WeedMD Inc. (TSX-V:WMD) (OTCQX:WDDMF)
(FSE:4WE) (“
WeedMD” or the
“
Company”), a federally-licensed producer and
distributor of medical-grade cannabis, is pleased to report its
financial and operating results for the three months ended June 30,
2019, including net revenue of $8.0 million and a gross margin of
46%.
"WeedMD continues to make solid progress and
we’re proud to post another record quarter that highlights the
strength of our operations and the demand for our products,” said
Nichola Thompson, CFO of WeedMD. “Our gross margins improved to 46%
as we realized scale in our cultivation operations and continued
optimizing our supply chain. With another 10 newly-licensed 10,000
sq. ft. cultivation rooms coming online alongside our 27-acre
outdoor harvest, we expect to realize some of the best cultivation
margins in the industry.” Latest Outdoor Grow video here.
Key Financial Highlights
- For the three months ended June 30, 2019, WeedMD recorded net
sales of $8.0 million, representing a quarter-over-quarter increase
of 139% and a 282% increase from the same period last year.
- Gross profit before changes in fair value was $3.7 million,
representing a 46% gross margin compared to 15% in the prior
quarter.
- The Company sold 1,979 kgs of dried cannabis, representing an
increase of 150% from the previous quarter.
- WeedMD holds $29.5 million in inventory and biological assets
as of June 30, 2019, an increase of $15.6 million or 113% from the
prior quarter.
- The weighted average cost per gram, inclusive of all costs,
direct and indirect, to produce and package finished cannabis
products for Q2 2019 was $1.84, compared to $2.90 for Q1 2019 and
$3.59 in Q2 2018. Cultivation cost per gram was $0.96 per gram for
the quarter, a 30% improvement from Q1 2019 of $1.37.
Summary of Results
|
|
Q2 2019 |
|
Q1 2019 |
|
|
|
($) |
|
($) |
|
Net Revenue |
|
7,979,747 |
|
3,335,788 |
|
Gross profit before changes in fair value |
|
3,663,089 |
|
489,094 |
|
Gross margin (before changes in fair value) |
|
46% |
|
15% |
|
Gross profit |
|
19,190,635 |
|
3,312,250 |
|
Net Income |
|
12,973,812 |
|
(2,403,887 |
) |
Adjusted
EBITDA* |
|
(662,822 |
) |
(3,087,793 |
) |
|
|
|
|
As
at |
|
June 30, 2019 |
|
March 31, 2019 |
|
|
|
($) |
|
($) |
|
Cash and cash equivalents |
|
11,349,687 |
|
16,853,647 |
|
Inventory |
|
12,470,953 |
|
8,713,069 |
|
Biological assets |
|
16,999,784 |
|
5,141,680 |
|
Working
Capital |
|
38,322,049 |
|
35,709,988 |
|
*Adjusted EBITDA is not a recognized measurement
under International Financial Reporting Standards (“IFRS”) and this
data may not be comparable to data presented by other companies.
Management believes Adjusted EBITDA to be an important measure of
the Company’s day-to-day operations, by excluding interest, tax,
and depreciation, stock compensation, fair value changes and other
non-cash items, and non-recurring items. This measurement is useful
in assessing the results of operating and strategic decisions.
“This quarter was indicative of WeedMD’s
long-standing drive for execution and quality,” said Keith Merker,
CEO of WeedMD. “Consistent product, efficient operations and
capital discipline remain our core focus. We are delivering on our
commitments to build an industry-leading cannabis production
platform with our low-cost outdoor cultivation platform.
Additionally, with the licensing of 10 more precision cultivation
rooms that are now being planted at our Strathroy facility, and
through the introduction of CX Industries, we continue on our path
to become Canada’s best source for premium cannabis flower, oils
and extracts at scale.”
Corporate Highlights During and
Subsequent to the Quarter Ended June 30, 2019
Purchased 60-acre Property in Strathroy,
Ontario. The Company purchased the 60-acre property
directly adjacent to its Strathroy property which allows it to
increase its outdoor cultivation to 100 acres in 2020.
Health Canada Licensing. WeedMD
secured the following:
- Processing Licence. April 2019 - Health Canada processing
licence for its Strathroy facility, the first phase in obtaining
its finished goods sales licence.
- Outdoor Grow Licence. May 2019 - Outdoor cultivation licence
from Health Canada to grow on 27-acres at its Strathroy facility.
The Company completed the planting of more than 20,000 clones in
June using over 30 strains from its genetic library with plans to
harvest in October & November 2019.
- Licence Amendment for 20 Additional Cultivation &
Processing Rooms. August 2019 - Health Canada’s approval for an
additional 20 cannabis cultivation and processing rooms in
Strathroy. The amendment allows another ten 10,000 sq. ft.
cultivation rooms to be utilized along with 10 more processing and
drying rooms.
Outdoor Grow. WeedMD completed
planting more than 20,000 clones in early June becoming one of the
first LPs to introduce outdoor cultivation in Canada. With the
low-cost input material that outdoor harvest is expected to yield,
the Company is positioned to process and market significant
quantities of extracts and concentrates through its subsidiary CX
Industries.
Aylmer Optimization & CX
Industries. In May, the Company announced its plans to
convert and optimize its fully-licensed Aylmer facility into a
focused extraction and processing hub. WeedMD has since launched CX
Industries, a wholly-owned subsidiary that will specialize in
extraction, toll processing, white labeling services and
third-party product formulation.
Adult-use Brand Color Cannabis.
