ECS Botanics posted a net cash operating deficit of A$1.5 million for the three months ending March 31, as the company pressed ahead with building the market profile of its own-label brands.
Third-quarter revenue came in at $4.8 million, a 1% increase on the second quarter and 19% above the same period a year earlier.
Direct-to-consumer sales, channelled through prescribing medical practitioners, rose 38% from Q2 to reach $2.2 million, now accounting for 46% of total revenue. The company launched its retail strategy last year and is currently working with 540 prescribers.
B2B sales, by contrast, declined by an undisclosed amount during the quarter, even as ECS added two new customers to that side of the business.
Managing director Nan-Maree Schoerie said the revenue growth from its B2C division "demonstrates the company is transitioning well" from its B2B roots to a "more balanced model which gives us the platform to achieve a stronger market presence".
"The benefits of our strategic shift to a B2C and B2B hybrid model are beginning to materialise," she said.
Schoerie also noted that the company's brands were beginning to gain traction in the market.
Despite the positive outlook, and with export volumes "continuing to strengthen", shares fell sharply in Monday morning trading, dropping 15% to $0.011c.
The $1.5 million net operating loss recorded for the quarter — up $200,000 from the prior quarter — was largely driven by higher production costs and the continued push into retail sales. That brings the company's nine-month net operating loss to $3.6 million.
On its cultivation operations, ECS reported that favourable low-rainfall conditions helped produce a "high quality outdoor crop" that will supply product for its OzSun value range.
In previous seasons, a "large proportion" of ECS's outdoor harvest had gone toward extraction, leaving the company short on supply to meet dried flower demand.
"The decline in oil sales has also reduced the requirement for biomass for extraction," Schoerie said. "The company has focused this year's cultivation and harvest on producing quality flower and less biomass and the results to date are extremely encouraging.
"This will allow ECS to continue to process last year's biomass for oil production and sell this year's flower as both A grade and B grade which will assist in meeting the high demand for ECS's OzSun value range."
Alongside its outdoor growing operations, ECS reported that seven of its nine protective cropping enclosures are now active, with six scheduled to grow plants through the winter months.
The company held $3.2 million in available funding at the close of March, a position strengthened earlier this month after National Australia Bank (NAB) lifted ECS's loan facility by $2 million to $5.2 million.
