STENOCARE (STENO) Q3 2024 earnings summary

Executive summary

• Transitioning to a trading company model, exiting cultivation to focus on prescription-based medical cannabis sales in Europe and Australia, and implementing the STENOCARE 3.0 strategy.

• Launching the patented Astrum product, aiming for competitive advantage and higher market penetration, with the Astrum 10:10 oil set for launch in Germany in Q4 2024.

• Targeting high-growth markets: Germany, Australia, and the Nordics, leveraging regulatory approvals, infrastructure, and unique patented products.

• Gross sales for Q3 2024 were 1.1 mDKK, with net sales at -0.9 mDKK due to significant product returns and increased competition in Denmark.

• Management is implementing a financial health plan and exploring financing options to address liquidity and capital needs.

Financial highlights

• Gross sales for the first nine months of 2024 were 3.26 mDKK, down 37% year-over-year; net sales were 0.97 mDKK, down from 2.73 mDKK.

• Q3 2024 EBITDA was -3.93 mDKK; nine-month EBITDA was -9.15 mDKK.

• Equity ratio improved to 72% as of September 30, 2024, with equity at 18.84 mDKK.

• Cash position at end of Q3 2024 was 52 tDKK, down from 5.1 mDKK a year earlier; capital raise plans announced to address liquidity.

• Share issue in 2024 raised 5.78 mDKK; outstanding options for 42,800 shares remain.

Outlook and guidance

• 2024 gross sales guidance revised downward to 4.5 mDKK, reflecting a 7% growth over 2023 but below initial expectations; break-even no longer expected in Q4 2024.

• Expecting sales growth in Denmark, Norway, and Australia due to strategic changes, new products, and partnerships.

• Anticipated increased sales in Q4 2024, driven by new product launches and market expansion.

• Focused on executing in current markets with potential for expansion as opportunities arise.

• Strategic focus on high-potential markets with significant growth forecasts, including Germany (CAGR 29%) and Australia (CAGR 26%).