Ecofibre Faces Cash Crunch, Eyes Asset Sales Amid Mixed Business Results

Financial Snapshot and Cash Flow Challenges

Ecofibre Limited (ASX: EOF) disclosed a challenging third quarter for fiscal 2025, reporting an operating cash outflow of $2.2 million excluding its separately funded EOF-Bio segment. The company’s total cash reserves stood at a precarious $1.3 million as of 31 March 2025, underscoring a tightening liquidity position. This cash burn was influenced by $0.3 million in litigation and restructuring costs alongside $1.2 million in interest expenses, reflecting ongoing financial pressures.

Despite efforts to reduce corporate overheads, costs remain elevated with the corporate segment posting an EBITDA loss of approximately $1.2 million, an improvement from $1.6 million in the prior 12 months but still a significant drag on overall profitability.

Business Unit Performance: Mixed Outcomes

Ecofibre Advanced Technologies (EAT) achieved a notable milestone by reaching EBITDA breakeven in 3Q25, following a cash-positive first half. This was largely due to timing shifts in Under Armour (UA) orders, with $0.7 million in shipments delayed into early 4Q25. The turf yarn business showed strength with committed orders filling capacity for over five months, and new equipment for a second production line has been received, signaling readiness for future growth.

Ananda Health (AH) reported flat revenues at $1.7 million but improved EBITDA driven by a better product mix. The business is currently exploring strategic options, including a potential sale or partnership, with HighBank Advisors LLC engaged to assist in maximising value, particularly leveraging its US manufacturing capabilities and supply agreements with EOF-Bio.

Ecofibre Genetics experienced slower-than-expected seed inventory sales in Australia and the US. A previously agreed sale fell through due to the acquirer’s inability to complete the transaction, prompting the company to seek alternative buyers with Apex Genetics LLC appointed as a broker for seed sales.

EOF-Bio Advances Clinical Pipeline Amid Financing Efforts

EOF-Bio, Ecofibre’s majority-owned clinical-stage biotech arm, secured FDA Investigational New Drug (IND) authorization to commence a Phase 2 clinical trial targeting Endometriosis Associated Pain. This regulatory milestone marks a significant step forward in the company’s strategy to commercialise cannabinoid-based botanical drugs focused on women’s health.

However, EOF-Bio continues to operate at a cash outflow of $0.6 million per quarter and has engaged HighBank Advisors LLC to explore financing options, reflecting the capital-intensive nature of clinical development and the need for external funding to sustain progress.

Strategic Priorities and Outlook

Ecofibre’s Cash Positive Plan focuses on monetising core businesses, reducing operating costs and debt, driving revenue growth in EAT, and realising value in EOF-Bio. The company is actively pursuing asset sales, particularly of Ecofibre Genetics and potentially Ananda Health, to bolster liquidity and fund ongoing operations. The timing of these sales is critical, given the company’s estimated cash runway of just half a quarter based on current burn rates.

Corporate restructuring efforts continue, including centralising support services in the US and right-sizing costs at the holding company level. Meanwhile, EAT is advancing product development with new NEOLAST yarn variations and increased production line speeds to better manage demand seasonality.

Overall, Ecofibre is navigating a complex transition phase, balancing operational improvements with urgent financial imperatives. The company’s ability to execute asset sales and secure financing will be pivotal in determining its near-term viability and capacity to capitalise on its technological and clinical assets.