Entourage Health Corp

Good morning, everyone, and welcome to the Entourage Health Corp third quarter 2023 results conference call. At this time, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity for analysts and members of the media to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. A replay of this call will be available on the Entourage Health website later today and will remain posted for the next 90 days. I would now like to turn the conference over to Catherine Flaman, Director of Communications with Entourage Health. Please go ahead, Catherine.

Thank you, Gaylene, and good morning, everyone. Welcome to Entourage Health's third quarter 2023 results conference calls. Please note this call is being recorded. For copies of our press releases and supporting documents filed or to retrieve a recording of this call, please visit the investor relations page on our website at entouragehealthcorp.com. The replay will be available later this afternoon. With us on today's call, George Sforzas, Chief Executive Officer and Executive Chair of Entourage Health, and Bonnie Montaraj, our Chief Financial Officer. Today, we will review the business highlights and financial results for the third quarter, as well as discuss recent developments. Following formal remarks, we will open the floor to questions. I would also like to remind everyone that during today's call, we will discuss our business outlook, which will contain certain forward-looking statements. Actual events or results could differ materially from those expressed or implied by such forward-looking statements due to several risks and uncertainties, including those mentioned in our most recent filings with CDAR. These comments are made based on predictions and expectations as of today. Other than as required by official securities law, the company does not assume any obligation or update or revise them to reflect new events. Now, at this time, it is my pleasure to introduce George Gorsuch, Entourage Health CEO and Executive Chair. George, please go ahead.

