MediPharm Labs Reports First Quarter Results
MediPharm Labs (TSX: LABS, OTCQB: MEDIF, FSE: MLZ) reported significant financial improvements for Q1 2024. Revenue rose by 67% to $9.8M compared to $5.8M in Q1 2023. Gross profit improved to $2.7M or 27% of revenue, up from 6.6% last year. Adjusted EBITDA loss decreased by 70% to $0.9M from $3.1M in Q1 2023. The company has $17M in cash and less than $3M in debt.
MediPharm is optimistic about potential US regulatory changes and plans to leverage its FDA and DEA credentials for future growth. Internationally, they saw a 36% increase in German medical cannabis sales to $1.4M and a 64% rise in Australian sales to $1.8M. CEO David Pidduck highlighted ongoing revenue growth, improved profitability metrics, and strong financial positioning for future investments.
- Revenue increased by 67% to $9.8M in Q1 2024 compared to $5.8M in Q1 2023.
- Gross profit margin improved to 27% from 6.6% in Q1 2023.
- Adjusted EBITDA loss reduced by 70% to $0.9M from $3.1M in Q1 2023.
- Strong balance sheet with $17M in cash and less than $3M in debt.
- Medical cannabis sales in Germany rose by 36% to $1.4M.
- Medical cannabis sales in Australia increased by 64% to $1.8M.
- MediPharm anticipates further profitability improvements in 2024.
- Operating expenses (Opex) increased to $5.6M from $2.9M in Q1 2023.
- Adjusted EBITDA, though improved, remained negative at $0.9M.
- Cash burn was approximately $1M during Q1 2024.
Completes Major Steps Towards Profitability with Best Revenue and Adjusted EBITDA in Over Three Years
Select Highlights
- Revenue increased
67% to$9.8M $5.8M - Q1 2024 gross profit was
$2.7M 27% which improved significantly versus Q1 2023 gross profit of6.6% and versus the three months ended December 31, 2023 ("Q4 2023") of24.3% - Adjusted EBITDA(1) improved
70% to negative$0.9M $3.1M $1.6M - MediPharm anticipates further improvement on profitability in 2024 with plans being implemented to improve Adjusted EBITDA(2) by a further
$1M $2M - Strong balance sheet with
$17M million$3 million
US Update and Strategy
- MediPharm is optimistic about recent Associated Press reports that the US Drug Enforcement Agency ("US DEA") will move cannabis from a Schedule I to a Schedule III drug. This is a solid step towards recognizing the medical benefits of cannabis and allow for the increased study of those benefits. Today, researchers face significant challenges in getting trial approvals and then dealing with the logistics of sourcing, and managing Clinical Trial Materials that may contain cannabis.
- The Company believes that the US Food and Drug Administration ("FDA") could regulate these cannabis activities, as they do with tobacco products, food, cosmetics, natural health products and drugs. (2)
- MediPharm is the only purpose-built cannabis facility that has been inspected by the FDA and holds a current Drug Establishment Licence. MediPharm has been referenced in FDA Investigational New Drug Applications, an Abbreviated New Drug Application and a Drug Master File. The Company has also sent multiple cannabis oil shipments for clinical trials which are DEA approved.
- In the short-term MediPharm will use this leading FDA and US DEA experience to position itself as the go-to partner for cannabis research in the US.
- Longer term, it is likely that any new US FDA regulations will raise the bar on manufacturing quality requirements. MediPharm intends to use its advanced GMP process validation and pharmaceutical product characterization to launch products into the future regulated US market. (2)
Continued Growth in International Medical Cannabis in Q1 2024
- Changes to the German legislation in removing cannabis from the narcotic lists has opened new commercial opportunities to streamline in-county operations and expand the addressable patient base.
- In Q1 2024, MediPharm's Beacon Medical GMBH hosted a successful audit at its German office for the continued import, manufacturing and release of cannabis products. This was followed by EU GMP renewal inspections at the Company's Canadian sites. This clears the path to increase branded product sales in the second half of 2024(2). MediPharm now has 14 product registrations under the Beacon brand in
Germany , up from 5 in Q4 2023. - Increase in German medical cannabis sales to
$1.4M 36% increase versus Q4 2023.70% of these sales were non-flower products including oil, CBD isolate and dronabinol, contributing to improved overall international margin profile. - In Q1 2024, MediPharm medical cannabis sales in
Australia were$1.8M 64% increase from Q4 2023. The main contributor to the increase was both branded and white label GMP vape sales. New tighter rules requiring all products to meet GMP standards inAustralia has opened many branded and B2B opportunities for the Company.
