Little Green Pharma FY2026 Revenue Climbs 15% Despite $1.4M Loss on Inventory Hits

European Expansion Fuels Revenue Growth

Little Green Pharma Ltd (ASX:LGP) reported FY2026 revenues of AUD 42.5 million, a 15.3% increase from AUD 36.8 million a year earlier, powered chiefly by its expanding European footprint. Germany remains the standout market, with strong demand for GMP-grade cannabis flower, particularly through white-label channels. The company’s Danish manufacturing facility is central to this growth, delivering cost efficiencies and scale benefits that underpin its competitive positioning in Europe.

Europe’s contribution has surged to the point where quarterly European revenue overtook Australian sales, highlighting the success of LGP’s international strategy. The company is also making inroads in France, where progress toward a permanent medicinal cannabis framework is seen as a significant opportunity, as well as in Poland and Italy, diversifying its European revenue base.

This expansion aligns with the company’s vertically integrated model, combining cultivation, manufacturing, and distribution capabilities across jurisdictions. The European focus contrasts with a more mature Australian market, where LGP continues to grow through diversified channels but faces increasing regulatory scrutiny and competition.

These developments build on recent quarterly momentum, including a record revenues and near merger completion announcement that underscored the company’s growth trajectory and set the stage for a pending merger with Cannatrek Ltd expected to close shortly.

Profitability Impacted by Inventory Write-Downs and Expenses

Despite revenue growth, Little Green Pharma swung to a loss after tax of AUD 1.4 million in FY2026, compared to a profit of AUD 3.3 million the prior year. The loss reflects a AUD 3.3 million write-down of inventory, up from AUD 846,000 previously, alongside other expenses including share-based payments of AUD 1.2 million and finance charges of AUD 553,000.

The company’s Adjusted EBITDA, a non-IFRS measure that excludes these and other non-cash items, rose sharply to AUD 6.5 million from AUD 2.9 million, indicating operational improvements beneath the headline loss. This metric reflects strong underlying cash generation from the core business despite one-off and non-cash charges.

Operating cash flow turned positive with an inflow of AUD 39,000, reversing a prior outflow of AUD 917,000, signaling improving cash discipline. However, the cash balance declined to AUD 1.4 million at year-end from AUD 2.4 million, partly due to capital expenditures and working capital movements.

The company continues to carry modest debt of AUD 3.35 million, up slightly from AUD 3.1 million the previous year, supported by unused credit facilities totaling over AUD 5.3 million.

Regulatory Landscape and Strategic Positioning

Little Green Pharma is navigating a shifting regulatory environment both domestically and internationally. In Australia, the Therapeutic Goods Administration’s proposed reforms aim to tighten oversight, which LGP views as a step toward market maturation despite near-term challenges. The company expects these changes to favour scaled, compliant operators like itself.

Internationally, recent rescheduling of medicinal cannabis in the United States and evolving frameworks in Europe, particularly Germany and France, create a dynamic backdrop. LGP’s pharmaceutical-grade quality standards and integrated supply chain are positioned to capitalize on these regulatory shifts.

Meanwhile, LGP is monitoring developments in the psychedelics sector via its subsidiary Reset Mind Sciences, which is sponsoring a clinical trial into psilocybin-assisted therapy for refractory depression, reflecting a cautious but forward-looking approach to adjacent markets.

Corporate Governance and Leadership Updates

The Board saw the retirement of independent non-executive director David Fenlon in August 2025. The company maintains a strong governance framework with a mix of executive and independent directors, though female representation on the Board has declined to 20% following Fenlon’s departure.

Executive remuneration continues to align closely with performance, with a mix of fixed pay, short-term incentives, and long-term equity awards. Managing Director Paul Long, who has overseen significant revenue growth since joining, received a remuneration package reflecting the company’s improved financial results.

Little Green Pharma’s ESG initiatives remain a core focus, with efforts to reduce energy consumption, recycle waste, and support employee well-being. The company sources 75% renewable power for its Danish operations and pursues water recycling and sustainable waste management at all facilities.

Merger with Cannatrek Looms as Next Catalyst

Looking ahead, the company is poised for a transformative merger with Cannatrek Ltd, pending shareholder approval expected on 22 May 2026. This deal aims to create a vertically integrated medicinal cannabis group with enhanced scale and market reach across Australia and Europe.

The merger follows a series of shareholder approvals and court processes, with implementation targeted for June 2026. The combined entity is expected to leverage complementary assets and capabilities, potentially accelerating growth and operational efficiencies in a consolidating industry.

Investors will be watching closely to see how the integration unfolds and whether the combined group can convert its strong revenue growth into sustained profitability amid ongoing regulatory and competitive pressures.