Althea Group Holdings Posts 20% Revenue Rise Amid Governance Overhaul

Financial Performance and Operational Highlights

Althea Group Holdings (ASX:AGH) has reported a solid 20% increase in receipts from customers for the quarter ending 31 December 2024, reaching $9.01 million. This growth reflects the company’s expanding footprint in the cannabis sector, particularly through its recreational cannabis subsidiary, Peak Processing Solutions, which saw a 20% rise in receipts to $6.25 million compared to the previous corresponding period.

Despite this revenue growth, the company acknowledged that sales fell short of budget expectations, prompting a review of its FY25 market guidance. Net cash used in operating activities was $1.19 million for the quarter, slightly higher than the $896,000 used in the first half of the fiscal year, underscoring ongoing operational challenges.

Strategic Investments and Operational Expansion

Althea has strategically invested in infrastructure upgrades at Peak Canada’s Ontario manufacturing facility, funded partly by a $2 million unsecured loan notes placement secured in December 2024. These upgrades include expanded production capacity and automation improvements, positioning Peak to meet anticipated demand increases as seasonal trends favor cannabis beverage consumption in warmer quarters.

Notably, Peak USA completed its inaugural commercial manufacturing run at its Florida-based emulsion facility, marking a significant milestone in scaling operations within the lucrative US THC beverages market. This expansion aligns with the company’s pivot away from higher-risk product categories, such as cannabis vapes, which were abandoned due to regulatory, ethical, and financial concerns.

Pharmaceutical Cannabis Business and Cost Management

Althea’s pharmaceutical cannabis division continues to recover from stock shortages caused by supplier transitions in late 2023. While receipts increased by 19% to $2.75 million, they remain below prior periods. The company has implemented a robust cost reduction program, including leadership changes and redundancies, delivering approximately $1.4 million in annualised savings starting January 2025. The recent sale of its MyAccess Clinics business in the UK and Ireland for $1 million further contributes to annual operating cost savings of around $1.5 million.

Governance Challenges and Remediation

December 2024 saw AGH voluntarily suspend trading following the identification of corporate governance lapses, notably delayed Cleansing Notices filings under the Corporations Act. The company has since appointed Adam Gallagher, a seasoned governance professional, as Company Secretary to strengthen oversight and prevent recurrence. A Federal Court hearing scheduled for 31 January 2025 will address the remediation of these compliance issues, with the company committed to transparent communication and regulatory adherence.

CEO Joshua Fegan emphasized the company’s strong momentum entering 2025, highlighting Peak’s leadership in cannabis beverage manufacturing and Althea’s stabilizing operations. He underscored the company’s focus on operational execution, cost discipline, and value creation amid a rapidly evolving market landscape.

Financial Position and Outlook

AGH closed the quarter with $2.96 million in available funding, supported by the recent loan notes placement and ongoing financing facilities. The company estimates approximately 2.3 quarters of funding available based on current cash flows, underscoring the importance of the upcoming guidance review and operational execution to sustain growth.

While the governance issues and sales shortfalls introduce near-term uncertainty, the company’s strategic investments and cost-saving measures position it to capitalize on growth opportunities in North America and beyond.