The Company launched Color Cannabis in June, a dedicated premium
adult-use brand exclusively available to distributors and select
retailers across Canada. Product shipments commenced in the summer,
quickly becoming one of the best-selling products across multiple
retailers.
Retail Initiative. WeedMD and
Pita Pit signed a Master Cannabis Retail and Licensing
Agreement with an Ontario cannabis retail lottery winner who
now owns and operates the first Pioneer Cannabis store located at
1200 Brant Street in Burlington, Ontario. The store opened on
August 2, 2019, becoming one of the initial 25 cannabis stores in
Ontario.
Appointment of Jeff Keyes, Vice
President, Operations. WeedMD is pleased to announce the
appointment of Jeff Keyes as Vice President, Operations. A seasoned
leader with over 30 years of management experience in the areas of
manufacturing, continuous improvement, food safety, and quality,
Jeff will provide direct oversight in areas of production,
inventory control and distribution.
Q2 Conference Call
The Company will host a conference call with
management on Thursday August 29, 2019 at 10 a.m. Eastern Time to
report its Q2-2019 financial results and operational outlook. The
call will be hosted by Keith Merker, CEO and Nichola Thompson, CFO
of WeedMD.Management will be available for analyst and media
questions following opening remarks.
Conference Call Details:Date: Thursday August
29, 2019Time: 10 a.m. Eastern TimeDial-in Number: Canada/USA:
1-800-319-4610. International Toll: +1-604-638-5340 Participants,
please dial in and ask to join the WeedMD call.Replay Dial - in:
Canada/USA: 1-800-319-6413. International Toll: +1-604-638-9010
Replay Access Code: 3544 Replay will be available after 12:00 p.m.
Eastern Time, until September 29, 2019.
The Company’s financial statements and related
management’s discussion and analysis for the period are available
under the Company’s profile on SEDAR at www.sedar.com. All amounts
are expressed in Canadian dollars and are in accordance with
International Financial Reporting Standards unless otherwise
noted.
About WeedMD Inc.
WeedMD Inc. is the publicly-traded parent
company of WeedMD Rx Inc., a federally-licensed producer of
cannabis products for both the medical and adult-use markets. The
Company owns and operates a 158-acre state-of-the-art greenhouse
and outdoor facility located in Strathroy, ON. The Company also
operates CX Industries, a wholly-owned subsidiary of WeedMD Inc. CX
operates out of the Company’s fully-licensed 26,000 sq. ft. Aylmer,
Ontario production facility which specializes in cannabis
extraction and processing. WeedMD has a multi-channeled
distribution strategy that includes selling directly to medical
patients, strategic relationships across the seniors’ market and
supply agreements with Shoppers Drug Mart as well as six provincial
distribution agencies where WeedMD’s adult-use brand Color Cannabis
is sold.
Follow WeedMD & Color
Cannabis:
Facebook:
https://www.facebook.com/weedmd/LinkedIn:
https://www.linkedin.com/company/weedmd/?originalSubdomain=frTwitter:
https://twitter.com/WeedMDInstagram:
https://www.instagram.com/weedmd/
For further information, please
contact:
WeedMD Inc.
For Investor Inquiries:
James Williams Director, Capital Markets Email:
investor@weedmd.com
For Media Inquiries:
Marianella delaBarreraVP, Communications & Corporate
AffairsTel: 416-897-6644Email: marianella@weedmd.com
To learn more, visit us at www.weedmd.com
Forward Looking Information
This press release contains "forward-looking
information" within the meaning of applicable Canadian securities
legislation which are based upon WeedMD's current internal
expectations, estimates, projections, assumptions and beliefs and
views of future events. Forward-looking information can be
identified by the use of forward-looking terminology such as
"expect", "likely", "may", "will", "should", "intend",
"anticipate", "potential", "proposed", "estimate" and other similar
words, including negative and grammatical variations thereof, or
statements that certain events or conditions "may", "would" or
"will" happen, or by discussions of strategy.
The forward-looking information in this news
release is based upon the expectations, estimates, projections,
assumptions and views of future events which management believes to
be reasonable in the circumstances. Forward-looking information
includes estimates, plans, expectations, opinions, forecasts,
projections, targets, guidance or other statements that are not
statements of fact. Forward-looking information in this news
release include, but are not limited to, statements with respect to
internal expectations, expectations with respect to actual
production volumes, expectations for future growing capacity and
the completion of any capital project or expansions.
Forward-looking information necessarily involve known and unknown
risks, including, without limitation, risks associated with general
economic conditions; adverse industry events; loss of markets;
future legislative and regulatory developments; inability to access
sufficient capital from internal and external sources, and/or
inability to access sufficient capital on favourable terms; the
cannabis industry in Canada generally; the ability of
WeedMD to implement its business strategies; competition; crop
failure; and other risks.
Any forward-looking information speaks only as
of the date on which it is made, and, except as required by law,
WeedMD does not undertake any obligation to update or revise any
forward-looking information, whether as a result of new
information, future events or otherwise. New factors emerge from
time to time, and it is not possible for WeedMD to predict all such
factors. When considering this forward-looking information, readers
should keep in mind the risk factors and other cautionary
statements in WeedMD's Annual Information Form dated June 21, 2019
(the "AIF") and other disclosure documents of WeedMD filed with the
applicable Canadian securities regulatory authorities on SEDAR at
www.sedar.com. The risk factors and other factors noted in the AIF
and other disclosure documents could cause actual events or results
to differ materially from those described in any forward-looking
information.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS
REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE
POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR
THE ADEQUACY OR ACCURACY OF THIS RELEASE
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