Elixinol Wellness sharpens Australian focus after completing US divestment
In its September 2026 investor presentation, drawn from the audited interim results for the half-year ended 30 June 2026, Elixinol Wellness (ASX: EXL) outlined the completion of its US business divestment on 4 September 2026, alongside materially improved H1 FY26 earnings and a stabilised capital base.
Management framed the update around repositioning the business on a stabilised, higher-margin Australian nutrition and wellness platform. Adjusted EBITDA loss improved to $(0.1)m for the half, with gross margin expanding to 43.2%.
The presentation positioned the Group as transitioning from a “reset” phase into a “growth” phase.
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H1 FY26 results show margin expansion and a near break-even EBITDA
The company reported group revenue from continuing operations of $7.2m for H1 FY26, up 5.8% on the prior corresponding half. The standout was gross margin, which expanded 9.8 percentage points to 43.2%, supported by improved brand and product mix.
Adjusted EBITDA loss narrowed to $(0.1)m, an improvement of roughly $2.0m on H1 FY25. Notably, this improvement was achieved without the $0.48m insurance recovery that had benefited H1 FY25, pointing to a more structural quality of earnings.
| Metric | H1 FY25 | H1 FY26 | Change |
|---|---|---|---|
| Group revenue (continuing) | $6.8m | $7.2m | +5.8% |
| Gross margin | 33.5% | 43.2% | +9.8 pts |
| Adjusted EBITDA loss | $(2.1)m | $(0.1)m | +94% |
| Statutory loss after tax | $(3.1)m | $(1.1)m | +65.4% |
| Cash at period end | $1.1m | $1.0m | -8% |
Management detailed the drivers behind the EBITDA improvement:
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Gross profit increased $0.84m to $3.11m
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Gross margin expanded 9.8 percentage points through improved brand and product mix
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Core operating expenses reduced $1.08m to $3.33m
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The improvement was achieved without the $0.48m insurance recovery received in H1 FY25
Australian brands drove the top-line growth
Australia is the primary continuing operating segment, and the presentation showed all three key Australian brands delivering revenue growth. The figures are per management reporting and are unaudited.
Hemp Foods Australia contributed $2.87m (+14.1%), The Healthy Chef $2.07m (+22.2%) and Hemp Ingredients $1.33m (+16.4%), taking the Australia total to $7.19m (+5.8%).
Growth was partly offset by a $0.5m decline attributed to Mt Elephant’s retailer consolidation and discontinued duplicate hemp brands.
US divestment completed, a sharper, lower-risk platform
The Group completed the divestment of Elixinol LLC (US) on 4 September 2026. Management outlined three strategic rationales: a sharper focus on the Australian brands where the strongest profitable growth opportunities sit, lower regulatory risk from removing exposure to the evolving US regulatory framework for hemp-derived products, and Ananda Health as the natural owner, bringing vertically integrated US manufacturing, market infrastructure and sector experience. EXL retains the Elixinol brand outside the US.
The transaction carries a headline consideration of A$465,000, comprising A$250,000 on completion plus deferred, contingent and earn-out payments. The US business was classified as held for sale at 30 June 2026, with $181k in assets and $354k in liabilities, while the discontinued loss narrowed to $98k (H1 FY25: $152k).
The binding offer from Ananda Health was structured to give EXL a clean exit while preserving the Elixinol brand across all non-US markets, with the transaction conditional on loan note holder consents being obtained before completion could proceed.
For investors, the divestment removes uncertainty tied to the US regulatory framework and concentrates management attention on the profitable Australian growth opportunity.
Convertible note and cash discipline stabilise the capital base
Subsequent to period end, the Group closed a convertible note offer that had been approved by shareholders at the AGM on 27 May 2026. The notes were issued and funds received on 26 August 2026, strengthening working capital to support growth across the Australian brands.
The capital reset strategy approved at the AGM included seeking up to $2m in convertible notes alongside 400 million new shares and 800 million options, establishing the structural conditions that made the subsequent note issuance and US exit possible.
The key note terms outlined were:
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A$1.06m raised across 1,055,800 notes at A$1.00 face value
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12% p.a. fixed coupon, payable annually
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31 Dec 2027 maturity, converting to EXL ordinary shares
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26 Aug 2026 notes issued and funds received
Management noted that dilution is deferred, as the notes convert to ordinary shares only on holder notice or at maturity, and that proceeds from the US divestment further support the capital base.
On the cash flow side, underlying operating cash flow turned positive to +$0.07m for the half (H1 FY25: -$1.15m). Underlying Q2 FY26 operating cash flow of +$0.05m marked the third consecutive positive quarter. Closing cash stood at $1.0m, with receipts from customers of $7.42m.
Understanding the “reset to growth” strategy
For readers less familiar with the rationale, the strategy reflects a common approach for a smaller, focused wellness company: divesting a non-core overseas business to reduce risk and cost, then rebuilding around higher-margin domestic brands where management believes it holds an advantage.
The presentation detailed a three-phase roadmap:
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Reset (FY25 – H1 FY26): costs rebased, portfolio simplified, US exposure exited and the capital base stabilised
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Proof (H2 FY26): Priceline rollout, Mt Elephant in grocery and hemp supplying two major retailers
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Growth (FY27 and beyond): functional nutrition and peptide innovation, B2B and private label, plus selective acquisitions
Central to the thesis is a vertically integrated hemp foods platform connecting contracted supply, Australian processing, branded and private label products, and retail plus B2B channels. Management framed this as a defensible base, where four brands share sourcing, manufacturing, quality systems and distribution so that each new product and channel win compounds across the Group. The investor takeaway is that cost-out and portfolio simplification lift margins and cash, providing a platform for growth.
A stronger foundation. A clearer position. A growing pipeline.
Growth engines and the next 6–12 months of proof points
Management highlighted The Healthy Chef as an emerging core growth engine, contributing A$2.07m in H1 FY26 revenue (+22.2%) and representing 29% of Australian segment revenue. The key retail catalyst is the Priceline rollout across approximately 410 pharmacy stores in the Stage 1 rollout.
To size the opportunity, the presentation cited the Global Wellness Institute (November 2025), which put the global wellness economy at US$6.8tn in 2024, projected to reach US$9.8tn by 2029. It also referenced McKinsey, noting that up to 60% of consumers rank healthy ageing a top or very important priority.
The four growth engines management outlined were:
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Product innovation
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Channel expansion
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Operating discipline
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Selective acquisition
Near-term proof points identified for the next 6–12 months include:
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Priceline rollout and broader pharmacy awareness
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Mt Elephant national grocery expansion and new formats
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Functional nutrition and nutritional peptide pipeline
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Continued mix improvement and B2B opportunities
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Convertible note in place plus disciplined assessment of aligned acquisitions
Management framed the roadmap as being about sequencing rather than starting from scratch, with multiple near-term, sequenced catalysts already in motion.
A low starting valuation as the market re-rates the reset
The presentation set out a valuation snapshot as the company’s framing of the potential re-rating thesis. As at 4 September 2026, EXL carried a market capitalisation of A$3.5m, based on A$0.008 per share on 438.2m shares. This compares with last-twelve-month revenue of A$14.4m and gross profit of A$5.9m, implying a market cap to revenue multiple of 0.24×. The L12M period ends 31 July 2026 and excludes the US business.
At the H1 FY26 period-end, the company reported 414.0m shares on issue, unchanged during the half.
Management characterised the gap between operating performance and the share price as the opportunity, arguing that operating performance has shifted but is not yet reflected in the valuation. The presentation concluded that consistent growth, sustained margins and continued cash discipline can progressively reshape how the market values EXL.
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