Elixinol turns the corner as H1 FY26 EBITDA loss narrows and margins climb to 43%
Elixinol Wellness Limited (ASX: EXL) has reported a materially improved operating result for the first half of FY26, with its Adjusted EBITDA loss narrowing by $2.0M to just $0.1M. Revenue from continuing operations rose 5.8% to $7.2M, while gross margin expanded to 43% from 33% a year earlier.
The result was accompanied by a decisive strategic step: the Group executed an agreement to sell the assets of its US business, sharpening its focus on the core Australian health and wellness portfolio.
Taken together, the half tells a two-part story. An operational turnaround driven by higher margins and lower costs, paired with a portfolio simplification that leaves a leaner, Australian-focused business.
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H1 FY26 financial highlights: a $2.0M swing in profitability
The improvement was broad-based, spanning revenue, cost and cash. Operating expenses fell 25%, or $1.1M, to $3.3M, while the statutory net loss after tax more than halved.
| Metric | H1 FY26 | H1 FY25 | Change |
|---|---|---|---|
| Revenue (continuing) | $7.2M | $6.8M | +5.8% |
| Gross margin | 43% | 33% | +10pts |
| Operating expenses | $3.3M | $4.4M | −25% |
| Adjusted EBITDA | −$0.1M | −$2.1M | +$2.0M |
| Net loss after tax | −$1.1M | −$3.1M | +$2.0M |
| Operating cash outflow | $0.7M | $1.4M | −49% |
Net operating cash outflow reduced by $0.7M, or 49%, to $0.7M. Notably, this improvement was achieved despite no repeat of the $0.5M insurance recovery received in H1 FY25, reinforcing that the gains are underlying rather than one-off in nature.
The Q4 FY25 operational turnaround, which saw margins expand from 38% to 42% and operating costs fall 30%, laid the structural groundwork for the H1 FY26 result reported today.
The statutory net loss after tax of $1.1M included a $0.1M loss from the discontinued US business.
Australian portfolio drives double-digit growth
Revenue growth was led by three core Australian businesses, each delivering strong double-digit growth:
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The Healthy Chef: revenue increased $0.4M (+22%), supported by retail growth and Priceline activation.
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Hemp Foods Australia: revenue increased $0.4M (+14%), with gross margins improving to 48%.
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Hemp Ingredients (Australian Primary Hemp): revenue increased $0.2M (+16%), with gross margins improving to 38%.
These three core growth businesses delivered revenue growth of more than three times the approximately 4% sales growth reported by Australia’s major supermarkets, according to Coles Group and Woolworths Group FY26 results, despite continued cost-of-living pressure.
Understanding the turnaround: why margin expansion matters
For a small-cap wellness company, the shift in profitability rests on a few core levers worth explaining in plain terms.
Gross margin measures the portion of revenue left after the direct cost of producing goods. A move from 33% to 43% means the company now keeps a materially larger slice of every dollar of sales, giving it more headroom to cover overheads and move toward profit.
Adjusted EBITDA strips out non-operating one-offs such as restructuring, business integration and other non-recurring expenses. It offers a cleaner read on underlying trading performance. Narrowing that loss to just $0.1M brings the business close to operational breakeven, signalling a potential path to profitability if the trend holds.
The third lever is product and channel mix. As sales shift toward higher-margin brands and channels, each incremental dollar of revenue carries more profit, compounding the benefit of the margin and cost improvements already achieved.
A simpler, more focused Group: US divestment and capital position
The half featured several distinct corporate actions that reshape the Group’s structure and funding position.
US divestment
The Group has executed an agreement to sell the assets of its US business. Completion remains subject to customary conditions precedent, meaning the transaction is not yet complete. Management framed the move as simplifying the Group and allowing it to focus resources on its core Australian health and wellness portfolio.
The binding offer from Ananda Health carries headline consideration of up to A$465,000, though only A$250,000 is payable at completion, with the remainder deferred or contingent on regulatory outcomes and post-completion revenue performance.
Capital position
Closing cash was $1.0M at 30 June 2026 (H1 FY25: $1.1M). Following period end, the Group closed the Convertible Note offer approved at the 27 May 2026 AGM, with subscriptions totalling $1,055,000 received as at the date of the announcement.
Of that amount, $755,000 represented a secured loan balance transferring into the Convertible Note offer, meaning a portion reflects a conversion rather than new cash. The Group explicitly stated that no equity capital raising has been implemented as at the date of the announcement.
Going concern
As in prior periods, the Interim Report discloses a material uncertainty in relation to going concern. The Directors prepared the financial statements on a going concern basis, having regard to the Group’s cash flow forecasts, the Convertible Note offer, and the expected proceeds from the US divestment. Further detail is set out in Note 2 of the Interim Report.
H2 FY26 priorities and outlook
Elixinol enters the second half of FY26 with stronger margins and a materially lower operating cost base. The Group outlined the following near-term priorities:
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Completing the US divestment.
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Sustaining the improvement in operating cash flow.
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Driving growth through new retail distribution, product launches and additional B2B contracts.
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Continuing to assess strategic M&A opportunities that can utilise existing infrastructure, capabilities and distribution channels.
Board-authorised outlook
The release was authorised by the Board of Elixinol Wellness Limited. Strategic priorities for the second half centre on completing the US divestment, sustaining cash flow improvement and driving further growth across retail, product and B2B channels, with Natalie Butler serving as CEO & Executive Director.
For investors, the half positions the company as entering H2 FY26 leaner, higher-margin and more strategically focused, with clear near-term catalysts. The material uncertainty regarding going concern, however, remains a factor to weigh alongside the operational progress.
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