Entourage Health Reports First Quarter 2024 Financial Results: Achieves $16.4 Million in Total Revenue and Marks First EBITDA-Positive Quarter

• Total revenue of $16.4 million represents a 9% increase year-over-year and a 23% sequential increase from Q4 2023.
• Gross profit before fair value changes improved by 92% year-over-year, leading to a record gross margin of 45%. This achievement reflects the successful execution of last year's transformation plans.
• EBITDA improved by $4.4 million, marking the Company's first positive quarter and resulting in a 114% year-over-year improvement.**
• Adult-use revenue reported a 10% increase year-over-year, highlighting expanding market share.
• Management will host a conference call on May 28, 2024, at 10 a.m. Eastern Time.
  

TORONTO, May 28, 2024 (GLOBE NEWSWIRE) -- Entourage Health Corp. (TSX-V: ENTG) (OTCQX: ETRGF) (FSE:4WE) ("Entourage" or the "Company"), a Canadian producer and distributor of award-winning cannabis products, today announced its financial results for the three months ended March 31, 2024. The Company reported total revenue of $16.4 million (net revenue of $12.7 million, before excise duties and discounts), up 9% year-over-year. The Company will host a conference call to discuss its financial and business highlights on Tuesday, May 28, 2024, at 10:00 a.m. Eastern Time.

"Entourage's first quarter results are a testament to our robust financial health and strategic approach to business operations, positioning us for success throughout 2024," said George Scorsis, Chair and CEO. "With defined infrastructure and supply agreements in place, we are well-positioned to continue delivering the accelerated growth we have already seen develop in Q1. Our team's relentless focus on efficient execution has led to a solid performance, reflected in improved profitability and a significant increase in EBITDA, marking the first positive quarter. We are also seeing substantial growth in our adult-use business as we continue to announce and launch a range of innovative products across Canada set to generate ongoing interest and excitement among consumers."

Summary of Results

^{*Net revenue defined as revenue (i.e., gross revenue less discounts and customer incentives but inclusive of freight) less excise taxes
** 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 EBITDA as adjusted to exclude interest, tax, 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 evaluating companies, many of which present similar metrics when reporting their results. As other companies may calculate EBITDA differently than the Company, this metric may not be comparable to similarly titled measures reported by other companies. We caution readers that 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 management's discussion and analysis for the three months ended March 31, 2024 (the "Q1 2024 MD&A"), for a detailed reconciliation of adjusted EBITDA to net income/(loss). The Company's financial statements for the three months ended March 31, 2024, and the Q1 2024 MD&A are available on SEDAR+ at www.sedarplus.ca.}

"Entourage delivered significant growth in the first quarter of 2024, driven by increased revenues and robust operating discipline, resulting in an impressive 92% increase in gross profit," said Vaani Maharaj, CFO. "Entourage is now perfectly positioned to seize a broad spectrum of opportunities, driving value through significant revenue growth, enhanced operating efficiencies, and improved margins. We are committed to investing in our future and accelerating our vision for the Company, setting a powerful foundation for the rest of the year."

Revenue Highlights

Financial Highlights

• For the quarter that ended March 31, 2024, Entourage recorded total revenue of $16.4 million compared to $15.1 million the previous year, a 9% increase, and a 23% increase from Q4 2023.
  
• Gross profit before changes in fair value was $5.8 million for Q1 2024, representing a $2.8 million increase compared to Q1 2023. This significant improvement is attributed to the cessation of cultivation activities and the closure of underperforming business units.
  
• Gross margins were 45% in Q1 2024, compared to 25% in Q1 2023. This improvement resulted from several factors, including increased production automation, lower biomass costs, improved freight management, and packaging optimizations.
  
• Cost of Goods Sold (COGS) declined by $1.9 million or 22% compared to Q1 2023. This reduction reflects the organization's commitment to cost management and operational excellence, as outlined in the Company's transformation plans.
  
