Entourage Health Corp. (TSX-V:ENTG) (OTCQX:ETRGF) (FSE:4WE) (“Entourage” or the “Company”), a Canadian producer and distributor of award-winning cannabis products, announced today its financial results for the three and six months ended June 30, 2022. The Company reported second quarter 2022 total revenue of $13.2 million and net revenue of $9.7 million, a slight total revenue decrease of 5.0% and net revenue decrease of 9.0% year over year from Q2 2021. The Company will host a conference call to discuss its financial and business highlights for the period on August 30, 2022 at 10 a.m. Eastern Time.

“Over the second quarter we noted steady 12% retail sales growth⁽¹⁾ over prior year, consistent with growing demand as we launched new premium cultivar Space Cake, as well as increased pre-roll sales which attributed to Entourage garnering 6.0% and about 5.0% of the respective market share in the premium⁽¹⁾ and pre-rolls⁽²⁾ segments, even as we contended with a temporary product shortfall of some of our prized cultivars,” said George Scorsis, CEO and Executive Chair, Entourage. “In the quarter, we undertook key upgrades to our greenhouse facility to bring more premium products to market over the coming months. We also made significant strides to improve our capital structure, debt and liquidity position during the period. Additionally, with the recent $8.9 million in additional funding capacity from a LiUNA Pension Fund affiliate, we settled the repayment of our unsecured convertible debentures and obtained extensions to our secured credit facilities’ maturity dates for increased financial flexibility.”

Summary of Results

*Adjusted EBITDA is not a recognized measurement under International Financial Reporting Standards (“IFRS”) and this data may not be comparable to data presented by other companies. Management defines Adjusted EBITDA as EBITDA adjusted to exclude interest, tax, and depreciation, stock compensation, fair value changes and other non-cash items, and non-recurring items. This data is furnished to provide additional information and does not have any standardized meaning prescribed by IFRS. The Company uses this non-IFRS measure to provide shareholders and others with supplemental measures of its operating performance. The Company also believes that securities analysts, investors and other interested parties, frequently use this non-IFRS measure in the evaluation of companies, many of which present similar metrics when reporting their results. As other companies may calculate Adjusted EBITDA differently than the Company, this metric may not be comparable to similarly titled measures reported by other companies. We caution readers that Adjusted EBITDA should not be substituted for determining net loss as an indicator of operating results, or as a substitute for cash flows from operating and investing activities. See the Company’s management’s discussion and analysis for the three and six months ended June 30, 2022 (the “Q2 2022 MD&A”) for a detailed reconciliation of Adjusted EBITDA to Net Income / (Loss). The Company’s financial statements for the three and six months ended June 30, 2022 and the Q2 2022 MD&A are available on SEDAR at www.sedar.com

“In Q2, we noted a 24% increase in sales revenue of our higher-margin medical products over the previous year, due in part to our customer-patient acquisition initiatives and digital marketing efforts - all while continuing to focus on operational improvements to reduce our long-term costs,” said Vaani Maharaj, CFO, Entourage. “While our cultivation underwent a recalibration and remediation in the quarter as we upgraded our operations while transitioning into premium flower offerings, we fully expect to realize the full benefits of our transformation and continuous improvement initiatives as we implement further drivers to ensure disciplined cash and inventory management.”

Revenue Highlights   

Second Quarter 2022 Financial Highlights

• For the quarter ended June 30, 2022, Entourage recorded total revenue of $13.2 million, and net revenue of $9.7 million compared to $13.8 million and $10.6 million for the quarter ended June 30, 2021, a 5.0% and 9.0% year-over-year decline. The decrease was driven by a decline in adult use net revenue, mainly due to the temporary unavailability of the company’s proprietary cultivars which reduced the case fill rate for adult use products, slightly offset by growth in medical revenue of $0.8 million or 24% over prior year.
  
  
• Gross profit (loss) before changes in fair value decreased by $2.6 million, or -85% in Q2 2022, over Q2, 2021 and gross margin before changes in fair value of 5.0% in Q2 2022 compared to 22% for Q1 2022 and 29.4% in Q2 2021. The decrease over the prior periods was a result of higher costs to produce while cultivation remediation and operational upgrades were finalized in the period.
  
  
• The weighted average cost per gram from clone to harvest of plants on hand was $0.56 in Q2 2022 compared to $0.52 in Q1 2022 and $0.46 in Q2 2021. Weighted average cost per gram of inventory on hand increased to $0.79 in Q2 2022 compared to $0.51 in Q1, 2022, and $0.50 in Q2, 2021 mainly due to increased cost of operations while cultivation remediation and operational upgrades were finalized in the period.
  
  
• Selling, General & Administrative expenses for Q2 2022 was $7.8 million, compared to $6.7 million in Q1 2022 and $10.4 million in Q2 2021. The decrease over prior year was partly driven by decreased consulting fees, office & administrative expenses, salaries and benefits, research and development and partially offset by increase in selling marketing and promotional expenses and professional fees.
  
  
• Adjusted EBITDA increased by 27% to ($2.4) million in Q2 2022, compared with ($3.3 million) in Q2 2021, an improvement of $876,139, also primarily driven by strategic transformation initiatives mainly due to reduction in expenses due to operational efficiencies.

Corporate Highlights During and Subsequent to Second Quarter 2022

• The Company announced the following appointments: Vaani Maharaj as CFO in April 2022; and Vincent Doré to Chief Legal Officer and Corporate Secretary in August 2022.
  
  
• In April 2022, Entourage announced the further upsizing of its existing credit facility with an affiliate of LiUNA Pension Fund of Central and Eastern Canada with an additional $15 million in funding availability and further upsized with an additional $8.9 million in June, 2022. This non-dilutive funding will be used for general working purposes to drive further commercial growth, and for repayment of the Company’s unsecured convertible debentures which matured on June 30, 2022.
  
