The Althea Group Holdings Ltd (ASX: AGH) share price is up 5.25% today and up 21.25% over the past four days, as the nano-cap grabs the attention of ASX investors again.
Althea is an ASX cannabis share. The company is focused on the manufacturing, sales, and distribution of cannabis-based medicines and recreational products around the world.
The share price jump follows Althea announcing a record result in its quarterly activities and cash flow report.
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Althea share price rockets on record sales result
The company reported the following results for the three months to 30 June:
- Record quarter with $6.5 million in receipts, up 130% on the previous corresponding period (pcp)
- Net cash used for operating activities decreased by 50% during the quarter
- $22 million in receipts for FY22, up 113% on FY21
- $6.6 million cash on hand and no debt
In its statement, Althea said the FY22 result was achieved despite "serious macro headwinds throughout the year". This included prolonged COVID-19 restrictions — which prevented the sales team from calling on doctors — related staff impacts, and the floods in Queensland and northern NSW.
What happened in the June quarter?
Althea has two business divisions — recreational cannabis (through the wholly-owned subsidiary company Peak Processing Solutions) and pharmaceutical cannabis (Althea).
In June, the recreational division achieved a record $3.6 million in receipts. The global medicines-based pharma business bought in $2.9 million.
Althea said increased sales and strict cost controls led to a 50% reduction in the net cash used for operating activities during the quarter. Costs went down to an all-time low of $1.1 million.
What did management say?
Althea CEO Joshua Fegan said:
Both the quarterly and FY2022 results were the best yet for AGH. [..]. we are very pleased to now be approaching a cash flow positive position.
Peak is proving to be one of the most promising recreational cannabis businesses in North America, quickly establishing itself as the leading supplier of cannabis beverages in Canada within a year of commencing operations.
Althea managed to grow in all territories despite sub-optimal trading conditions over the last 12 months, with our sales team's access to doctors limited due to COVID-19 restrictions, impacting sales.
Althea continues to see very strong underlying demand for its cannabis-based medicines and aims this financial year to return to pre COVID-19 growth rates.
What's next for Althea?
Althea has a range of new products set for launch during the first quarter of FY23.
The company anticipates a "significantly higher level of sales activity across all territories in FY2023
as market access returns to pre-COVID-19 levels".
Althea has been investing in purchasing stock to ensure it can supply any increase in sales orders.
Althea is scaling its operations in the United Kingdom and Germany. It received product approval in Ireland in May.
The company is also cutting costs. It is currently finalising its annual review of operating expenditure and has identified approximately $1 million in annualised savings, mainly from corporate overheads.
Althea said these cost savings would be implemented in the current quarter.
The Althea share price has fallen 71% over the past 12 months. This compares with an 11% fall in the S&P/ASX All Ordinaries Index (ASX: XAO).
