The Althea Group Holdings Ltd (ASX: AGH) share price is sinking lower today as the medicinal cannabis producer released its half-year results.
After opening relatively flat this morning, Althea shares are now down 7.69% to $0.30 apiece.
Althea's 1H20 results
Althea reported a 963.8% increase in revenues which increased to $1.851 million. Cost of goods sold was $787,000, up from $71,000 in the prior corresponding period (pcp).
Major expenses included $2.28 million for employee benefits, $1.82 million in marketing expenses, and $2.43 million spent on professional services. Althea reported a loss for the half-year of $8.35 million.
The company reported cash and cash equivalents of $22.36 million at 31 December 2019 and no debt. Net assets were $54.90 million at the end of 2019. Net tangible assets per ordinary security increased to 14.37 cents per security from 8.01 cents in the previous period.
During the half, Althea continued to acquire new prescribers and new patients, and also launched a highly concentrated full spectrum cannabidiol all (CBD) product.
Patients and prescribers
Althea achieved its target of 4,000 Australian patients for the half, with 4,018 patients presided Althea medicinal cannabis products in Australia as at 31 December 2019.
Despite the summer holidays, January delivered Althea's second-best month on record with 572 new patients added. Althea has now surpassed 5,000 patients in Australia. Based on data published by the Department of Health, Althea patients represent 24% of all Australian medical cannabis consumers.
At the end of 2019, 432 healthcare professionals had prescribed Althea products, a number that rose to 459 at the end of January. Patient and health care professional growth means Althea expects to achieve profitability from its Australian operations in the next 6 months.
New product launch
In October, Althea launched Althea CBD100, a highly concentrated CBD preparation. The product features a full spectrum cannabinoid profile which distinguishes it from some other products in the market which are generally 'purified' or 'isolate' CBD. Althea CBD100 has this far delivered approximately 30% in additional sales.
UK expansion
Althea launched in the UK in June 2019 and reports that the market has experienced steady growth. A total of 88 prescriptions had been received as at 29 January 2020.
While patient and prescription growth has been positive in the context of the introductory UK market, political uncertainty has impeded progress.
Following the UK election in December and subsequent certainty around Brexit, Althea is confident a period of stability in the UK will enable greater focus on domestic agenda items such as patient access to medical cannabis.
German market entry
In November, Althea signed a Memorandum of Understanding with Nimbus Health GmbH for the sale and distribution of Althea medicinal cannabis products throughout Germany. The German market is distinctive in that public health insurers normally cover the entire fee for medicinal cannabis medications, so there is no cost to patients.
Althea reports that 60,000 patients were treated in Germany with medicinal cannabis in 2018, with this number expected to rise to 1 million by 2024.
Althea and Nimbus have made an application to German authorities for approval to import the full range of Althea cannabis oil products. Approval and shipment are expected to occur in the first half of calendar 2020.
