Strategic Cost Management Signals Stronger Financial Health and Future Stability

• Gross profit before fair value changes reached $2.4 million, reflecting a 126% year-over-year increase.
• Company demonstrates financial gains with a 23% reduction in the cost of goods sold.
• SG&A declined 14% compared to the previous year.
• Color Cannabis secures a #6 spot in the national pre-roll market.

TORONTO, April 30, 2024 (GLOBE NEWSWIRE) -- Entourage Health Corp. (TSX-V: ENTG) (OTCQX: ETRGF) (FSE: 4WE) ("Entourage" or the "Company"), a Canadian producer and distributor of award-winning cannabis products, announced today its financial results for the fiscal year that ended December 31, 2023. The Company reported a total revenue of $54.1 million, mirroring the previous year's performance, demonstrating resilience in a competitive market.

"In 2023, Entourage made significant strides, advancing production and diversifying our market presence with innovative products," notes George Scorsis, CEO and Executive Chair. "Dime Bag's success is a prime example—quickly rising to become one of Ontario's fastest-growing pre-roll brands and maintaining its market leadership for two consecutive quarters. Driven by surging demand for our products and the effectiveness of our enhanced business model, we're achieving growth while improving cost efficiency, firmly establishing ourselves in a favourable financial position."

Summary of Results

^{* EBITDA is not a recognized measurement under International Financial Reporting Standards ("IFRS") and this data may not be comparable to data presented by other companies. Management defines EBITDA as earnings before interest, taxes, depreciation, and amortization. This data is furnished to provide additional information and does not have any standardized meaning prescribed by IFRS. The Company uses this non-IFRS measure to provide shareholders and others with supplemental measures of its operating performance. The Company also believes that securities analysts, investors and other interested parties, frequently use this non-IFRS measure in the evaluation of companies, many of which present similar metrics when reporting their results. As other companies may calculate EBITDA differently than the Company, this metric may not be comparable to similarly titled measures reported by other companies. We caution readers that EBITDA should not be substituted for determining net loss as an indicator of operating results, or as a substitute for cash flows from operating and investing activities. See the Company's management's discussion and analysis for the 12 months ended December 31, 2023 (the "2023 MD&A") for a detailed reconciliation of EBITDA to Net Income / (Loss). The Company's financial statements for the 12 months ended December 31, 2023, and the 2023 MD&A are available on SEDAR+ at}

"In the past year, we have achieved positive results that are a solid reflection of the discipline we have put into our business and the committed work of our team members," shared Vaani Maharaj, CFO. "We've fine-tuned our production methodologies, identified efficiencies, and significantly reduced expenditures, collectively forging a robust cost-saving framework. We have also adopted a data-centric strategy, giving insights into our consumer's evolving preferences and behaviours. The impact is twofold: we are strengthening customer satisfaction and driving loyalty while achieving a more agile business."

Full Year 2023 Financial Highlights

• For the twelve months ended December 31, 2023, Entourage recorded total revenue of $54.1 million, compared to $54.5 million for the fiscal year ended December 31, 2022. This shows stability despite significant reductions in operating expenses.
• Cost of Goods Sold (COGS) was ($38.3 million) representing a decrease of 23% compared to the previous year. Improved inventory management practices, strategic sourcing, and process optimization contributed to the reduction in COGS.
• For the twelve months ended December 31, 2023, gross profit before changes in fair value increased 126% to $2.4 million from ($9.2 million) in the previous year. The reduction is attributed to the integration of automation, premium product offerings, and decreased production costs. Moreover, the Company has strategically aligned its market strategies to better adapt to consumer demands, instilling confidence in its ability to navigate changing market conditions.
• Selling, General, and Administrative (SG&A) expenses for 2023 totalled $26.1 million, compared to $30.3 million in 2022. This significant decrease was primarily due to the successful implementation of an organization-wide restructuring plan. This plan, aimed at enhancing efficiency and streamlining operations, not only contributed to a decrease in selling expenses, but led to a substantial cut in overhead costs.
• For the twelve-month period ended December 31, 2023, the Company's EBITDA improved by 79% to ($21.3 million) largely due to the discontinuation of cultivation activities.

