Cronos Australia just announced a 1100pc increase in revenue to ~$27.37 million in H1 FY22 and delivered a ~$3.37m net profit
Health & Biotech
Health & Biotech
With a share price that has risen ~65% in the past year, a recent merger with CDA Health and turning a strong profit, Cronos is leading its ASX peers.
Medicinal cannabis company Cronos Australia (ASX:CAU) has reported a massive 1100% increase in total revenue to $27.37 million for H1 FY22 on the previous corresponding period (pcp) which delivered a net profit after tax (NPAT) of ~$3.37 million.
Cronos was incorporated in Victoria just four years ago and listed on the ASX in November 2019, since becoming a leading medicinal cannabis player on the local bourse and a rare one as the only pure play ASX listed medicinal cannabis company to turn a profit.
The Cronos stock price has been rising since announcing a merger with unlisted CDA Health in December 2021.
The merger brings together the two companies, including BHC’s online CanView platform, CDA Clinics, Adaya product range and Cannadoc Clinics. The Executive Team, which is now focussed on leveraging synergies from both businesses and driving growth is made up of executives from the two companies.
Cronos CEO Rodney Cocks told Stockhead the merger had been significant on several levels.
“The merger of Cronos Australia and CDA Health has been a game-changer for our shareholders and, moving forward, we have the team and the operations to execute on our growth strategy to deliver shareholder value,” Cocks said.
Cocks said its 1H FY22 results have been driven by sales of medicinal products through the online CanView platform, which is part of CDA subsidiary Burleigh Heads Cannabis (BHC). CanView allows users to access, prescribe and order from the widest range of medical cannabis products – all from one streamlined, compliant and free-to-use online platform.
CanView delivered significant growth during the half-year, well exceeding its internal forecasts. During the period BHC sold more than 190,000 medical cannabis units, of which 37,000 were sold in December 2021 alone.
BHC executed seven new agreements with leading suppliers of medicinal cannabis products during H1 FY22, adding an additional 35 unique product SKUs to the CanView online platform.
BHC, via CanView, now offers a portfolio of more than 130 discrete medicinal cannabis products for the treatment of patients and for wholesale direct to a growing number of pharmacies Australia-wide.
A total of 492 new pharmacy purchasing accounts were established on CanView during H1 FY22, bringing the total number to 2,433 registered accounts nationally.
There were 150 new doctor accounts also established during the period, increasing the total number of doctors registered on CanView to 649 nationally.
To manage increasing sales, BHC expanded its Gold Coast distribution centre to provide additional space for order processing and fulfilment, and recruited more staff to the distribution team.
Cronos has just leased additional premises in Melbourne for a distribution centre to warehouse and distribute medicinal cannabis products to further expand the group’s national sales and distribution footprint.
“CanView can be accessed online by patients, doctors andpharmacists to access, prescribe and order a wide range of medicinal cannabis products and we have seen a huge uptake of the platform with its functionality and ease of use” Cocks said.
“We are continuing to see solid growth on CanView and we are continuing to grow our medicinal cannabis clinic revenue through our two clinic brands; CDA Clinics and Cannadoc.”
Cocks said disruptions and lockdowns from the COVID-19 pandemic during H1 FY22 meant consultations were largely conducted over telehealth, with additional doctors recruited to meet the needs of the growing patient base.
Work is underway to integrate the group’s two medicinal cannabis clinic businesses to create operational efficiencies and cost savings, while at the same time retaining the brand identities of each.
Cronos’s growth has been predominantly in Australia as the sector matures and becomes an international market leader with support from regulators. Last year, Australia’s Therapeutic Goods Administration down-scheduled CBD as schedule 3 over-the-counter products, rather than schedule 4 prescription only products
The TGA also increased the allowable dose from 60mg to 150mg of cannabidiol (CBD) to be sold in pharmacies without a prescription if they’ve been included on the Australian Register of Therapeutic Goods.
However, following the successful merger with CDA Health the company is now looking at strategic growth opportunities both in Australia and globally.
The company’s focus is on the expansion of the current scope, scale and sophistication of its operations, while assessing expansion into markets where success in Australia can be leveraged.
In addition to driving internal, organic growth, Cocks said Cronos continues to review and evaluate potential inorganic opportunities for the acquisition of complementary businesses and assets that would create shareholder value.
“We look forward to updating the market on the synergies from the successful integration of the two businesses, growth in scope and scale of the operations and executing on our ambitious growth plans in Australia and abroad.”
In terms of market cap at ~$184m Cronos is only second to cannabinoid biotech company Incannex Healthcare (ASX:IHL) at ~$677m on the ASX cannabis stocks ladder board.
Incannex focuses on developing medicinal cannabinoid pharmaceutical products and psychedelic medicine therapies for a range of conditions.
Cocks said Cronos Australia is a downstream player in the cannabis value chain with a focus on patients, doctors, pharmacists, products, distribution and clinics.
“We are focused on delivering clinical outcomes for the patient and supporting health care professionals with our tech enabled asset light operating model and believe that creates value for our shareholders,” he said.
Cocks said its half year results strongly reinforce the strategic case for Cronos Australia’s merger with CDA Health.
“We are very proud to be releasing our half year results to the market, with net profits in excess of $3.37m, 1100%+ increase in revenues to $27.37m and stable margins – making Cronos Australia the only profitable pure-play cannabis company on the ASX,” he said.
This article was developed in collaboration with Cronos Australia, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.