Topic: Cantourage reported Q3 figures with significant sales growth and notable EBITDA improvements. The planned abolishment of the narcotic drug status of medical cannabis in Q1 2024e should further drive patient numbers and sales growth going forward.

Q3 sales grew by 79% yoy to € 6.1m (9M: +85% yoy to € 17.2m). At the same time, EBITDA came in at € -0.6m (9M: € 0.4m EBITDA loss), a notable improvement compared to last year’s figure (€ -1.2m). The discrepancy to our old Q3 estimates (€ 7.3m sales and EBITDA break-even) was driven by delays in the approval of new production facilities, which offer significantly higher throughput rates but also weaker demand at the beginning of the quarter.

The confirmed FY23 guidance (high double-digit percentage sales growth while reaching EBITDA break-even) points towards continued strong growth as well as further significant EBITDA improvement during Q4. Above all, this should be carried by the ongoing ramp-up, i.e. a gradually increasing number of fully onboarded cultivators having a product deployed at pharmacies.

Regulatory tailwinds to materialize towards the end of Q1 2024e. Medical cannabis is still a fairly young market in Germany (approved for therapeutical purposes since 2017), which still records low adoption rates amongst suitable patients, largely as a result of complex prescription processes that potential patients have to go through. With the "Cannabis Act", which should become effective towards the end of Q1 2024 (eNuW), this should materially change as getting a prescription for cannabis should become as easy as getting one for ibuprofen 600. Through this, medical cannabis could also become part and benefit from the German e-script universe, which just launched in July this year.

Cantourage should be well prepared to benefit from this thanks to its broad global supplier network with more than 60 grower partners, its own telemedicine platform, telecan°, and a growing distribution network across Europe. The company looks set to grow sales at a 59% CAGR (2022-25e) while at the same time reaching a high single-digit EBITDA margins thanks to the resulting operating leverage.

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