Corporate Highlights Year End December 31, 2023

2023 Financial Restructuring

• In January 2023, the Company secured the second tranche of its Credit Facility, valued at $15 million, with an affiliate of the LiUNA Pension Fund of Central and Eastern Canada ("LPF"), as previously disclosed on October 31, 2022.
• Subsequently, in May 2023, the Company completed the divestiture of its Strathroy facility. The transaction's net proceeds were allocated towards reducing the balance of the Company's existing senior secured credit facility with Bank of Montreal ("BMO"). Following this transaction, the outstanding debt, amounting to approximately $14.6 million, was assumed by LPF, allowing for the full repayment of BMO.
• The Company was in breach of certain financial covenants and other obligations under each of its Senior Credit Agreement and Subordinated Credit Agreement with LPF as of December 31, 2023. The Company began working collaboratively with LPF to reach an agreement on refined debt terms. To this end, the Company received a forbearance letter on November 17, 2023, waiving the Company's breaches until December 8, 2023, subject to the satisfaction or waiver of certain conditions. Subsequent to 2023, the Company continued to work with its secured lender on debt terms and the forbearance letter was renewed on January 15, 2024, March 8, 2024, and April 5, 2024, and the extant forbearance letter expires on May 3, 2024.
  

Strengthened Operations

• The Company's streamlined operations have resulted in annualized savings of $14.8 million, fuelled by a focused effort to boost operational performance and continuous improvement.
• The Company's investment in pre-roll automation has significantly increased production capacity to nearly two million pre-rolls per month.
• Entourage's move to a third-party supplier was a strategic decision to enhance financial stability and invest additional capital in operations, brand awareness, and innovation.
• The Company broadened its international reach, successfully distributing medicinal cannabis to Australia in partnership with Lyphe Australia Pty Ltd., part of Lyphe Group Ltd.

Product Innovation and Strategic Expansion

• In 2023, the Company expanded its portfolio by launching over 18 innovative SKUs across the three adult-use brands, including infused pre-rolls and new cultivars, to meet consumer demand and provide the marketplace with various product offerings.
• In June 2023, the Company launched the dynamic brand Dime Bag, which swiftly rose to become Ontario's third fastest-growing pre-roll brand for the last two consecutive quarters.ⁱ The Company plans to roll out nationwide throughout 2024.
• In 2023, Color Cannabis strengthened its market presence by ranking among the top ten pre-roll brands in Canada, achieving the 6th position. Additionally, it established itself as the second-leading brand in the pre-roll category in British Columbia, capturing an 8.5% market share.
• In 2023, the Company demonstrated its strong market presence, securing the top 8 position in national pre-roll sales, and has emerged as the 16^th largest Licensed Producer by retail sales.
  

Leadership in Medical

• Committed to advancing patient well-being with quality medical cannabis innovations via Starseed, the Company launched an exclusive soft gel line in partnership with Irwin Naturals Cannabis and introduced a controlled delivery inhaler in collaboration with Remidose, offering medical patients innovative consumption methods.
• In 2023, Union Benefits expanded the Company's reach, integrating a new union group into the proprietary medical cannabis program. This expansion solidified Starseed's commitment to accessible healthcare, bringing the Company's partnerships to 10 union groups, five insurance providers, and 24 clinics that endorse the Company's medical cannabis program.

Company Outlook 2024

The key to Entourage's success in 2024 lies in the strategic alignment of its brands, the diverse range of its products, and the dedication of its teams. Navigating the dynamic cannabis landscape is central to the Company's aim of achieving year-over-year growth. A key factor in this growth is Entourage's strategic partnerships with external suppliers. These partners are meticulously chosen for their commitment to excellence, efficiency, and their alignment with the Company's core values.

