Annual Revenue and Adjusted EBITDA Improve by
50%
TORONTO, March 27, 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, today announced its
financial results for the full year and three months ended
December 31, 2023.
Select Highlights
- 2023 full year revenue increased approximately 50% to
$33M versus prior year of
$22M.
- 2023 full year Adjusted EBITDA(1) improved 50% to
negative $10M in 2023 from negative
$21M in 2022.
- Q4 2023 gross profit was $2.2M or
24%. Gross profit showed significant improvement over Q4 2022 of
$0.2M or 4%.
- Q4 2023 Adjusted EBITDA(1) of negative $1.6M improved 55% from negative $3.6M in Q4 2022 and improved over 30% from
negative $2.4M in Q3 2023. Adjusted
EBITDA(1) continues to improve driven by margin
expansion initiatives and cost reductions.
- Strong balance sheet, relative to many peer companies, with
approximately $18M million of cash
and less than $3 million of debt as
of December 31, 2023.
Continued Growth in International
Medical Cannabis
- In Q4 2023, MediPharm completed an in-person inspection
from the Brazilian Health Regulatory Agency (ANVISA). The first
cannabis company in North America
to complete an in-person inspection for Good Manufacturing Practice
(GMP) cannabis production for Brazil.
- Brazil, with a population of
215M, has seen tremendous growth in
medical cannabis patients with a 480% increase in prescriptions in
20221. MediPharm has two medical cannabis products with
ANVISA authorizations and will increase deliveries to a new pharma
partner in 2024.(2)
- In Q4 2023, MediPharm completed the development and
initial deliveries of THC isolate, commonly known as Dronabinol,
for the European Union market. Subsequent to year-end MediPharm has
made deliveries of this product to multiple customers and it
anticipates it having a materially positive impact to sales and
gross profit. (2)
- In 2023, MediPharm expanded its top Australian medical
cannabis flower brand, Beacon Medical, to include high quality GMP
oils and vapes. Australia is the
largest medical cannabis market outside of North America which The Pennington Institute
(Cannabis in Australia 2023
report) estimates generated over $400m AUD in 2023.2
Progress Towards
Profitability
- MediPharm achieved a 2023 gross margin of 18% versus negative
9% in 2022. Positively moving to 24% in Q4 2023. This improvement
is a trend the Company believes will continue. With the success in
improving product mix and cost of goods sold MediPharm now has the
foundation for a profitable future.
- Total Opex, which includes general administrative,
marketing and selling, and research and development expenses, was
reduced by $2M or 10% on a year over
year basis, while growing sales by 50% in the same time period.
Additional reductions implemented in Q4 2023 will further reduce
Opex in 2024. (2)This execution of doing more with less
has resulted in a revised cost base, positioning the company for
profitability.
- MediPharm plans to further improve on profitability in 2024
including optimizing facility utilization with additional contract
manufacturing, growing sales of healthy margin products, increasing
international sales with local pharmaceutical partners, and
refreshing the Canadian adult use and wellness portfolio to grow
sales in our largest addressable market.
Management Commentary
David Pidduck, CEO, MediPharm
Labs commented, "MediPharm now has the margins, Opex and
Adjusted EBITDA results all trending in the right direction. We
also have a robust revenue pipeline with multiple partners in
multiple markets. The transformation to a profitable growing
company continues. Over the years we have invested in our
infrastructure as a high quality and high capacity pharmaceutical
grade manufacturer, allowing us to grow sales with new
opportunities and markets, without additional investment into
capital or resources. We are proud of the work completed in 2023
and excited about the future of MediPharm Labs."
Greg Hunter, CFO, MediPharm Labs
added, "2023 was a transformation year for MediPharm, with the
acquisition of VIVO, revenue increased by approximately 50% year
over year and expanded our reach into Australia and the Canadian Medical business.
Gross margins expanded significantly to 24% in Q4 and OPEX was
reduced to produce the best Adjusted EBITDA in 4 years. In Q4, we
continued to make progress by improving gross margins, reducing
expenses and reducing cash burn as we drive towards profitability.
Adjusted EBITDA of negative $1.6
million improved sequentially and year over year and is our
best result in over 4 years. In addition, we ended the year with a
strong balance sheet with $18 million
of cash and 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 move in to 2024"
Financial Summary
(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".
|
|
Q4 2023 Financial Results
Conference Call
MediPharm's executive management team will also host a
conference call and audio webcast on Wednesday, March 27, 2024 at 8:30 a.m. eastern time to discuss the Company's
financial results.
Conference Call:
Toll-free number: +1 (888) 330-2379 / International number: +1
(240) 789-2710
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:
- This is a non-IFRS reporting measure. See "Non-IFRS
Measures" below.
- 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 table reconciles the Company's net operating
income (loss) (as reported) and Adjusted EBITDA for the periods
presented:
|
Three months
ended
|
Twelve months
ended
|
|
December 31,
2023
$'000s
|
December 31,
2022
$'000s
|
December 31,
2023
$'000s
|
December 31,
2022
$'000s
|
Net operating
loss
|
(2,935)
|
(6,390)
|
(18,252)
|
(29,533)
|
Adjusted
for:
|
|
|
|
|
Share-based
compensation expense
|
306
|
1,390
|
2,027
|
2,872
|
Depreciation and
amortization
|
717
|
540
|
2,516
|
2,872
|
Restructuring related
severance expenses
|
335
|
-
|
2,303
|
1,233
|
Government
grants
|
-
|
-
|
-
|
(21)
|
Transaction
fees
|
-
|
813
|
883
|
1,164
|
Recovery of impaired
receivables (1)
|
-
|
-
|
(2,010)
|
-
|
Impairment loss on
remeasurement of
disposal group
|
-
|
-
|
-
|
-
|
Impairment loss on
remeasurement of assets
held for sale
|
23
|
13
|
40
|
81
|
Gain on disposition of
assets
|
(174)
|
-
|
(174)
|
-
|
Incremental cost of
cannabis inventory
acquired in a business combination (2)
|
372
|
-
|
2,427
|
-
|
Fair value adjustments
in gross profit
|
(223)
|
-
|
(1,188)
|
-
|
Write down of
inventories (3)
|
-
|
-
|
1,204
|
766
|
Adjusted
EBITDA
|
(1,579)
|
(3,634)
|
(10,224)
|
(20,566)
|
Notes:
- This relates to the reversal of a former impairment of a long
outstanding receivable.
- 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.
- 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; growth of
the Brazilian medical cannabis market, ability to gain further
medical cannabis product approvals in Brazil; the Company's ability to increase
deliveries to its Brazil partners
in 2024; future German deliveries of THC isolate 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.