Toronto-based Field Trip Health & Wellness Ltd. (TSXV: FTHW) (OTCQB: FTHWF) may have arrived at the beginning of the end, as new quarterly financials show the company looking at ways to drastically wind down its operations.
In a statement on Tuesday, Field Trip said that it hired a third-party consultant to review the business and suggest restructuring paths and cost cuts such as breaking leases and shuttering clinic locations, which have cost more money than they make.
The third-quarter financials were for the period ending Dec. 31, 2022.
Field Trip posted net revenue of $1.6 million for the quarter, up 23% over the year, though the company’s operating expenses totaled out to $8.1 million.
Net loss for the quarter was $6.9 million, an improvement from $8.8 million in the same period the prior year. Earnings per share were for a $0.08 loss, an improvement from $0.18 loss per share the year before.
The company wrote in its regulatory filing: “As at December 31, 2022, Field Trip H&W has not yet achieved profitable operations” and has a deficit of $48.7 million since its inception and $17.87 million worth of negative operating cash flows for the nine months leading up to the end of 2022.”
The company wrote that it “expects to incur further losses in the development of its business, all of which creates a material uncertainty that may cast significant doubt about the company’s ability to continue as a going concern.”
“The company’s ability to continue as a going concern is dependent upon its ability to generate future 10 FIELD TRIP HEALTH & WELLNESS LTD. Notes to the Unaudited Interim Consolidated Financial Statements For the Three and Nine Months Ended December 31, 2022 and 2021 profitable operations and/or to obtain the necessary financing to conduct its planned business, meet its on-going levels of corporate overhead and discharge its liabilities as they come due. Current unfavourable capital market conditions have presented a challenge for the company in seeking alternative sources of financing.”
Personnel costs alone were $2.7 million for the quarter, and the company spent nearly half a million dollars on marketing in the quarter.
Field Trip wrote off $997,524 in construction costs after it said in April 2022 that it would “defer” to open any more clinics until a future date. The company had split from now-Reunion Science during that period.
The company then subleased four spots it decided not to open clinics at and wrote off $32,696 worth of “leasehold improvements, furniture and fixtures and computer equipment” at the locations.
It said in filings, “The impairment assessment was based on the assumption that future tenants may require modifications to the site that are different from constructions and other assets in the sites. Therefore, it would be unlikely for the company to derive any future benefits from these assets. Hence the full value of the construction in progress, leasehold improvements, furniture and fixtures and computer equipment associated with the affected locations was written off.”
Additionally, the company said that the federal government announcing last month that it would formally end the public health emergency sometime during the first half of the year threw a wrench in its one-year hybrid ketamine therapy program, which had relied on an exception to the Ryan Haight Act that permitted prescribing of controlled substances such as ketamine by telemedicine during the emergency order.
Field Trip said that it would be “evaluating its strategy” around the program and apparently stopped enrolling new clients for it.
The company said that it initially anticipated “revenues and operating cash inflows to ramp” with the launch of the program announced in November 2022.
An independent committee formed among the board of directors in December 2022 set out to “assess strategic options” for the Field Trip.
Last month, the group commissioned a third-party consultant to “perform a review of operations and investigate alternate courses of actions including, but not limited to, further cost reductions, restructuring, the potential sublease or closure of clinic locations and settlement of lease obligations.”
“The formation of the IC was in response to, among other things, current unfavourable capital market conditions, which have presented a challenge for the Company in seeking additional sources of financing, ongoing fixed costs associated with the Company’s brick and mortar locations and the pausing of its hybrid in-clinic/virtual Freedom Program due to regulatory changes potentially affecting the ability of the Company to operate the program.”
It said that it does not intend to comment further on the review “unless and until the board has approved a specific course of action or otherwise determined that further disclosure is appropriate or required by law.”