8 million. This impairment includes a write off of aged finished goods and bulk cannabis, bulk lozenges which cannot be sold due to Health Canada's recent order to halt production and sale of these products, as well as certain packaging and raw materials. The Company will continue to work to monetize any impaired inventory which remains saleable.
Operating expenses in the quarter decreased 16.7% sequentially, and 7.7% year-over-year, representing 34.3% of net revenue, versus 41.7% in Q4 2022 and 39.4% in Q1 2022. Operating expenses declined sequentially primarily due to lower marketing and sales costs.
Adjusted EBITDA improved sequentially in Q1 2023 to a profit of $0.4 million, versus a loss of $0.5 million in Q4 2022, and a loss of $ 0.4 million in Q1 2022 due to higher sales and higher gross margins as well as lower operating expenses.
Comprehensive net loss of $2.3 million included one-time gains and non-cash charges for impairment of inventory and property, plant and equipment totaling $0.9 million. Excluding these amounts, comprehensive loss declined to $1.3 million versus an adjusted loss of $2.4 million in Q4 2022 and $1.9 million in Q1 2022.
Operational Highlights for the First Quarter 2023
Indiva completed the commissioning of two key pieces of automation used in the processing and packaging of its top-selling edible brands. This is an important milestone for the Company as it allows Indiva to scale innovation and continue to drive unit costs lower.
Indiva began supplying Tilray Brands, Inc.'s ('Tilray') medical platform with Indiva products. Products are now available to Tilray medical patients including Pearls by Gron, Wana Sour Gummies, Bhang Chocolate as well as Indiva Life Double-Stuffed Sandwich Cookies.
Pearls by Gron gummies continue to gain market share in Ontario and British Columbia, quickly becoming one of the top edibles in the country.
Indiva signed a non-exclusive agreement with Valiant Distribution Cannabis, a subsidiary of Canna Cabana Inc, for the distribution of its products in the province of Saskatchewan. This agreement simplifies Indiva's path to market in Saskatchewan and substantially reduces shipping costs.
Per the Company's news release dated March 14, 2023, the Company received notification from Health Canada of its determination that certain of its lozenges have been improperly classified as an 'extract' rather than an 'edible' under applicable cannabis regulations. Health Canada requested that Indiva cease production of the lozenges, and Indiva immediately complied with such order. The lozenges subject to this determination are the Indiva Life Wild Cherry THC Lozenges and Indiva Life Lemon THC Lozenges in their 100 mg, 250 mg and 500 mg THC per package formats (the 'Products'). Prior to the launch of the Products, the Company closely considered the regulatory requirements of the legislation, including with respect to product classification, and conducted substantial research. Consistent with the legislative requirements and the Company's research, the Company classified the Products as cannabis extracts. Subsequent to quarter end, Indiva completed a right-sizing of its production team to reflect the permanent removal of lozenges from its production schedule.
About Indiva
Indiva sets the standard for quality and innovation in cannabis. As a Canadian licensed producer, Indiva produces and distributes award-winning cannabis products nationally, including Bhang Chocolate, Wana Sour Gummies, Jewels Chewable Tablets, Gron edibles, Dime Industries vape products, as well as capsules, edibles, extracts, pre-rolls and premium flower under the INDIVA, Indiva Life and Artisan Batch brands.
Contact:
Anthony Simone
Tel: 416-881-5154
Email: ir@indiva.com
INDIVA LIMITED 
