Vitura Health shares dropped more than 26% after the company posted a steep fall in earnings, driven by intensifying competition and declining medicinal cannabis prices.
Although revenue grew 4% to $60m in H1 FY24, after-tax profit fell 59% to A$3.12m, compared with $7.66m in the same period the year before.
Vitura characterised the six months to December as a "more challenging trading environment," citing heightened distribution competition, lower average selling prices, and pharmacy rebates that had become "commonplace."
Markets responded sharply, with the stock closing the previous day at $0.165c — a 26.6% drop that erased more than $35m from the company's market value.
Units sold through CanView came close to 500,000, an 11% increase from H1 FY23, yet revenue generated through the distribution platform slipped 0.5% to $58.3m — the first half-yearly decline in three years.
Measured against H2 FY23, sales fell 4.5% while unit volumes edged up just 0.7%.
The company attributed the result to growing competitive pressure and a "proliferation" of products in the Australian market, which pushed average prices down from $130 to $110.
"During the past year, the Australian medicinal cannabis industry has experienced considerable average selling price compression across all SKUs as a result of increased competition, price discounting and the addition of new suppliers bringing with them a marked increase in the number of medical cannabis products offered," Vitura said.
"Vitura has also entered into a number of commercial rebate agreements with larger customers which the company anticipates will drive increased sales and revenues in future noting that, in a number of cases, the relevant suppliers contribute to reduce the amounts paid."
Gross margins were also squeezed by these market conditions, declining 6% to 29.4%, though Doctors on Demand — the business Vitura acquired in October — posted margins of "closer to 35%."
The inclusion of Doctors on Demand pushed revenue from clinic consultations up 348% to nearly $3m.
Over the half-year period, prescriber accounts on CanView grew from 978 in H2 FY23 to 1,401, while pharmacy accounts rose to 4,180 from 3,649.
The platform now lists 295 SKUs, an increase of 45 from the prior half.
Vitura is scheduled to hold an investor briefing on Wednesday morning.
