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FLGC: 1H22 Results Support Positive Revenue Outlook As FLGC Maintains Growth Initiatives


By M. Marin



1H22 augers well for meeting targets…

Flora Growth Corp. (NASDAQ:FLGC) reported results and provided a business update last week. Flora Growth is an emerging cannabis company focused on cultivating, processing and supplying medicinal-grade cannabis and related products globally. The company is pursuing an ambitious growth strategy, building an ecosystem to support multiple consumer categories of cannabis, plant-based wellness merchandise and lifestyle brands. The company has operations in Colombia, including a 249-acre farm that enables all-outdoor cultivation activities and a processing laboratory in Fort Lauderdale, Florida. Flora recently reorganized its laboratory facilities.

Flora's total 1H22 revenue came in at $14.9 million, which represents a greater than 7-fold advance compared to the same period of 2021 and a more than doubling compared to the prior half year period. Flora reiterated 2022 guidance of $35 million to $45 million, which management believes is supported by many factors, including the recent JustCBD acquisition.

In addition, FLGC has strengthened its European presence with a new office in London and also received approval to sell JustCBD products on Amazon UK. Cross-promoting its growing product portfolio to enhance and accelerate growth is a priority.

The company also expects the launch of sales in the Commercial Wholesale and Life Sciences business to contribute to revenue growth in 2H22 and beyond. Flora is optimistic about the Life Sciences division, following the recent acquisition of Masaya and approval of clinical trials in the U.K.

… strengthened management team …

Separately, the company recently named Elshad Garayev as CFO. He has more than 25 years of experience in finance. Prior to joining Flora, he held a range of financial leadership positions at companies such as Amazon, Boeing BP and RPK Capital.

… and benefiting from cost advantages…

Flora benefits from favorable cultivation conditions in Colombia that help lower production costs. Management estimates that it has a significant cost advantage over competitors located in other markets and even compared to Colombian peers, as Flora believes it is the only public company with GACP approval for all-outdoor cultivation of both CBD and THC.

… and a favorable regulatory environment…

Flora's growth strategy also has a favorable regulatory tailwind in Colombia. The company believes that 2021 was transformational as it concluded certain supplier, vendor and distribution agreements, strengthened the balance sheet and executed on its complementary M&A strategy that is expected to broaden the company’s product portfolio and distribution and accelerate revenue growth.

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