How Will Elixinol Wellness Turn Revenue Growth Into Profit Amid Rising Losses?

Revenue Growth Amid Strategic Expansion

Elixinol Wellness Limited has posted a notable 12.8% increase in revenue for the half-year ended 30 June 2025, reaching $7.64 million. This growth was primarily driven by the Australian segment, where brands such as The Healthy Chef and Hemp Foods Australia delivered stronger contributions. The Healthy Chef, acquired in late 2024, showed its strongest quarter since acquisition, buoyed by new product launches and a refreshed digital strategy. Meanwhile, the Americas segment experienced a deliberate scaling back of marketing activities as it prepared for a brand refresh.

Rising Losses Reflect Integration and Marketing Costs

Despite the revenue uplift, Elixinol reported a net loss after tax of $3.09 million, a 12.2% increase compared to the prior corresponding period. The widening loss reflects higher investment in marketing and brand development, integration costs related to The Healthy Chef acquisition, and restructuring expenses including the rationalisation of the Ananda facility. These costs have weighed on earnings before interest, tax, depreciation, and amortisation (EBITDA), which showed a small deterioration despite the revenue gains.

Improved Margins and Operational Shifts

The group’s gross margin improved to 37.4%, up from 35.7% in the previous year, supported by a shift towards higher-margin e-commerce sales and the introduction of The Healthy Chef’s portfolio. Margins stabilized in the second quarter, with expectations of further improvement in the second half of the year as cost reduction and portfolio optimisation initiatives take effect. However, retail channels outside e-commerce faced margin pressures from rising ingredient costs, notably for Mt Elephant’s chocolate products.

Liquidity and Going Concern Considerations

Elixinol’s balance sheet shows net assets of $6.97 million and cash reserves of $1.09 million at period end. The company secured a $1.325 million secured debt facility and completed a $150,000 equity raise during the half-year to support liquidity. Nonetheless, the directors disclosed a material uncertainty regarding the company’s ability to continue as a going concern, citing ongoing losses and net current liabilities. The company remains confident in its forecast sales growth, margin improvements, and ability to raise additional capital if needed.

Leadership Changes and Strategic Outlook

Significant leadership changes took place during the period, with Natalie Butler appointed as Chief Executive Officer in June 2025, alongside a new Chief Financial Officer, Adam Dimitropoulos. The company is focused on leveraging its core brands and pipeline innovations, including new product launches under The Healthy Chef, to drive revenue growth and margin expansion in the second half of the year. Cost control and portfolio rationalisation remain key priorities as Elixinol navigates the challenges of integration and market headwinds.