Key points
- Althea delivered a record performance during the second quarter
- Strong demand for pharmaceutical cannabis helped drive its growth
- Althea is still burning through its cash despite its sales growth
The Althea Group Holdings Ltd (ASX: AGH) share price is smoking the market on Thursday.
In late afternoon trade, the cannabis company's shares are up 12% to 23.5 cents.
Why is the Althea share price shooting higher today?
Investors have been bidding the Althea share price higher today following the release of a trading update.
According to the release, Althea recorded its best quarter ever with $5.5 million in receipts from customers for the three months ended 31 December. This was an increase of 107% from the prior corresponding period and an increase of 21% on the prior quarter.
A key driver of this growth was the company's pharmaceutical cannabis business. Its cash receipts totalled $2.8 million during the quarter, including a record $1.2 million for the month of December.
This means that receipts from customers for the first half of FY 2022 have reached a record of $9.9 million.
Another positive that could be lifting the Althea share price was a reduction in its expenditures. Management advised that its expenditure decreased by $354,000 during the quarter. This follows the completion of its previously announced business review.
However, this wasn't enough to stop Althea from burning through $2.5 million of cash during the quarter. This led to the company's cash balance falling from $12.735 million to $10.254 million.
Management commentary
Althea's CEO, Joshua Fegan, said:
Althea achieved a record $1.2 million in receipts from customers from pharmaceutical cannabis sales for the month of December 2021 – an increase of 56% from the prior month – as the business rebounded following the easing of various COVID-19 restrictions in place in Sydney and Melbourne, during the Reporting Period. Moving forward, we expect a stronger growth trajectory as more and more COVID-19 restrictions are removed, and patients return to visit their doctors as normal.
Peak continues to prosper as it cements itself as one of the leading manufacturers of recreational cannabis products in Canada. The achievement of the positive EBITDA milestone from its operations in the Canadian adult-use cannabis market is remarkable and somewhat unique to the sector, with the Company expecting to see fantastic results from the business in the months and years ahead, as it continues to forge greater market share across multiple product categories and foster strong brand partner relationships.
Despite today's strong gain, the Althea share price is down about 50% over the past 12 months.
