Incannex Healthcare Share Price Down Despite Positive Results (ASX:IHL)

Shares trading in medicinal cannabinoid producer Incannex Healthcare Ltd [ASX:IHL] share price are flat today, despite posting positive results in its half-yearly report.

IHL’s results follow Althea Group Holding Ltd’s [ASX:AGH] bumper half-yearly report, hinting at a revival of the cannabis boom we saw just a few years ago.

At time of writing the IHL share price is down 2.27% to trade at 22.5 cents per share.

ASX IHL Share Price Chart - Incannex Healthcare Ltd SharesSource: Trading View

Although trading volume is relatively low thanks to a poor day on the broader market.

Regardless of today’s share price action, the IHL share price has seen big upwards movement this month on a slew of positive results relating to its treatments.

Revenue kicks off

The key result in IHL’s half-year report today is the big jump in revenue.

IHL posted revenue growth for the half of 11,859%.

No that’s not a typo.

Revenue ballooned to $1.23 million during the December half, from $10,279 in the previous corresponding period.

With sales of their cannabinoid products finally kicking into gear during the September quarter, with cash receipts of $695,000, IHL is looking well positioned to springboard sales even higher in the current half.

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The strong sales result has also allowed IHL to invest strongly in research and development.

With R&D spending exploding from $313,426 in 1H2020 to $2.04 million in 1H2021.

However, this increase in expenses also meant IHL’s net losses grew by 31% to $2.89 million in the half.

Although this isn’t necessarily a bad result.

It is quite typical for small-cap stocks to post operating losses during their growth phases — IHL is not expecting this.

IHL also managed to raise a hefty $11.2 million from share placements in the period, helping to maintain a healthy cash balance to invest in further growth.

What to look for in Incannex’s growth prospects

Firstly, the beginning of product sales during the half is a key factor in my books.

Not only does it show proof-of-concept — particularly in a small Australian market — but it also helps set them up for potential expansion into overseas markets.

In the long-term, IHL is seeking FDA registration of its four therapeutic products, which would allow for sales in the booming American market.

However, legislative changes here in Australia could see IHL products being sold over the counter of your local pharmacy this year.

Which could spell further significant growth for the IHL share price.

If you’re thinking about making a play into pot stocks, we have a great resource for you; it’s our 2021 pot stocks report which profiles three different options in the growing cannabis market after a consolidation period.

You can download that for free, right here.

Regards, 

Lachlann Tierney,
For Money Morning


Lachlann Tierney is an Analyst for Money Morning and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. Recently he has been working with Ryan Dinse. Lachlann is involved in two publications:


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