Cann Group Limited reported a significant 56% reduction in net loss for FY25, driven by cost cuts and strong growth in dried flower sales, even as revenue declined due to shifting product preferences. The company faces going concern challenges but is actively pursuing debt refinancing and operational improvements.
- Net loss narrowed 56% to $22.35 million in FY25
- Revenue declined 26% to $11.3 million due to product mix shift
- Normalized EBITDA improved 44% to -$5.03 million
- Operating expenses cut by 31%, boosting gross margins
- Debt refinancing underway amid going concern uncertainties
Financial Performance Highlights
Cann Group Limited has reported a marked improvement in its financial results for the year ended 30 June 2025, reducing its net loss by 56% to $22.35 million compared to the previous year. This progress was underpinned by a disciplined cost management program that saw operating expenses fall by 31%, alongside a 44% improvement in normalized EBITDA to negative $5.03 million.
Despite these gains, the company’s revenue declined by 26% to $11.3 million, primarily due to a strategic shift in product mix away from oils; which saw a 70% revenue drop; to dried flower products. Notably, dried flower sales volume increased by 30%, with the company’s own-brand Botanitech doubling its dried flower sales, signaling strong market traction in this segment.
Operational and Market Dynamics
The pivot towards dried flower products reflects evolving consumer preferences within the medicinal cannabis market. While bulk flower sales grew, a higher proportion of lower-priced bulk sales limited overall revenue growth to a modest 7% uplift in that category. The company’s ability to reduce direct production costs by 46% has improved gross margins, enabling more competitive pricing and supporting market share gains.
Cost reductions extended beyond production, with employee and administrative expenses cut by $4.32 million (31%), contributing to the improved EBITDA. These operational efficiencies are critical as Cann Group navigates a challenging market environment and seeks to build a sustainable business model.
Balance Sheet and Liquidity Challenges
Despite operational improvements, Cann Group faces significant balance sheet pressures. The company reported a net asset deficiency of $2.78 million and a net current asset deficiency of $71.34 million as at 30 June 2025. These figures, combined with a net cash outflow from operations of $9.64 million, have raised material uncertainties regarding the company’s ability to continue as a going concern.
Management is actively addressing these challenges through a refinancing strategy. This includes restructuring existing debt facilities with major lenders such as the National Australia Bank and leveraging a $15 million convertible note facility, of which $2.75 million has been drawn to date. The company also raised $2.97 million through equity markets during the year, supported by rights issues and private placements.
Convertible Notes and Capital Structure
Cann Group issued convertible notes and associated share options as part of its financing arrangements. The convertible note facility has a maturity date of 30 September 2025, with provisions allowing conversion into equity under specified terms. The company has also issued options to noteholders and brokers as incentives, reflecting a complex capital structure designed to support liquidity while minimizing immediate cash outflows.
The company’s auditors are expected to include an emphasis of matter in their report concerning going concern and asset valuation risks, highlighting the importance of successful refinancing and operational execution in the coming months.
Looking Ahead
Cash flow forecasts indicate that Cann Group expects to have sufficient liquidity for at least the next 12 months, assuming successful refinancing and continued growth in its Botanitech product range. The anticipated receipt of a $1.76 million R&D tax credit refund in October 2025 will provide additional working capital support.
While the company has made meaningful strides in reducing losses and improving operational efficiency, the path to sustained profitability remains contingent on market acceptance of its product mix, successful debt restructuring, and continued cost discipline.
Bottom Line?
Cann Group’s FY25 results show promising operational progress, but refinancing and market shifts will define its near-term viability.
Questions in the middle?
- Will Cann Group successfully complete its debt refinancing by the September 2025 maturity date?
- How sustainable is the shift towards dried flower products in driving future revenue growth?
- What impact will the expected audit emphasis on going concern have on investor confidence?