• Melodiol’s subsidiary, Health House International generates quarterly net profit of +$300k from Aussie operations
  • Profit result generated from unaudited Q3 FY23 revenues of almost $3 million in first full quarter of operations post-acquisition
  • Additional contribution forecast from HHI’s UK operations, which will be finalised and reported in October

 

Melodiol Global Health’s wholly-owned subsidiary Health House International (HHI) has delivering an unaudited net profit of $312,548 from Australian operations in the September quarter.

In its first full quarter of integrated operations for HHI within Melodiol Global Health (ASX:ME1), preliminary figures for Q3 FY23 show that HHI Australia generated sales of $2,998,365.

HHI achieved consistent monthly sales of ~$1 million per month, peaking in August at $1,064,494.

Adjusted for cost of goods sold (COGS) and operating expenses, HHI Australia was also profitable with quarterly net profit before tax of $312,548, representing a net-profit-to-sales margin of 10.4%.

HHI, which was previously listed on the ASX prior to its acquisition by ME1 in May 2023, specialises in the distribution of medicinal cannabis products in Australia and other international markets.

HHI also has a strong R&D footprint, highlighted by key recent developments in the Australian division which has lodged applications for state licence amendments to import and distribute medicines containing psilocybin and MDMA, for either clinical trial purposes or certain mental health conditions under authorised psychiatrists.

The company is working to establish commercial pathways for medicines containing psilocybin and MDMA  following the TGA’s decision from July 1, 2023 to allow such treatments to be available via prescription by specifically authorised psychiatrists for treatment of certain medical conditions.

 

Strong sales in Queensland and Victoria

 ME1 says the Q3 result confirms the strong traction HHI Australia has established as a leading distributor of medicinal cannabis products through a diversified network of pharmacy customers.

The company’s national sales footprint was highlighted by strong  momentum in Victoria and Queensland,  which collectively accounted for ~50% of total revenues during the quarter.

Strong momentum was also observed in Western Australia with ~20% and New South Wales ~15% during the quarter.

HHI’s broader contribution to MEI’s unaudited group revenues and net earnings is forecast to be further bolstered by the inclusion of quarterly financial data for the company’s UK operations, which will be finalised and reported in October.

 

Growing portfolio of subsidiaries

ME1 says the quarterly net profit figure achieved by HHI Australia is reflective of the value-accretive credentials that were identified by its management team when the decision was made to acquire the business.

Combined with the recent momentum across the group, ME1 is focused on converting sales growth into net profits across its growing portfolio of operating subsidiaries.

ME1 has built a diverse portfolio of plant-based brands in high growth market segments and geographies including:

  • Mernova: – a licensed producer of cannabis products in Canada for sale under the Ritual brand banner.
  • Health House International – leading distributor of medical cannabis to the Australian market
  • Sierra Sage Herbs – US based developer of plant based first aid and beauty and personal care brands Green Goo, Southern Butter, and Good Goo.
  • impactive – CBD topical products for athletes.
  • Halucenex Life Sciences – Clinical stage psychedelics research and development operation.
  • Creso Pharma Switzerland – CBD related research, development, and commercialization.

ME1 last week announced Halucenex has achieved encouraging results in its Phase II clinical trial to test the efficacy of psilocybin on treatment-resistant Post Traumatic Stress Disorder (PTSD).

CEO William Lay says the company welcomed the unaudited results for HHI Australia following the business’s first full quarter of operations as an integrated division of ME1.

“As previously communicated to market, it’s a strategic priority of Melodiol to generate growth through strategic M&A and the acquisition of HHI marks successful execution in that regard,” he says.

“Due diligence during the acquisition process left the Melodiol board and management team confident that HHI was positioned to make an immediate and material contribution to group revenues and net earnings, and these results confirm that view.”

“We look forward to reporting on further growth going forward, as HHI continues to leverage its established position as a leading distributor of medicinal cannabis products in Australia and the UK.”

 

This article was developed in collaboration with Melodiol Global Health, 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.

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