Thank you to everyone for joining us this morning. It is my pleasure to be with you today. Let me begin by highlighting the business transformation our company has undergone. Entourage today stands distinctly different from just a year ago. Over the past year, we've not only adapted, but also redefined our business, surmounting the challenges that the industry has once again thrown our way. A pivotal decision shaped our trajectory, a strategic move away from cultivation. As we delve into our Q3 story, it takes a significant turn. We've made remarkable strides in refining our business operations. Through the streamlining of processes, procedural enhancements, and efficiencies, we have focused on minimizing unnecessary costs, forging a solid foundation for our business. This marks just the beginning of our journey. Let me take you through a quick snapshot of our milestones. Overall, the rise in our gross margin is evidence of our ability to maximize the value of each revenue dollar, achieving 27%. in Q3 2023, a significant leap of 149% year over year. Notably, our cost of goods, COGS, has steadily declined by 8.6 million or 58%. At the same time, our strategic efforts in streamlining SG&A have resulted in 12% reduction. Alongside these accomplishments, our EBITDA has seen a 71% improvement. I'll let Bonnie speak to our financial accomplishments in more detail in a few moments. But for now, I want to touch on how we got to this point. The focus for us has been the enhancement of both our capital structure and operational efficiencies, revolving around three key levers. Strong fundamentals. Our commitment to simplicity goes beyond restructuring. We have developed an approach focused on disciplined cost management to reduce expenditures, increase our cash position, and meet positive EBITDA goals. Focused product portfolio. We continue to analyze the ever-evolving consumer trends and preferences that shape the market. Armed with this understanding, our approach enables us to meet current demands and anticipate future needs. A product portfolio that consistently delivers a strong sales performance rooted in exceptional quality of our brands. Let me be clear, we are never going to sacrifice quality for market share. Thirdly, sustainability of our financial future. Our strengthened financial future reflects the success of our strategic decisions and our ability to weather challenges in this dynamic market, setting us up for ongoing success. Now, let's take a closer look at the decision to exit our cultivation, allowing us to focus running a leaner, more efficient operation. This shift involved eliminating unnecessary expenditures and fine-tuning processes. I wanted to discuss some steps we have taken that speak to this. Increased production. Having introduced pre-roll automation at our Elmer site, we have boosted our production rates to over 1.6 million pre-rolls per month with 2 million pre-rolls per month by the end of the year, meeting the demand we are seeing in this ever-evolving and quickly growing category. Advancements in the inventory and supply chain management have allowed us to adjust forecasts more effectively, thereby improving our market agility. We are adjusting our forecasts with greater precision, ensuring that our inventory aligns seamlessly with market demands. Aligning our labor resources with organizational goals, ensuring a balance between workforce productivity and cost-effectiveness. Entourage is effectively engaging in a collaborative and productive process with its senior secure lender to restructure its senior debt. This move is driven by a desire to ultimately improve the company's financial health. These substantial measures represent ongoing initiatives poised to enhance our bottom line. We are already witnessing improvements in our P&L and anticipate further enhancements over consecutive quarters. Now, Shifting our focus to the commercial side, we observed a decline in net revenue in the adult use market. However, this dip is not without purpose. We conducted a thorough portfolio analysis, strategically withdrawing certain margin dilutive skews and redirecting our focus towards products thriving in the market. Our scrutiny extended into retail partnership programs, identifying areas where the return on investment was not optimal while exercising prudent management of sales and marketing expenses. We know this will set us back on the right track to having a well-rounded product portfolio in 2024. Added to that, our strategic focus is the pre-roll segment, one of the fastest growing categories. As previously mentioned, our commitment to capitalizing on this is evident in our ambition to plan to produce over 24 million pre-rolls in 2024. Notably, Our color pre-rolls have secured a spot among the top 10 brands nationwide, holding on to the number six position. The success has been directly linked to the proactive efforts of the sales team. We have expanded product distribution and retail outlets, as well as the focus on larger format pre-rolls packs. This not only underscores the popularity of these offerings, but also solidifies our position as a key player in the market. To note, we have a diverse portfolio catering to budget-conscious consumers as well. We recently introduced Dimebag branded pre-rolls, garnering significant attention and making a notable impact in Ontario with 250 stores carrying this product across the province. The reception from our consumers is a testament to the success of the strategy, showcasing how premium products at cost-effective prices are now commanding the spotlight. Looking ahead, we are rolling out our top sellers, including the new high THC cultivars infused pre-rolls. Additionally, our recently launched holiday advent color cannabis calendar deserves a mention. Our first shipment sold out in record time. With that said, we are strategically expanding our market reach. We aim to establish a strong foothold in areas with high growth potential by identifying key regions and demographics. Both our color cannabis and Saturday cannabis products are thriving, prominently displayed across 80% of the retail market. Our market penetration signifies the strength of our brand and the widespread acceptance of our products, positioning us as an upcoming competitive force in the industry. Turning our attention to the medical side of our business, we achieved an 87% patient renewal rate over the quarter. Revenues in medical increased 2% in Q3 year over year, despite a backdrop of declining medical cannabis sales in the Canadian market. Starseed experienced an uptick in new patient acquisitions. Our efforts in customer patient acquisitions and renewals have grown, supported by our extensive portfolio of 45-plus products, including novel cannabinoids that we have just entered into our portfolio that have CBG and CBN. Additionally, we launched a line of controlled delivery inhaler products, which have shown high patient demand for controlled dose, discrete delivery methods. In short, while we're expanding our patient base, we're also improving our platform's product offerings with tailor-made solutions that bring forth a patient-first mandate. In our recent expansion into the global market, our medical cannabis fulfillment to Australia has proven successful. Considering the Australian market's emergence as one of the fastest growing medical cannabis sectors, we aim to capitalize on this momentum with plans for a second shipment in the coming months. Before passing it over to Vani, I want to mention that these early outcomes are testament to our entire team's collective and dedicated effort as well as hard work. In summary, Entourage stands strong with the promising narrative Our strategy over the past year has proven its alignment amid inflationary trends and operational complexities. We anticipate to see steadier growth moving into 2024. We know that the next steps we took over the next year will align with our long-term goals for sustainability and profitability. With that, I conclude my opening remarks. I will now turn it over to Vani, our CFO, to provide an overview of our financial performance for the period.