MediPharm Archives - Green Market Report

Debra BorchardtDebra BorchardtNovember 16, 2020
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3min2700

MediPharm Labs Corp. (TSX: LABS) (OTCQX: MEDIF)  announced its revenues fell to $4.9 million for the third quarter ending September 30, 2020, versus $13.9 million for the second quarter of 2020. This was a massive decline from last year’s revenue of $43 million for the same time period. The company also delivered a net loss before tax of $15.4 million, compared to a net income of $5.3 million for last year’s third quarter. It also increased sequentially from a loss of $3.7 million in the second quarter.

MediPharm said that the decline in revenue was due to lower bulk extract volumes and average selling prices, which were partially offset by growth in formulated finished goods sales, up 30% to provincial distributors throughout Canada, and sales from MediPharm Labs Australia. The company told investors in a statement that based on agreed customer production schedules, it expects revenue from its portfolio of domestic and international sales agreements to grow beginning early in 2021 and will be complemented by new sales of LABS Cannabis products.

“Economic conditions including the oversupply in the Canadian bulk crude resin and distillate markets, along with the impact of COVID 19, continue to challenge the industry,” said Pat McCutcheon, CEO, MediPharm Labs. “We are now focused on doing more to drive profitable revenue and address weaknesses including reducing our cost structure. We have taken immediate steps to improve our costs and organizational alignment against which we have put an action plan in place that will create value and enable us to achieve our potential.”

The company reported its gross profit was ($10.6 million) and gross margin was (214%) compared to a gross profit of $2.2 million and a gross margin of 16% in the second quarter of 2020. This was primarily due to a $6.3 million non-cash write-down of inventory to net realizable value and a $1.5 million write-down of non-current deposits given to vendors for capital expenditures. The gross profit was $$14.7 million for the 2019 third quarter.  The negative Adjusted EBITDA was $7.3 million.

The company said that it had a cash and equivalents balance of $36.5 million on September 30, 2020.

C Suite Changes

Following the end of the quarter, MediPharm announced the departures of Robert Kwon, Chief Financial Officer, and the company’s Chief Marketing Officer. A search process has been initiated for a new CFO while the role of Chief Marketing Officer will not be directly filled and but will be covered by the company’s new VP of Sales.


Debra BorchardtDebra BorchardtJune 8, 2020
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3min5720

MediPharm Labs Corp. (OTCQX: MEDIF) closed a private placement with an institutional investor for gross proceeds of C$37,822,500. The company said it plans to use the money for general corporate purposes, including building on the launch of its Cannabis 2.0 offerings with new product formats and expanding its product and Active Pharmaceutical Ingredient exports.

“With this strategic capital, MediPharm Labs moves forward confidently with a position of increased financial strength and flexibility to deliver on the longer-term opportunities available to us domestically and internationally that will diversify our revenue and drive long term earnings growth,” said Pat McCutcheon, Chief Executive Officer, MediPharm Labs. “I continue to be excited about the global market opportunity and leveraging our multi-jurisdictional pharmaceutical-quality manufacturing platform in a nascent cannabis market.  We are building on our global customer partnerships and market share, providing international distribution expertise, and delivering innovative products and brands. Importantly, we are excited to expand our participation across a wide range of clinical trials that offer potential upside towards the future development of cannabis-based prescription RX products. We look forward to creating value for all shareholders as we build out our capabilities to drive future sustainable growth.”

The money will also strengthen the company’s balance sheet as it navigates the economic recession created by the COVID-19 pandemic. The company said it would file its first-quarter earnings by June 29 and has hinted that the pandemic may have affected the company. It laid off 10% of its employees and instituted a 10% voluntary pay cut.

MediPharm filed an application to list its common shares on the NASDAQ Stock Market (NDAQ) in November 2019, but is still on the OTC exchange according to the press release. The company at the time said it would continue to maintain the listing of its common shares on the Toronto Stock Exchange under the symbol “LABS”.

Terms

According to the company statement, $18,911,250 of the Offering is related to the placement of a $20.5 million unsecured convertible note and a warrant to purchase up to 3,601,427 common shares of the company and $18,911,250 of the Offering is currently being held in escrow and is related to the placement of a subscription receipt entitling the holder to receive, upon satisfaction of certain Escrow Release Conditions (as defined below), a further $20.5 million unsecured convertible note and a further warrant to purchase up to 3,601,427 Common Shares.

 


Debra BorchardtDebra BorchardtAugust 12, 2019
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8min9690

It’s time for your Daily Hit of cannabis financial news for August 12, 2019.

On The Site

CannTrust

After the market closed on Friday, CannTrust Holdings Inc. (NYSE: CTST)said it received a report from Health Canada telling the company that “Its manufacturing facility in Vaughan, Ontario has been rated non-compliant with certain regulations.”CannTrust stock is dropping over 25% to lately trade at roughly $2.26 in pre-market trading as shareholders learn about the continuing problems with the facilities causing more uncertainty.