• EBITDA increased by $4.4 million to $0.5 million in Q1 2024, a significant turnaround from ($3.9 million) in Q1 2023.** This 114% improvement highlights the success of the Company's strategic transformation initiatives to lower costs and a shift to a higher-margin product mix. 

Corporate Highlights During and After the First Quarter of 2024

• On April 30, 2024, the Company announced it was in breach of certain financial covenants and other obligations under each of its Senior Credit Agreement and Subordinated Credit agreements with an affiliate of the LiUNA Pension Fund of Central and Eastern Canada ("LPF") and was working collaboratively with LPF to reach an agreement on amended debt terms. Consequently, the Company received a renewed forbearance letter on May 3, 2024, waiving the Company's breaches until August 2, 2024, subject to the satisfaction or waiver of certain conditions.
• In Q1 2024, Entourage increased production capacity to nearly 2.2 million pre-rolls per month.

Commercial Highlights

• Entourage continues demonstrating its market strength and consumer appeal with a 10% year-over-year increase in adult-use revenue. This impressive growth reflects the Company's strategic initiatives and ability to adapt to the evolving market landscape.
• In Q1 2024, the Company's Dime Bag brand in Ontario was the 3rd fastest-growing pre-roll brand. Additionally, Dime Bag launched in Alberta, with plans for a nationwide rollout throughout 2024.
• In Q1 2024, 80% of stores in Ontario, Alberta, and British Columbia continued carrying at least one Entourage SKU, maintaining a strong presence from the previous year. Furthermore, 50% of these stores featured four or more Company SKUs.
  
• In Q1 2024, Entourage's national pre-roll market share was 2%. Color Cannabis also ranked 12th highest pre-roll brand in national dollar sales. It secured the number 2 spot in the pre-roll category in British Columbia, the second-largest revenue-generating market in Canada after Ontario.
  
• The Company launched 11 new adult-use SKUs in Q1 2024, enhancing its product lineup across key markets. These SKUs included Color Cannabis "Pedro's Sweet Sativa" and "Blueberry Seagal Live Resin Infused" pre-rolls in Ontario, and "Phantom Sunset" whole flower in Alberta.
  
• Additionally, Saturday unveiled "Passionfruit Lavender" and "Beached Mango" in 1 g 510 vape carts in Ontario, further diversifying offerings and catering to consumer demand.
  
• Starseed consistently broadens its product portfolio available to medical cannabis patients. This portfolio includes the introduction of new strains, advanced delivery methods, and specialized formulations, all designed to meet the diverse needs of the medical cannabis community.
  

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

Source data: Buddi Retail Data, as of March 31, 2024.

About Entourage Health Corp. 

Entourage Health Corp. is the publicly traded parent Company of Entourage Brands Corp., a licence holder producing and distributing cannabis products for the medical and adult-use markets. The Company owns and operates a fully licensed 26,000 sq. ft. Aylmer, ON processing facility. With its Starseed Medicinal medical-centric brand, Entourage has expanded its multi-channelled 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 now Dime Bag and Syndicate ? sold across eight provincial distribution agencies. Exclusive Canadian producer and distributor of award-winning U.S.-based wellness brand Mary's Medicinals, sold in both medical and adult-use channels. In addition, Entourage also entered into an exclusive agreement with Irwin Naturals, a renowned nutraceutical and herbal supplement formulator of branded wellness products sold across North America. 

Follow Entourage and its brands on:

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Color Cannabis, Saturday Cannabis, Starseed & Syndicate

For additional information or investor or media inquiries:
Catherine Flaman
Senior Director, Communications & Corporate Affairs
416-910-0279
[email protected]

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 using 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.sedarplus.ca. 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.

Third Party Information

This press release includes market and industry data that has been obtained from third party sources, including industry publications. The Company believes that the industry data is accurate and that its estimates and assumptions are reasonable, but there is no assurance as to the accuracy or completeness of this data. Third party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there is no assurance as to the accuracy or completeness of included information. Although the data is believed to be reliable, the Company has not independently verified any of the data from third party sources referred to in this press release or ascertained the underlying economic assumptions relied upon by such sources.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.