Liberty Health Science Archives - Green Market Report

Debra BorchardtOctober 30, 2020

Liberty Health Sciences Inc. (CSE: LHS) (OTCQX: LHSIF ) announced its financial results for the second quarter ending August 31, 2020. The company said that consolidated net sales for the quarter ended August 31, 2020, were $18,170,975 versus $10,627,656 for the quarter ended August 31, 2019.

While Liberty recorded a net income in the quarter of $11.5 million, this was a huge drop from last year’s net income of $23 million for the same time period.

“We continue to strive to post steady operational results and grow our market share to meet the increased demand for our suite of cannabis brands,” said George Gremse, Interim Chief Executive Officer of Liberty. “Despite the challenges we face with COVID-19, we continue to make progress with our strategy and provide our patients with some of the best quality of life medicinal products on the market today.”

For the quarter ended August 31, 2020, the company reported Adjusted EBITDA of $5,632,626 , compared with $872,946 for the quarter ended August 31, 2019, and $11,227,903 for the six months ended August 31, 2020, compared with negative Adjusted EBITDA of ($1,731,727) for the six months ended August 31, 2019.

Prices rose for the company’s product. Estimated selling prices for cannabis flower averaged $9.95 and $11.02 for the three and six months ended August 31, 2020, respectively. Estimated selling prices for cannabis flower averaged $12.26 for the three months ended May 31, 2020. Estimated selling prices of cannabis flower averaged $8.97 for the three months ended August 31, 2019, and $10.18 for the year ended February 29, 2020.

Earlier this week, Liberty made changes in its C-suite. The company announced that Victor Mancebo had resigned from the Board of Directors and his role as Chief Executive Officer, effective December 31, 2020. Gremse was appointed as Interim CEO during the process of identifying a permanent CEO.

The moves came after shareholders expressed dissatisfaction with the company’s disappointing cannabis production in the state of Florida. A recent state report from the Office of Medical Marijuana dated October 16-22 showed that Liberty, with 26 dispensing locations, had produced only 3,937,111 mgs of medical marijuana with THC. AltMed Florida, which also has 26 locations, produced 14,854,911 mg. of medical marijuana with THC. The same report listed Liberty as producing 1,189,520 ounces of “marijuana in smoking form” while AltMed produced 3,410,551 ounces. Sales also fell as the same report showed that Liberty’s sales fell 26% in the THC category, but rose 75% in flower sales. However, Liberty only sold 1,200 ounces of flower versus AltMed’s 3,400 ounces of flower.

In addition to that, Liberty asked its debt holders for a 12-month extension on Senior Secured Convertible Debentures from the original November 22, 2020 maturity date (that were originally issued on November 22, 2017). They were offered to increase the interest from 12% to 13%. $6 million is currently outstanding. Debenture holders that don’t choose the extension are said to be repaid from existing funds held at the company.

The company had cash and cash equivalents of $17,086,203 as of August 31, 2020, compared to $24,957,245 as of February 29, 2020. In the quarter ended August 31, 2020, the company made tax payments of $13,998,820 .

Debra BorchardtOctober 31, 2019

Liberty Health Sciences Inc. (CSE: LHS) (OTCQX: LHSIF) reported net sales of $10,627,656 for the second quarter ending August 31, 2019, versus $2,219,290 for the quarter for the same time period in 2018. Liberty Health delivered net income for the quarter of $22,884,261, turning the corner over last year’s net loss of $5,605,355 and besting many cannabis companies that only seem to deliver net losses.

The company attributed the significant year-over-year increase in revenue to the opening of new dispensaries and delivery locations, as well as experiencing an upsurge in same-store sales volume and an uptick in the registered patient base for Medical Marijuana Use in Florida.

“The second quarter of fiscal year 2020 proved to be the largest sales revenue quarter in the history of our Company,” said Victor Mancebo, Interim Chief Executive Officer of Liberty. “Liberty’s continued growth directly ties to the strategic initiatives we have set in place, which has been increasing our Florida production, retail base, and delivery footprint along with expanding our product portfolio and brand partnerships. We continue to work on numerous marketing strategies that will complement our expansion plans and simultaneously provide our patients a more educational, personalized and accessible experience.”

Liberty said it was one of the first companies in Florida to rollout whole flower products in all of its dispensaries, Liberty has reached monthly sales, including smokable medical marijuana, of more than $4.6 million in August 2019. In the heat of the vape crisis, flower has become a consumer favorite. The company said it expects its sales to continue to grow steadily as it expands its dispensary footprint and product offerings. Those product offerings include Liberty Health Sciences, Zentient, Pretty Pistil, Papa’s Herb, Mary’s Medicinal, PAX, Werc Shop, and Lemon and Grass.

As of August 31, 2019, Liberty said it had $23,884,434 of cash and term deposits. The company currently has 19 operational dispensaries.

In The Pipeline

Liberty finished construction on its new 387-acre state-of-the-art Liberty-360 facility comprising 300,000 square feet of greenhouse processing and production space resulting in the company being the lowest cost and consistent producer in Florida. The company has lease agreements in place for another 10 locations and is further negotiating another seven.