Irwin Naturals Inc. (CSE: IWIN | OTC: IWINF | FRA: 97X) announced the Company filed results for its third quarter of fiscal 2022, the period ended September 30, 2022 on www.sedar.com.
“Despite cost pressures continuing through the quarter, we were able to grow our Gross Margins by +4.8% over Q3 2021. The Gross Margin increase can be attributed to sales mix coupled with the early success of a targeted price increase across the market. In addition, we were still able to maintain positive Operating Profits despite the additions in the cost base to support the early phases of the Emergence and Licensing businesses.”
Sean Sand, CFO
Mr. Sand continued, “Our balance remains strong, and have access to considerable working capital to fund our accelerated growth plans. To date we have closed or announced agreements to acquire entities or assets amounting to 18 clinics and anticipate several more closing as we exit 2022 and in the coming quarters. In addition, we are continuing our rollout of our licensing deals, which now sees us in six states and in Canada.”
Klee Irwin, CEO, commented, “In Q3, Irwin Naturals moved close to becoming the world’s largest chain of dedicated psychedelic mental health clinics. In addition, we are rapidly on our way to doubling our profits from last year on an annualized basis based on potential acquisitions in the psychedelic mental. The mental healthcare industry is a 1.5 trillion dollar behemoth in desperate need of a disruptive sea change. With standard treatments having an average effectiveness of approximately 17%, the drastic improvements of results from psychedelic treatments is that sea change. We currently have no meaningful competitors in our rearview mirror and intend to be the world’s first chain of clinics in this sector to exceed 100 locations.”
- The 7% decline in overall operating revenues were due largely to supply issues in the CBD segment, related to a reduction in supply at a key supplier. The decline, though still down from prior year, is recovering quarter over quarter. Production of CBD products has restarted at the Company’s manufacturer. Other factors impacting sales related to order timing and the loss of distribution of certain non-CBD mass market products.
- Income from operations in Q3 2022 came in at $0.6 million, as compared to $1.2M million for the same period in the prior year. The reduction in income was driven primarily by the aforementioned decrease in business volume and startup costs related to Emergence by Irwin Naturals (ketamine clinics) and Irwin Naturals Cannabis (intellectual property licensing to the cannabis industry).
- The overall decrease in business volume paired with startup costs related to the Company’s initiatives in cannabis and the aforementioned startup costs, resulted in a decrease in Adjusted EBITDA1 to $0.5 million.
1EBITDA is a non IFRS metric that management believes provides a metric for rapid analysis of the underlying strength of the business. A reconciliation from IFRS to EBITDA is provided in the accompanying table above and at the end of this release.
- Cash provided by operating activities by Irwin were $3.6 million and $14.6 million for the nine months ended September 30, 2022 and 2021, respectively. The decrease in operating cash flows is primarily due to lower operating revenue and temporary unfavourability to working capital led by the timing of payments to the Company’s primary product manufacturer couple with increased cash related to Emergence startup costs.
Operational Highlights & Subsequent Events
Irwin Naturals is executing on an aggressive expansion strategy into the high-growth cannabis and psychedelics sectors. The Company intends to leverage its household name brand status to drive an aggressive rollup of mental health clinics (the Company is focused on ketamine clinics, as this is currently the only FDA-approved and/or regulated psychedelic substance). Furthermore, the Company has begun executing on its brand licensing strategy throughout the US. To date, the Company has announced agreements to acquire entities or assets; or completed the acquisition of such entities or assets amounting to 17 clinics, as well as the signing of seven brand licensing deals that will see Irwin Naturals products enhanced with THC be offered in California, Colorado, New Mexico, Mississippi, Ohio, Michigan and Canada.
| State | Clinic Acquisitions |
| Florida | Ketamine Health Centers (5 clinics)
Florida Mind Health (3 clinics)
Dura Medical (1 clinic) |
| Iowa | Midwest Ketafusion |
| New Hampshire | New England Ketamine |
| Mexico | Ketamine Health Centers |
| Vermont | Preventive Medicine |
| Georgia | Invictus Clinics (2 clinics) |
| Washington | Tri-Cities Infusion |
| Idaho | Ketamine Infusions of Idaho |
| Ohio | Happier You |
| Kentucky | Serenity Health |
| State | Brand License Recipients |
| California | The Hive Laboratory, LLC |
| Colorado | Larsen Group II, LLC |
| Ohio | BeneLeaves, Ltd |
| New Mexico | Assurance Laboratories, LLC |
| Canada | Entourage Health Corp. |
| Mississippi | Mockingbird Cannabis, LLC |
| Michigan | 42 Degrees Processing, LLC |
About Irwin Naturals
Irwin Naturals has been a household name and best-in-class nutraceutical company since 1994. It is now leveraging its brand into both the cannabis and psychedelic sectors. On a mission to heal the world with plant medicine, Irwin has operated profitably for over 27 years1. The growing portfolio of products is available in more than 100,000 retail doors across North America, where 80% of households know the Irwin Naturals brand2. In 2018, the Company first leveraged its brand to expand into the cannabis industry by launching hemp-based CBD products into the mass market. The Company is now leveraging its famous halo of brand trust to become, perhaps, the first household name brand to offer THC-based products. Its rapidly growing national chain of psychedelic mental health clinics is called Irwin Naturals Emergence.