Althea Group Slashes FY25 Revenue Forecast Amid Market Headwinds
Althea Group Holdings has sharply downgraded its FY25 financial guidance, citing significant challenges in its medicinal cannabis division and the strategic withdrawal from a vape product initiative. Despite the setback, the company highlights ongoing growth in its recreational cannabis operations and a strategic refocus on capital efficiency.
- FY25 revenue guidance revised down to $26–33 million from $50–57 million
- Adjusted EBITDA forecast cut to $0.8–1.1 million, down from $4–5.5 million
- Medicinal cannabis sales forecast reduced by approximately 60%
- Abandonment of vape product project expected to forgo $8.2 million revenue
- Strategic focus shifting towards B2B pharmaceutical opportunities and recreational cannabis growth
Significant Downgrade in FY25 Financial Outlook
Althea Group Holdings Limited (ASX:AGH), a prominent player in the cannabis-based medicines and recreational cannabis markets, has announced a substantial revision to its FY25 financial guidance. The company now anticipates revenue between $26 million and $33 million, a steep decline from its previous forecast of $50 million to $57 million. Similarly, adjusted EBITDA expectations have been lowered to a range of $0.8 million to $1.1 million, down from $4 million to $5.5 million.
Drivers Behind the Revision
The primary factor behind this downward revision is a marked reduction in Althea’s medicinal cannabis sales, which have been cut by approximately 60%. This reflects persistent market challenges, including prolonged supply chain disruptions affecting high-turnover products and intensifying competitive pressures in key markets such as Australia and the UK. Additionally, the company has strategically abandoned its planned vape product initiative, which was projected to contribute up to $8.2 million in revenue and $720,000 in EBITDA for FY25. This move aligns with Althea’s renewed focus on capital efficiency and risk mitigation amid regulatory and competitive uncertainties.
Strategic Reorientation and Growth Prospects
Despite the setbacks, Althea remains optimistic about its core business strengths and future growth avenues. The company is actively restructuring its pharmaceutical division to improve operational efficiency and financial sustainability, with a pivot towards business-to-business (B2B) commercial opportunities. Strategic alternatives for this segment are under review to maximise shareholder value.
On the recreational cannabis front, Peak Processing Solutions continues to deliver steady performance, particularly in Canada where demand for THC beverages remains consistent. In addition, Peak USA has commenced operations following a successful initial production run, positioning Althea to capitalize on the emerging US cannabis market.
Capital Discipline and Long-Term Value Creation
Althea’s management underscores a disciplined approach to capital allocation as it navigates a challenging market landscape. The company is focused on achieving sustainable cash flow and profitability, while exploring strategic opportunities to enhance long-term shareholder value. This cautious stance reflects a pragmatic response to the evolving regulatory environment and competitive dynamics within the global cannabis sector.
Bottom Line?
Althea’s sharp guidance cut signals near-term challenges but underscores a strategic pivot that could reshape its future trajectory.
Questions in the middle?
- How will Althea’s restructuring of its pharmaceutical division impact its medium-term profitability?
- What are the potential strategic alternatives under consideration for the medicinal cannabis segment?
- Can Peak USA’s entry into the US market offset declines in other regions and drive meaningful growth?
