Can Little Green Pharma Sustain Growth as Medicinal Cannabis Market Consolidates?

A Year of Transformation and Profitability

Little Green Pharma Ltd (ASX: LGP) has delivered a striking financial turnaround for the year ended 31 March 2025, posting a profit after tax of $3.3 million compared to a loss of $8.2 million the previous year. This recovery was underpinned by a 42.8% increase in revenues to $36.8 million, reflecting strong demand for its medicinal cannabis products across Australia and Europe.

The company’s adjusted EBITDA swung from a negative $1.6 million to a positive $2.9 million, signaling improved operational efficiency and margin expansion. This performance is notable given the sector’s competitive pressures and regulatory complexities.

Strategic European Expansion and Market Dynamics

Europe emerged as a key growth engine for LGP, with revenue more than doubling to $6.7 million. The partial legalization of cannabis in Germany and the formalization of medicinal cannabis frameworks in France have opened new commercial avenues. LGP’s position as one of only two authorized suppliers in the French pilot program positions it well for the anticipated commercial market launch later this year or early 2026.

Operational capacity in Denmark was significantly expanded to support this growth, while the UK market also began to show promise after years of underperformance. The company’s vertically integrated supply chain and broad European footprint provide a competitive advantage in navigating these evolving markets.

Acquisition and Operational Efficiencies

In February 2025, LGP acquired HHI (Australia) Pty Ltd, a medicinal cannabis distribution business, with integration progressing ahead of schedule. This acquisition strengthens LGP’s distribution network and supports its margin expansion strategy by shifting revenue recognition from gross to net service fees, reflecting regulatory compliance and industry best practices.

Cost management was a highlight, with employee, administration, and R&D expenses declining despite revenue growth. The only cost increases related to raw materials, distribution, and insurance, all directly tied to higher sales volumes. The company also subcontracted its Australian cultivation operations to improve cost efficiency and focus management efforts on sales growth.

Research, Innovation, and ESG Commitments

LGP continues to invest in research, with its QUEST study outcomes published in the peer-reviewed journal PLOS One, validating the therapeutic benefits of its medicinal cannabis products. Its subsidiary, Reset Mind Sciences, made progress in psilocybin-assisted therapy trials for treatment-resistant depression, underscoring LGP’s commitment to evidence-based innovation.

Environmental, social, and governance (ESG) initiatives remain a priority. The company sources 75% renewable power for its Danish operations, recycles organic waste, and optimizes water usage. Employee well-being and workplace culture were recognized with the Best Place to Work award at the 2025 Cannabiz Awards.

Governance and Outlook

Board changes included the appointment of Paul Long as Managing Director and David Fenlon as an Independent Non-Executive Director, while Beatriz Vicén Banzo retired. The company is reviewing its remuneration policies following shareholder feedback.

Looking ahead, LGP anticipates a consolidating medicinal cannabis market and is well-positioned to capitalize on strategic opportunities. Its strong balance sheet, with net tangible assets of 24.05 cents per share and low debt, provides a solid foundation for growth. The company also secured a $3 million inventory financing facility post-year-end to support operations.