The news that the company’s facility has failed a recent inspection is troubling because it was supposed to have addressed problems from previous inspections in which the company was found to be growing cannabis in rooms that hadn’t received licenses.  Health Canada has said that it is currently unable to provide any guidance about the timing or content of its decisions regarding CannTrust.

Saving Money

On August 6th we published an article that illustrated the savings for consumers and additional profits for cultivators that could be produced through the use of a properly organized Cannabis Cooperative Association (“CCA”). This article describes the savings for consumers and the additional profits for cultivators in the movement of cannabis in the form of extracted oil.

As we have said on multiple occasions, a CCA is the most financially efficient structure for engaging in business in California’s cannabis industry. The utilization of a CCA for the movement of cannabis as extracted oil produces even greater price reductions for consumers and increased profits for cultivators than with flower. This occurs because more costs are incurred between the cultivator and the consumer in the movement of extracted oil than in the movement of flower.

Novel?

It was announced on January 2019 that the European Food Safety Association, EFSA is about to make a decision in order to classify CBD oil and other CBD products as a novel food. This decision was announced at the Novel Food Commission meeting which was held in Brussels in 2016. This led to a final imminent decision very soon and EFSA considered CBD products as Novel Food.

In recent times, there has been tremendous growth in food products available in the market which eventually included Cannabidiol. And, according to reports, it is clear that the European CBD Market is going to encounter a boom in the near future. Eventually, the regulators started taking a closer look at the CBD products and oil available in the European market.

In Other News

MediPharm Labs

MediPharm Labs (MEDIF) reported that its second-quarter revenue was $31.5 million, a 43% increase over Q1 2019, reflecting Canadian cannabis extraction-only industry and the ramp-up of new committed contracts. Gross Profit was $11.3 million, a 65% increase over Q1 2019, while Gross Margin was 36% compared to 31% in Q1 2019, reflecting increased production and production efficiency that continues to improve as the Company realizes economies of scale. Adjusted EBITDA was $7.7 million, 79% higher than Q1 2019, while Adjusted EBITDA margin was 24% compared to 20% in Q1 2019. Net income before tax was $4.1 million compared to a net loss of $0.3 million in Q1 2019

MariMed

MariMed (MRMD) report that its revenues for the second quarter of 2019 were $25.7 million, up 774% compared to $2.9 million in the same year-ago quarter. The increase in revenue was primarily the result of hemp seeds sales totaling $25.2 million dollars, of which $22.0 million was recognized in the quarter. The remaining revenue is expected to be recognized in the third and fourth quarters of 2019 upon payment from the buyer. Revenues excluding the hemp seed sales increased 24% to $3.7 million versus the year-ago quarter.

Gross profit for the second quarter of 2019 was $8.9 million or 34.8% of revenues, up 341.1% from $2.0 million or 68.9% of revenues in the same quarter from a year ago. Gross profit in MariMed’s core businesses as a percentage of revenues increased to 72.4% in the second quarter of 2019 from 68.9% in the year-ago quarter. Net income for the second quarter of 2019 was $4.7 million or $0.02 per fully diluted share, improving from a net loss of $393,000 or $(0.00) per basic share in the year-ago quarter.

Medicine Man Tech

Medicine Man Technologies, Inc. (OTCQX: MDCL) announced that it has entered into a binding term sheet to acquire Colorado-based Dabble Extracts, an award-winning cannabis concentrate company that specializes in processing medical and recreational marijuana into premium-grade extracts.

Under the terms of the term sheet, the company will pay $3,750,000 for Dabble Extracts. The purchase price will consist of $750,000 in cash and 996,678 shares of common stock priced at $3.01/share, which is the average closing price of the Company’s stock for the five trading days prior to August 6, 2019. The terms can also be referenced in the 8-K, which outlines the closing conditions. The obligations of the Company and Dabble Extracts under the term sheet are conditioned upon the satisfaction of mutual waiver of certain conditions, including regulatory approval.

Nabis

Nabis Holdings Inc. (CSE: NAB) (OTC: NABIF has entered into a Definitive Agreement for the acquisition of 100% of the membership units of a licensed medical marijuana business in the state of Arizona.

The Asset, licensed under the provisions of the Arizona Medical Marijuana Act, operates a dispensary in Phoenix, Arizona. The dispensary in Phoenix has been operating since 2015 with proprietary branded products and wholesale operations, including an established distribution network serving more than 50% of the dispensaries in Arizona.

The audited sales for 2017 and 2018 were USD $7.4 million and $8.7 million respectively.  2019 unaudited revenue is on pace for sales of USD $9 million. The dispensary specializes in top-tier flower, vape pens, concentrates, edibles, tinctures, and CBD products.

 



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