Adam Jackson
Cannabis-based pharmaceutical company MediPharm Labs Corp. (TSX: LABS) (OTCQX: MEDIF) reported rising revenue for the second quarter ending June 30, attributed largely to its recent acquisition of VIVO Cannabis.
The incorporation of VIVO more than doubled MediPharm’s revenue year-over-year to $9.6 million, a 120% rise versus the prior year’s period and 64% sequentially. Another milestone for the company was the shipment of a product to the U.S. for a large-scale phase two clinical trial.
This comes alongside a positive gross profit margin for the third consecutive quarter, the highest the firm has seen since Q4 2019, hovering around 21%.
MediPharm reported $14.7 million in cash with around $3 million in debt and short-term sales prospects for cash generation in the upcoming quarters. Net loss totaled $2.7 million versus $8.98 million in the same period last year, according to regulatory filings.
In a statement, MediPharm Labs’ CEO David Pidduck expressed satisfaction with the second-quarter results, highlighting the smooth integration of VIVO.
“We are excited to have new employees, new business units, new products and capabilities and new investors and stakeholders,” said Pidduck.
The Canadian medical cannabis market has been a source of growth for MediPharm, it said, with revenues surging from $200,000 in prior year’s period to $3.8 million now. The boost was driven by the integration of VIVO’s medical branch, Canna Farms.
Internationally, the company saw a 249% growth year-over-year, primarily from VIVO’s Australian business, Beacon Medical Australia. Beacon stands out as the third top-selling flower brand, with the company expecting similar success with new high margin products soon to launch.
The company’s adjusted EBITDA was a loss $3.2 million, a 50% improvement from the same period in 2022. Additionally, the figure remained consistent sequentially, even after the VIVO incorporation, which had a historical adjusted EBITDA of negative $2 million per quarter.
During the quarter, MediPharm entered into a supply agreement with a large generic pharmaceutical company in Brazil. With similar previous approvals in Brazil, product deliveries could commence by the first quarter of 2024, providing a boost to Brazilian revenue streams.
On the regulatory front, MediPharm completed its first delivery of cannabis clinical trial material to a U.S. research partner in July 2023. The company also remains in close correspondence with the U.S. Food and Drug Administration (FDA) regarding its November 2022 on-site inspection of the Barrie facility in Canada.
“This is the first U.S. FDA Audit of a purpose-built commercial cannabis facility in Canada,” the company said in the release.
“We continued to make progress by growing our revenue base, improving gross margins, reducing expenses and reducing cash burn as we drive towards profitability,” CFO Greg Hunter added. “We have also demonstrated that we can quickly integrate and drive synergies through acquisitions.”
