MediPharm Labs Reports First Quarter Results
PR Newswire
TORONTO, May 15, 2024
Completes Major Steps Towards Profitability with Best Revenue and Adjusted EBITDA in Over Three Years
TORONTO, May 15, 2024 /PRNewswire/ - 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: $(888.UK)$ 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 $(API.UK)$ 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
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