  
• In May 2022, Entourage announced it had entered into an agreement with Pineapple Express – a wholly owned subsidiary of Fire & Flower Holdings Corp. – to launch same-day/next-day medical cannabis delivery services to the Company’s Starseed Medicinal patients.
  
  
• Also in May 2022, the Company entered into voting support agreements with certain holders of its 8.5% unsecured convertible debentures, and following debentureholders’ approval in June 2022, announced the subsequent implementation of the proposed amendments.
  
  
• Later in May, Entourage announced the Canadian debut of The Boston Beer Company’s (BBC) new cannabis-infused iced tea beverages ‘TeaPot’. Entourage is the exclusive distributor of TeaPot to local retailers in Canada. Launched in select provinces as of July 2022, TeaPot is the first non-alcoholic, infused beverage crafted in partnership with Boston Beer’s cannabis subsidiary BBCCC Inc., and Peak Processing, its bottling partner.
  
  
• At its annual general and special meeting of shareholders held in June 2022, shareholders overwhelmingly approved all proposed resolutions and director nominees including: George Scorsis, Gail Paech, Lu Cacioppo, Bruce Croxon and Jason Alexander with a combined 99.18% approval rating.
  
  
• In June 2022, the Company announced amendments to its senior secured and second secured credit facilities’ maturity dates, extending the terms respectively to June 30, 2024 and December 31, 2024.
  
  
• In July 2022, Entourage announced debentureholders approved certain amendments to the outstanding 9.0% unsecured convertible debentures of the Company’s subsidiary CannTx Life Sciences Inc.
  
  
• Later in July, Entourage announced the expansion of its medical offerings with the launch of new services, signing with HelloMD, a telehealth network to support high volume of patient consultations. The Company also debuted its customized, first-of-its-kind digital Patient Treatment Plan for registered patients looking for tailored products along with dosing guidelines.
  
  
• In August 2022, Entourage announced it entered into an exclusive licensing agreement with U.S.-based Irwin Naturals, a renowned nutraceuticals and herbal supplement formulator. Under the agreement, Entourage will produce and distribute Irwin Naturals Cannabis products in Canada. The first line of products are expected to be available to Starseed Medicinal patients in Q4 2022 with eventual expansion into adult-use retail stores. The strategic partnership follows recent release of recommendations for easing access to over-the-counter CBD products in Canadian pharmacies.

Conference Call Details:

A conference call will be hosted by Mr. Scorsis and Ms. Maharaj, with management available for questions following opening remarks as follows:

Visit Entourage’s website here to access the latest Company updates.

About Entourage Health Corp.

Entourage Health Corp. is the publicly traded parent Company of Entourage Brands Corp. (formerly WeedMD RX Inc.) and CannTx Life Sciences Inc., licence holders producing and distributing cannabis products for both the medical and adult-use markets. The Company owns and operates a state-of-the-art hybrid greenhouse and processing facility located on 158-acres in Strathroy, ON; a fully licensed 26,000 sq. ft. Aylmer, ON processing facility, specializing in cannabis extraction; and a micropropagation, tissue culture and genetics centre-of-excellence in Guelph, Ontario. With its Starseed Medicinal medical-centric brand, Entourage has expanded its multi-channeled distribution strategy. Starseed’s industry-first, exclusive partnership with LiUNA, the largest construction union in Canada, along with employers and union groups complements Entourage’s direct sales to medical patients. Entourage’s elite adult-use product portfolio includes Color Cannabis, Saturday Cannabis and Royal City Cannabis Co.– sold across eight provincial distribution agencies. The Company also maintains strategic relationships in the seniors’ market and supply agreements with Shoppers Drug Mart. It is the exclusive Canadian producer and distributor of award-winning U.S.-based wellness brand Mary’s Medicinals sold in both medical and adult-use channels. Under a collaboration with The Boston Beer Company subsidiary, Entourage is also the exclusive distributor of cannabis-infused beverages ‘TeaPot’ in Canada, which launched in summer 2022, starting in select provinces.

For more information, please visit us at www.entouragehealthcorp.com

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For further information, investor or media inquiries, please contact:

Marianella delaBarrera
SVP, Communications & Corporate Affairs
416-897-6644
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(1)   Source data: HiFyre Retail Data, three and six months ending June 30, 2022
(2)   Source data: Buddi Retail Data, three and six months ending June 30, 2022

Forward Looking Information This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation which are based upon Entourage's current internal expectations, estimates, projections, assumptions and beliefs and views of future events. Forward-looking information can be identified by the use of forward-looking terminology such as "expect", "likely", "may", "will", "should", "intend", "anticipate", "potential", "proposed", "estimate" and other similar words, including negative and grammatical variations thereof, or statements that certain events or conditions "may", "would" or "will" happen, or by discussions of strategy.

The forward-looking information in this news release is based upon the expectations, estimates, projections, assumptions and views of future events which management believes to be reasonable in the circumstances. Forward-looking information includes estimates, plans, expectations, opinions, forecasts, projections, targets, guidance or other statements that are not statements of fact. Forward-looking information necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; loss of markets; future legislative and regulatory developments; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the cannabis industry in Canada generally; the ability of Entourage to implement its business strategies; the COVID-19 pandemic; competition; crop failure; and other risks.

Any forward-looking information speaks only as of the date on which it is made, and, except as required by law, Entourage does not undertake any obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for Entourage to predict all such factors. When considering this forward-looking information, readers should keep in mind the risk factors and other cautionary statements in Entourage’s disclosure documents filed with the applicable Canadian securities regulatory authorities on SEDAR at www.sedar.com. The risk factors and other factors noted in the disclosure documents could cause actual events or results to differ materially from those described in any forward-looking information.