Completes Major Steps Towards Profitability
with Best Revenue and Adjusted EBITDA in Over Three Years
TORONTO, May 15, 2024
/CNW/ - MediPharm Labs Corp. (TSX: LABS) (OTCQB: MEDIF) (FSE:
MLZ) ("MediPharm", "MediPharm Labs" or the "Company") a
pharmaceutical company specialized in precision-based cannabinoids
announced its financial results for the three months ended
March 31, 2024.
Select Highlights
- Revenue increased 67% to $9.8M
during the three months ended March 31,
2024 ("Q1 2024") versus revenue for the same quarter in 2023
("Q1 2023") of $5.8M.
- Q1 2024 gross profit was $2.7M or
27% which improved significantly versus Q1 2023 gross profit of
6.6% and versus the three months ended December 31, 2023 ("Q4 2023") of 24.3%
- Adjusted EBITDA(1) improved 70% to negative
$0.9M in Q1 2024 from negative
$3.1M in Q1 2023 and improved
sequentially from negative $1.6M in
Q4 2023.
- MediPharm anticipates further improvement on profitability in
2024 with plans being implemented to improve Adjusted
EBITDA(2) by a further $1M
to $2M, which plans include the
ongoing optimization of production and logistics facilities.
- Strong balance sheet with $17M
million of cash, and less than $3
million of debt as of March 31,
2023.
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, a 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 a 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 in Australia 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 Germany and Australia and potential upcoming changes in
the US are all very favourable for the Company."
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
$9.8 million or 67% higher than prior
year and Adjusted EBITDA loss was $0.9
million which is $2.1 million
better than prior year. Our cash burn was approximately
$1 million resulting in an ending
cash balance of $17 million with less
than $3 million of debt. MediPharm is
in a strong financial position to capitalize on our strong suite of
licences, global customer contracts and assets as we strive for
profitability in 2024."
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 North America to hold a
domestic Good Manufacturing Licence for the extraction of natural
cannabinoids. The Company carries out its operations in compliance
with all applicable laws in the countries in which it operates.
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,
2024
|
December
31, 2023
|
September
30, 2023
|
June
30, 2023
|
$'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
sale
|
-
|
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
business combination (2)
|
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 Hope, British
Columbia facility.
|
(4)
|
This adjustment is for
unusual inventory write-downs only and not the total value of
inventory written down.
|
|
Three months
ended
|
|
March 31,
2023
|
December 31,
2022
|
September 30,
2022
|
June 30,
2022
|
$'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
held for sale
|
-
|
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
group
|
-
|
-
|
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
Germany in 2024 and the
impact of such continued deliveries to the Company's sales and
gross profit; Australian medical cannabis market size and growth
potential; ability to optimize facility utilization; and ability to
grow profitable sales. Forward-looking statements are necessarily
based upon a number of estimates and assumptions that, while
considered reasonable, are subject to known and unknown risks,
uncertainties, and other factors which may cause the actual results
and future events to differ materially from those expressed or
implied by such forward-looking statements. Such factors include,
but are not limited to: general business, economic, competitive,
political and social uncertainties; the inability of MediPharm to
obtain adequate financing; the delay or failure to receive
regulatory approvals; and other factors discussed in MediPharm's
filings, available on the SEDAR+ website at www.sedarplus.ca. There
can be no assurance that such statements will prove to be accurate,
as actual results and future events could differ materially from
those anticipated in such statements. Accordingly, readers should
not place undue reliance on the forward-looking statements and
information contained in this news release. Except as required by
law, MediPharm assumes no obligation to update the forward-looking
statements of beliefs, opinions, projections, or other factors,
should they change.
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SOURCE MediPharm Labs Corp.