Management Commentary
David Pidduck, CEO, MediPharm Labs commented, "This quarter shows another quarter of growing revenue, stronger gross profit, decreasing costs and improving Adjusted EBITDA. MediPharm's balance sheet is in an excellent position to consider future investments in growth. With Adjusted EBITDA getting close to breakeven, the leadership team can now devote even more energy to growing our business. Regulatory changes in
Greg Hunter, CFO, MediPharm Labs added, "Q1 2024 was another step in the right direction towards profitability and becoming cash flow positive. Our revenue and Adjusted EBITDA were both the highest in over 3 years. Revenue was
Financial Summary
Three months ended | |||||
31-Mar-24 | 31-Dec-23 | 30-Sep-23 | 30-Jun-23 | 31-Mar-23 | |
$'000s | $'000s | $'000s | $'000s | $'000s | |
Revenue | 9,771 | 9,131 | 8,505 | 9,583 | 5,843 |
Gross profit | 2,651 | 2,196 | 2,417 | 855 | 387 |
Opex(1) | (5,648) | (5,020) | (6,050) | (7,516) | (2,923) |
Adjusted EBITDA (2) | (949) | (1,579) | (2,346) | (3,191) | (3,090) |
(1) Opex includes general administrative expense, marketing and selling expenses and R&D expenses. |
(2) Adjusted EBITDA is a non-IFRS measure. See "Non-IFRS Measures". |
Q1 2024 Financial Results Conference Call
MediPharm's executive management team will also host a conference call and audio webcast on Wednesday, May 15, 2024 at 8:30 a.m. eastern time to discuss the Company's financial results.
Conference Call:
Toll-Free number: (888) 330-2454
International number: +1 (240) 789-2714
Conference ID: 4921762
Participants are asked to dial in approximately 15 minutes before the start of the call.
Audio Webcast:
An audio webcast will be available by visiting the following link here.
For those who are unable to participate on the live conference call or webcast, a replay will be available at https://www.medipharmlabs.com/investors approximately one day after completion of the call.
About MediPharm Labs
Founded in 2015, MediPharm Labs specializes in the development and manufacture of purified, pharmaceutical-quality cannabis concentrates, active pharmaceutical ingredients (API) and advanced derivative products utilizing a Good Manufacturing Practices certified facility with ISO standard-built clean rooms. MediPharm Labs has invested in an expert, research driven team, state-of-the-art technology, downstream purification methodologies and purpose built facilities with five primary extraction lines for delivery of pure, trusted and precision-dosed cannabis products for its customers. Through its wholesale and white label platforms, MediPharm Labs formulates, develops (including through sensory testing), processes, packages and distributes cannabis extracts and advanced cannabinoid-based products to domestic and international markets.
In 2021, MediPharm Labs received a Pharmaceutical Drug Establishment Licence from Health Canada, becoming the only company in
In 2023, MediPharm acquired VIVO Cannabis Inc. which expanded MediPharm's reach to medical patients in Canada via Canna Farms medical ecommerce platform, and in Australia and Germany through Beacon Medical PTY and Beacon Medical GMBH. This acquisition also included Harvest Medical Clinics in Canada which provides medical cannabis patients with Physician consultations for medical cannabis education and prescriptions.
Notes:
(1) | This is a non-IFRS reporting measure. See "Non-IFRS Measures" below. |
(2) | This is a forward-looking statement and based on a number of assumptions. See "Cautionary Note Regarding Forward-Looking Information" below. |
Non-IFRS Measures
This press release contains references to "Adjusted EBITDA", which is a non-IFRS financial measure. Management believes that this supplementary non-IFRS financial measure provides useful additional information related to the operating results of the Company. This non-IFRS financial measure is not recognized under IFRS and, accordingly, users are cautioned that this measure should not be construed as an alternative to net income (loss) and gross profit determined in accordance with IFRS as measures of profitability or as alternatives to the Company's IFRS-based Financial Statements. The non-IFRS measure presented may not be comparable to similar measures presented by other issuers. Adjusted EBITDA is a measure of the Company's overall financial performance and is used as an alternative to earnings or income in some circumstances. Adjusted EBITDA is essentially net income (loss) with interest, taxes, depreciation and amortization, non-cash adjustments and other unusual or non-recurring items added back. Adjusted EBITDA has limitations as an analytical tool as it does not include depreciation and amortization expense, interest income and expense, finance fees, gain in revaluation of derivative liabilities, taxes, government grants including rent and wage subsidies, one-off transactions, impairment losses on inventory and on fixed assets and intangibles, write down of deposits and share-based compensation. Because of these limitations, Adjusted EBITDA should not be considered as the sole measure of the Company's performance and should not be considered in isolation from, or as a substitute for, analysis of the Company's results as reported under IFRS. Adjusted EBITDA, as used within the Company's disclosure, may not be directly comparable to Adjusted EBITDA used by other reporting issuers. Adjusted EBITDA does not have a standardized meaning and the Company's method of calculating such non-IFRS measure may not be comparable to calculations used by other companies bearing the same description.
