MediPharm Labs Reports Second Quarter Results Closing in on Positive Adjusted EBITDA(1) as Gross Profit Continues to Improve
Key Highlights
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Adjusted EBITDA(1): Negative
$124K in Q2 2024, significantly improved from negative$949K during the three months endedMarch 31, 2024 ("Q1 2024"), and representing 96% growth versus Adjusted EBITDA(1) for the same quarter in 2023 ("Q2 2023"). -
Net Revenue:
$10.3M in Q2 2024, an 8% increase as compared to Q2 2023, and a 6% increase as compared to Q1 2024, representing the highest net revenue in over three years. International revenue represented 44% of total revenue in Q2 2024. - Gross Profit: 33% in Q2 2024, significantly increased from 8.1% in Q2 2023, driven by cost reductions, production efficiencies and favourable product mix with the expansion of international medical revenue.
-
Cash Balance:
$16 million at the end of Q2 2024. -
Operating Expenses: Reduced by
$2M as compared to Q2 2023, driven by execution of acquisition synergies and overall cost reductions. - Innovation in Pharma Quality Cannabis
-
European Union Dronabinol Sales Success: After a strong Q1 2024,
MediPharm Labs doubled its dronabinol sales in Q2 2024, achieving total sales of$1.9M year to date. Dronabinol is a pharmaceutical monograph product produced byMediPharm Labs in a specialized all-natural process. - Licensing Agreement with Remidose Aerosols: The agreement provides exclusive rights to advanced non-combustible cannabis products. This aerosol technology, produced in both spray and inhaler formats, is expected to expand the Company's product offerings in the adult use wellness, Canadian medical cannabis, and international medical cannabis markets.(2)
- Launch of SEDDS Capsules: In partnership with Avicanna, the company successfully manufactured self-emulsifying drug delivery systems (SEDDS) capsules. Distribution is now available for Canadian patients in two formulations.
-
Leadership in Australian flower alternatives: As of
July 2024 ,MediPharm Labs holds the third largest market share for GMP vapes inAustralia , both in terms of units sold and patient revenue,(3) just nine months after launching these products.
Operational Highlights
-
Streamlined Medical Cannabis Operations: In Q2 2024,
MediPharm Labs reduced the scale of its operations at its facility inHope, British Columbia (the "Hope Facility") and relocated its direct-to-patient medical sales logistics to its facility inBarrie, Ontario (the "Barrie Facility"). This move is anticipated to streamline operations, deliver cost savings of approximately$1M annually and deliver better service to the Company's medical cannabis patients.(2) The sale of the Hope Facility has the potential to generate additional cash in the near term.(2) -
EU GMP Inspections: The Landesamt für Arbeitsschutz Verbraucherschutz und Gesundheit ("LAVG"), the health authority of
Brandenburg, Germany , completed inspections of both the Company's facility inNapanee, Ontario and the Barrie Facility inApril 2024 . EU-GMP certification of both facilities was confirmed and renewed with certificates issuedJuly 1, 2024 , which do not expire untilJuly 2027 . -
DMF Submission for CBD API: In
April 2024 ,MediPharm Labs submitted a DrugMaster File ("DMF") for cannabidiol ("CBD") active pharmaceutical ingredients ("API") toHealth Canada , allowing current and future pharmaceutical partners to referenceMediPharm's CBD API in new and generic drug applications. This complements the DMF filed with theUnited States Food and Drug Administration in 2021. -
New High Potency Medical Cannabis Products in
Germany : InJuly 2024 , the Company began delivering new high potency medical cannabis flower branded underBeacon Medical GmbH to distribution partners inGermany , complementing existing sales as the market grows due to favourable regulatory changes.
