Nova Cannabis Reports Increased Revenue, Wider Losses As Sundial’s Alcanna Acquisition Gets Extended

Nova Cannabis (TSXV: NOVC) reported today its 2021 financial results, highlighting an annual revenue of $134.4 million. This is an increase from 2020’s $63.3 million.

“Once again, we delivered strong sequential and year over year sales growth for the quarter and we now have 78 stores open across Alberta, Saskatchewan and Ontario,” said CEO Darren Karasiuk. The cannabis firm has been pushing its Value Buds brand in 2021, most recently in Ontario.

However, the gross margin for the year went down to 18.5% from 32.9% last year. Further down, the company recorded an operating loss of $18.0 million compared to an operating profit of $0.1 million in the year-ago period. The decline is primarily due to a $10.2 million depreciation and a $4.1 million impairment.

This led the firm to record an annual net loss of $20.6 million, down from a net loss of $2.1 million last year. This translates to a $0.39 loss per share.

Despite the wider losses, the company ended the year with a cash balance of $10.5 million coming from a starting balance of $1.4 million. The inflow mostly came from the $37.1 million proceeds from common share issuances.

This puts the balance of the current assets at $21.1 million while current liabilities ended at $13.4 million.

The cannabis firm, in which Alcanna Inc (TSX: CLIQ) has a majority stake, also announced that the closing of Sundial Growers’ (NASDAQ: SNDL) acquisition of Alcanna is extended beyond the original target date and is now expected to close on March 30, 2022, to give time “to complete the required closing matters.”

The proposed acquisition is not without its hiccups. In December 2021, the Alcanna shareholder vote was delayed due to a lack of support. Sundial then sweetened the deal by adding a cash component for Alcanna shareholders.

After scoring approvals from shareholders, Sundial faced another hurdle by trading below the US$1.00 minimum bid, a potential precursor for being delisted in the Nasdaq exchange. The firm wasn’t able to trade above the minimum bid for 10 consecutive days by its first deadline on February 7, 2022. The exchange gave Sundial an additional 180 days to fulfill this requirement.

Sundial floated the idea of a reverse stock split to improve the trading price but it hasn’t indicated any tangible action towards that plan. The firm’s shares last traded at US$0.52 on the Nasdaq.

Nova Cannabis last traded at $2.32 on the TSX Venture, then opened today with a 15% jump.

Information for this briefing was found via Edgar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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