Cannara Biotech Delivers Highest Revenue and Profitability Since Inception in Fiscal Q3 2025

Executive Summary

• Cannara Biotech Inc. reported record financial results for the third fiscal quarter ended May 31, 2025, driven by a 40% year-over-year increase in total revenues and significant margin expansion.
• The company achieved record profitability metrics, including a 110% increase in gross profit before fair value adjustments and a 173% increase in Adjusted EBITDA, marking the seventeenth consecutive quarter of positive Adjusted EBITDA.
• Operational highlights include a 26% yield improvement that increased annual production capacity from 39,500 kg to 50,000 kg, allowing the company to meet its Fiscal 2026 cultivation target one year ahead of schedule.

Key Details

• Q3 2025 Financial Performance (vs Q3 2024):
  • Total revenues (net of excise taxes) increased 40% to $27.3 million (from $19.5 million).
  • Gross cannabis revenues (before excise taxes) increased 44% to $37.8 million (from $26.2 million).
  • Gross profit before fair value adjustments rose 110% to $12.1 million (from $5.7 million).
  • Gross margin before fair value adjustments improved to 44% (from 29%).
  • Adjusted EBITDA reached a record $7.6 million, up 173% from $2.8 million.
  • Adjusted EBITDA margin increased to 28% (from 14%).
  • Operating income reached $6.8 million (from $3.6 million).
  • Net income before income taxes was $5.8 million (from $2.0 million).
  • Net income was $4.1 million (from $2.0 million).
  • Earnings per share (Basic) were $0.05 (from $0.02).
• Cash Flow Metrics:
  • Operating cash flow surged 221% to $13.9 million (from $4.3 million).
  • Free cash flow increased 841% to $11.7 million (from $1.2 million).
• Year-to-Date (Nine Months Ended May 31, 2025) Performance:
  • Total revenues (net of excise taxes) increased 35% to $79.0 million (from $58.7 million).
  • Gross profit before fair value adjustments increased 57% to $32.7 million (from $20.8 million).
  • Adjusted EBITDA increased 81% to $20.7 million (from $11.4 million).
  • Operating cash flow was $17.2 million (from $7.5 million).
  • Free cash flow was $12.3 million (from $0.5 million).
  • Earnings per share (Basic) were $0.11 (from $0.01).
• Operational Updates:
  • Capacity Expansion: Activated two additional grow rooms at the Valleyfield facility in May and June 2025, adding 50,000 sq. ft. of capacity.
  • Yield Improvement: R&D efforts resulted in a 26% yield improvement, increasing annual capacity from 39,500 kg to 50,000 kg.
  • Quebec Vape Launch: Received approval for 5 accepted SKUs for the Quebec provincial vape category launch (pending final procedural steps), representing 20% of all accepted in-store SKUs by the SQDC.
  • Product Launches: Secured approval for 11 new product launches in Q4 2025 (10 in Ontario, 1 in Quebec), including new genetics (Waygu Delight, Porto Leche) and the first accessory listing (Häpple glass hash pipe).
• Market Share (Hifyre/Weed Crawler Data):
  • Q3 2025 vs Q3 2024: Quebec market share increased to 12.3% (from 9.7%); British Columbia increased to 1.7% (from 0.8%); Saskatchewan increased to 1.5% (from 0.4%).
  • Q3 2025 vs Q2 2025: Quebec market share was 12.3% (down from 12.8%); British Columbia was 1.7% (up from 1.5%); Saskatchewan was 1.5% (up from 1.0%).
• Capital Structure & Debt:
  • Reduced interest rate on BMO credit facility by 50 basis points during the quarter and a further 25 basis points subsequent to quarter-end, lowering the cost of debt to below 6%.
  • Eliminated the need for a limited recourse guarantee provided by a related party, reducing annual interest expense by $375,000.
  • Repaid $1 million against the Olymbec Convertible Debenture (original principal $5.7 million).
• Equity Transactions:
  • Granted 100,000 stock options at $1.25 and 84,400 stock options at $1.80 to employees.
  • Granted 22,500 RSUs to a board member.
  • Subsequent to quarter-end, granted 7,500 stock options at $1.80 to employees.
• Balance Sheet Highlights (As of May 31, 2025):
  • Cash: $14.4 million.
  • Working Capital: $49.4 million.
  • Total Assets: $170.1 million.
  • Total Liabilities: $71.5 million.

Notable Quotes

• "Fiscal Q3 2025 represents another record-breaking quarter for Cannara, producing records for revenue, gross profit, gross margin, adjusted EBITDA, adjusted EBITDA margin, operating cash flow, and free cash flow, showcasing the successful execution of our long-term business strategy, as well as our industry leadership." — Zohar Krivorot, President & CEO
• "In addition to our stellar operating results, we have achieved two very significant milestones within our business. First, for the upcoming launch of Québec’s high-demand vape category, the acceptance of 5 Cannara SKUs... Second, the optimization of our cultivation procedures which has resulted in a 26% yield improvement across our facilities, allowing Cannara to achieve our Fiscal 2026 cultivation target a full year ahead of schedule." — Zohar Krivorot, President & CEO
• "We delivered our seventeenth consecutive quarter of positive Adjusted EBITDA, generating a record-high of $7.6 million, a 173% increase against the prior year period, underscoring the scalability and profitability of our operations." — Nicholas Sosiak, CFO