Management Commentary
Financial Summary
Three months ended |
|||||
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|
|
|
|
|
$'000s |
$'000s |
$'000s |
$'000s |
$'000s |
|
Revenue |
10,350 |
9,771 |
9,131 |
8,505 |
9,583 |
Gross profit |
3,418 |
2,651 |
2,196 |
2,417 |
855 |
Opex(1) |
(5,382) |
(5,648) |
(5,020) |
(6,050) |
(7,516) |
Adjusted EBITDA (2) |
(124) |
(949) |
(1,579) |
(2,346) |
(3,191) |
(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". |
Q2 2024 Financial Results Conference Call
Conference Call:
North America Toll-Free: (888) 330-2454
International Toll: +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,
In 2021,
In 2023,
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. |
(3) |
According to industry data aggregated by NostraData PTY. |
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 |
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|
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|
$'000s |
$'000s |
$'000s |
$'000s |
|
Net operating loss |
(2,573) |
(3,725) |
(2,935) |
(4,355) |
Adjusted for: |
- |
- |
- |
|
Share-based compensation expense |
576 |
895 |
306 |
386 |
Depreciation and amortization |
731 |
790 |
717 |
617 |
Restructuring related severance expenses |
305 |
755 |
335 |
273 |
Impairment loss on remeasurement of assets held for sale |
77 |
- |
23 |
17 |
Transaction fees for mergers and acquisitions |
- |
- |
- |
46 |
Gain on disposition of assets |
(20) |
(276) |
(174) |
- |
Early lease termination cost |
- |
44 |
- |
- |
Incremental cost of cannabis inventory acquired in a business combination (1) |
162 |
327 |
372 |
2,055 |
Terminal costs for closed facility (2) |
95 |
323 |
- |
- |
One-off derecognition of liabilities |
- |
(130) |
- |
- |
Write down of inventories (3) |
60 |
- |
- |
168 |
Fair value adjustments in gross profit |
170 |
48 |
(223) |
(1,553) |
HST reassessment (4) |
240 |
- |
- |
- |
Payroll tax assessment |
42 |
- |
- |
- |
Miscellaneous |
11 |
- |
- |
- |
Adjusted EBITDA |
(124) |
(949) |
(1,579) |
(2,346) |
(1) |
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. |
(2) |
This relates to employee compensation for terminated employees and write downs of the carrying value of inventory at the Hope Facility. |
(3) |
This adjustment is for unusual inventory write-downs only and not the total value of inventory written down. |
(4) |
This relates to a liability recognized in connection with a notice of reassessment issued by the tax authorities. |
|
Three months ended |
|||
|
|
|
|
|
$'000s |
$'000s |
$'000s |
$'000s |
|
Net operating loss |
(7,629) |
(3,333) |
(6,390) |
(8,046) |
Adjusted for: |
|
|
|
|
Share-based compensation expense |
588 |
747 |
1,390 |
161 |
Depreciation and amortization |
692 |
490 |
540 |
754 |
Restructuring related severance expenses |
1,695 |
- |
- |
- |
Impairment loss on remeasurement of assets held for sale |
- |
- |
13 |
68 |
Transaction fees for mergers and acquisitions |
304 |
533 |
813 |
185 |
Recovery of impaired receivables (1) |
(464) |
(1,546) |
- |
- |
Write down of inventories (2) |
1,036 |
- |
- |
428 |
Impairment loss on remeasurement of disposal group |
- |
- |
- |
1,476 |
Fair value adjustments in gross profit |
588 |
- |
- |
- |
Other tax recovery |
(1) |
- |
- |
- |
Miscellaneous |
- |
19 |
- |
- |
Adjusted EBITDA |
(3,191) |
(3,090) |
(3,634) |
(4,974) |
(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; the impact of the licensing agreement with Remidose Aerosols on the Company's product offerings in the adult use wellness, Canadian medical cannabis, and international medical cannabis markets; the anticipated impact of the Company's reduction in operations at the Hope Facility and relocation of its direct-to-patient medical sales logistics to the Barrie Facility; the potential sale of the Hope Facility; market growth in
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