Nova Cannabis Inc. NOVC NVACF released its unaudited condensed interim consolidated financial statements for the three months ended March 31, 2022.
“The company’s Value Buds stores experienced strong sales through the first quarter of 2022, and gross margin improved sequentially from the fourth quarter of 2021,” stated Marcie Kiziak, CEO of Nova. “Those results are a direct correlation of the consolidation and rationalization in the industry, which our disruptive pricing strategy was designed to withstand. It is our commitment to continue to improve operational efficiency and discipline in managing our retail stores while selling good cannabis affordably. With the deep support and increased capital commitment from Sundial, our new majority shareholder, Nova is well positioned to extend its leadership position in Alberta, expand in Ontario, and continue our trajectory as one of Canada’s largest and fastest growing cannabis retailers by bringing best value prices to the heart of the cannabis market and encouraging greater migration from the illicit market.”
Q1 Financial & Operating Summary
- Sales of CA$49.8 million ($38.38 million), a 171% increase from the first quarter of 2021, and a 5% increase from the fourth quarter of 2021.
- For the three months ended March 31, 2022, the company recorded a net loss of CA$3.5 million compared to a CA$2.2 million net loss in the first quarter of 2021. Included in this loss was CA$1.6 million of costs that were incurred as a result of the closing of the Sundial-Alcanna transaction relating to D&O insurance, severance, accelerated share-based payment expense and legal fees.
- Gross margin of CA$9.4 million, or 19% of sales, a 95% increase from the first quarter of 2021 and an improvement as a percentage of sales from 18% for the fourth quarter of 2021.
- Operating loss before depreciation, impairment and other costs of CA$0.2 million compared to CA$0.1 million for the first quarter of 2021. Which included CA$1.6 million of costs that were incurred as a result of the closing of the Sundial-Alcanna Transaction relating to D&O insurance, severance, accelerated share-based payment expense and legal fees.
- Increased revolving credit facility from a maximum of CA$5 million to a maximum of CA$10 million.
- Cash of CA$4.9 million as at March 31, 2022.
- Nova appointed Marcie Kiziak as its chief executive officer on March 31, 2022.
Sundial Acquistion Of Alcanna
On October 7, 2021, Sundial Growers Inc. SNDL entered into an arrangement agreement, as amended, to acquire all of the issued and outstanding common shares of Alcanna Inc., Nova’s majority shareholder (the “Sundial-Alcanna Transaction”).
On March 31, 2022, Alcanna and Sundial completed the Sundial-Alcanna transaction, and Sundial indirectly acquired an approximately 63% ownership interest in Nova, as Alcanna was the registered holder of 35,750,000 Nova common shares on March 31, 2022. Sundial is now Nova’s majority shareholder.