The following tables reconcile the Company's net operating income (loss) (as reported) and Adjusted EBITDA for the past eight quarters:
Three months ended | ||||
March 31, | December | September | June | |
$'000s | $'000s | $'000s | $'000s | |
Net operating loss | (3,725) | (2,935) | (4,355) | (7,629) |
Adjusted for: | - | - | ||
Share-based compensation expense | 895 | 306 | 386 | 588 |
Depreciation and amortization | 790 | 717 | 617 | 692 |
Restructuring related severance expenses | 755 | 335 | 273 | 1,695 |
Impairment loss on remeasurement of assets held for | - | 23 | 17 | - |
Transaction fees | - | - | 46 | 304 |
Recovery of impaired receivables (1) | - | - | - | (464) |
Gain on disposition of assets | (276) | (174) | - | - |
Early lease termination cost | 44 | - | - | - |
Incremental cost of cannabis inventory acquired in a | 327 | 372 | 2,055 | - |
Terminal costs for closed facility (3) | 323 | - | - | - |
One-off derecognition of liabilities | (130) | - | - | - |
Write down of inventories (4) | - | - | 168 | 1,036 |
Fair value adjustments in gross profit | 48 | (223) | (1,553) | 588 |
Other tax recovery | - | - | - | (1) |
Adjusted EBITDA | (949) | (1,579) | (2,346) | (3,191) |
Notes:
(1) | This relates to the reversal of a former impairment of a long outstanding receivable. |
(2) | Incremental cost of cannabis inventory acquired in a business combination represents the fair value realized on sale of cannabis inventory acquired in a business combination. |
(3) | This relates to employee compensation for terminated employees and write downs of the carrying value of inventory at the Company's |
(4) | This adjustment is for unusual inventory write-downs only and not the total value of inventory written down. |
Three months ended | ||||
March 31, | December 31, | September 30, | June 30, | |
$'000s | $'000s | $'000s | $'000s | |
Net operating loss | (3,333) | (6,390) | (8,046) | (9,069) |
Adjusted for: | ||||
Share-based compensation expense | 747 | 1,390 | 161 | 580 |
Depreciation and amortization | 490 | 540 | 754 | 759 |
Restructuring related severance expenses | - | - | - | 952 |
Impairment loss on remeasurement of assets | - | 13 | 68 | - |
Transaction fees | 533 | 813 | 185 | 95 |
Recovery of impaired receivables (1) | (1,546) | - | - | - |
Write down of inventories (2) | - | - | 428 | 338 |
Impairment loss on remeasurement of disposal | - | - | 1,476 | - |
Adjusted EBITDA | (3,090) | (3,634) | (4,974) | (6,345) |
Notes:
(1) | This relates to the reversal of a former impairment of a long outstanding receivable. |
(2) | This adjustment is for unusual inventory write-downs only and not the total value of inventory written down. |
Cautionary Note Regarding Forward-Looking Information
This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements relate to, among other things, statements regarding: the Company's progress toward profitability; potential improvements in gross margin and revenue, potential future and annualized savings to be realized as a result of Company's restructuring efforts, including the Company's ongoing plans to optimize its production and logistics facilities; the successful reclassification of cannabis as a Schedule III drug, including the approval by the White House Office of Management and Budget, and the publishing of the final rule by the US DEA; the US FDA beginning to regulate activities related to sourcing and managing Clinical Trial Materials that may contain cannabis; the Company having the necessary resources and approval requirements to launch products into any future cannabis-regulated US market; ongoing demand for continued and increased product sales into the German cannabis market; the Company's ability to increase deliveries to
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SOURCE MediPharm Labs Corp.
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