The transformative changes implemented in 2023 positively impacted Entourage's business fundamentals as it improved cost savings, invested in manufacturing, and developed a data-driven approach, solidifying the Company for sustainable growth. Entourage carefully analyzes profitability metrics to guide financial success, ensuring every decision enhances overall financial health and operational effectiveness.

Despite the challenges of the Canadian cannabis industry and regulatory complexities, Entourage's resolve remains optimistic. Through proactive engagement and strategic foresight, the Company is poised to overcome these hurdles and capitalize on emerging opportunities, unlocking new avenues for growth and expansion in the years ahead.

The Company will defer the earnings call for the fourth quarter and fiscal year 2023 to align with the first quarter 2024 earnings results on or before May 30, 2024.

About Entourage Health Corp.

Entourage Health Corp. is the publicly traded parent Company of Entourage Brands Corp., a licence holder producing and distributing cannabis products for the medical and adult-use markets. The Company owns and operates a fully licensed 26,000 sq. ft. Aylmer, ON processing facility. With its Starseed Medicinal medical-centric brand, Entourage has expanded its multi-channelled distribution strategy. Starseed's industry-first, exclusive partnership with LiUNA, the largest construction union in Canada, along with employers and union groups, complements Entourage's direct sales to medical patients. Entourage's elite adult-use product portfolio includes Color Cannabis, Saturday Cannabis – and now Dime Bag and Syndicate – sold across eight provincial distribution agencies. Exclusive Canadian producer and distributor of award-winning U.S.-based wellness brand Mary's Medicinals, sold in both medical and adult-use channels. In addition, Entourage also entered into an exclusive agreement with Irwin Naturals, a renowned nutraceutical and herbal supplement formulator of branded wellness products sold across North America.

Follow Entourage and its brands on LinkedIn
Instagram: Color Cannabis, Saturday Cannabis, Starseed, Syndicate, Dime Bag

For additional information or investor or media inquiries:
Catherine Flaman
Senior Director, Communications & Corporate Affairs
416-910-0279
catherine.flaman@entouragecorp.com

Forward Looking Information

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation which are based upon Entourage's current internal expectations, estimates, projections, assumptions and beliefs and views of future events. Forward-looking information can be identified using forward-looking terminology such as "expect," "likely," "may," "will," "should," "intend," "anticipate," "potential," "proposed," "estimate" and other similar words, including negative and grammatical variations thereof, or statements that certain events or conditions "may," "would" or "will" happen, or by discussions of strategy.

The forward-looking information in this news release is based upon the expectations, estimates, projections, assumptions, and views of future events which management believes to be reasonable in the circumstances. Forward-looking information includes estimates, plans, expectations, opinions, forecasts, projections, targets, guidance, or other statements that are not statements of fact. Forward-looking information necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; loss of markets; future legislative and regulatory developments; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the cannabis industry in Canada generally; the ability of Entourage to implement its business strategies; the COVID-19 pandemic; competition; crop failure; and other risks.

Any forward-looking information speaks only as of the date on which it is made, and, except as required by law, Entourage does not undertake any obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for Entourage to predict all such factors. When considering this forward-looking information, readers should keep in mind the risk factors and other cautionary statements in Entourage's disclosure documents filed with the applicable Canadian securities' regulatory authorities on SEDAR+ at The risk factors and other factors noted in the disclosure documents could cause actual events or results to differ materially from those described in any forward-looking information.

Third Party Information

This press release includes market and industry data that has been obtained from third party sources, including industry publications. The Company believes that the industry data is accurate and that its estimates and assumptions are reasonable, but there is no assurance as to the accuracy or completeness of this data. Third party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there is no assurance as to the accuracy or completeness of included information. Although the data is believed to be reliable, the Company has not independently verified any of the data from third party sources referred to in this press release or ascertained the underlying economic assumptions relied upon by such sources.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

ⁱ Hifyre data on pre-roll sales encompasses the three-month period ending December 31, 2023, as well as the subsequent quarter concluding on March 31, 2024.