Melodiol subsidiaries deliver $2 million revenue to group in strong start to year

Melodial subsidiaries deliver strong growth at start of 2024 for company to capitalise
Heart Health International generates $1 million in unaudited revenue during January
Mernova delivers more than $1 million in revenue to date during Q1 FY24

Special Report: Cannabis play Melodiol Global Health says strong revenue from its wholly-owned subsidiaries Health House International (HHI Australia) and Mernova is laying the foundation for stronger growth among the group.

Melodiol Global Health Limited (ASX:ME1) says its operating division Health House International (HHI) posted $1 million in unaudited revenue during January 2024, generated from HHI’s established Australian business, along with UK operations.

Meanwhile, ME1’s Canadian subsidiary Mernova Medicinal Inc (Mernova) delivered $1,003,405 in revenue to date during Q1 FY24, generated through ongoing sales of the company’s dried cannabis flower, pre-roll joints and electronic vaporiser products.

The products are sold under Mernova’s established Ritual brand into all major Canadian provinces, with ME1 saying work continues on several other ongoing sales initiatives that have the potential to considerably fast-track additional revenue growth.

ME1 says the initiatives will help the company to deliver on its stated strategy of maintaining high revenue growth across the group, with an emphasis on cost management as it targets a cash-flow breakeven position.

‘Growing sales presence in Canada’

ME1 says Mernova generated revenue of $610,751 in January and has already delivered $392,654 for February.

The strong start to the three-month period follows Mernova’s Q4 FY23 revenue of $2.13 million, which was up 15% on Q3 FY23 and 101% on PCP.

Mernova’s growth contributed to ME1 achieving a record unaudited group revenue of $21,577,431 during FY23, a 141% increase on PCP.

CEO and managing director William Lay says Mernova delivered a very strong foundation in the first month of Q1 FY24 and remains on track to continue the “very pleasing growth trajectory”.

“Mernova has continued to command a growing sales presence in Canada, which is underpinned by a leading product suite of dried cannabis flower, electronic vaporisers and pre-roll joint products that are grown and manufactured in Canada,” he says.

“This has allowed the division to become a constant contributor of pleasing revenue growth for the company in the recent quarter.”

M&A strategy proving a winner

Lay says HHI’s ongoing contribution to ME1 revenue since its acquisition further underpins the company’s strategy of leveraging strategic M&A to fast-track growth.

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 personnel are advancing multiple sales initiatives to drive sales growth across key markets, while continuing to manage operating expenditure.

“Health House has made a very valuable contribution to the company’s revenue profile in January, which based on recent sales from Mernova included now sits comfortably at over $2 million,” Lay says.

“This has created a very strong foundation for Melodiol and we intend to capitalise on our growth trajectory aggressively over the coming months, pursuing multiple opportunities to unlock value for shareholders.

“We expect that both HHI and Mernova will continue to deliver sales in their key territories, where each division has longstanding relationships with customers.”

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.