As we continue to report on the recent financial results of cannabis companies, we’ve seen an interesting response from investors dissatisfied with some of the less-than-phenomenal returns seen by some companies.
A number of businesses have reported figures that, while impressive, weren’t good enough to justify the “hype” and exponential returns associated with the industry. This newest round of financial results also includes the much-anticipated sales figures from after Canada’s cannabis legalization. MediPharm Labs Corp (TSXV: LABS) announced today their Q4 financial figures, bringing in $10.2 million in revenue between November 2018 and January 2019.
“2018 was a breakthrough year for MediPharm Labs. We became the first fully Licensed Producer to specialize solely in extraction and quickly scaled operations to emerge as the dominant market leader in the manufacturing of high quality, pharmaceutical-like production of cannabis derivate products – the future of cannabis,” said MediPharm CEO Patrick McCutheon. “As leading extraction specialists, we demonstrated our ability to rapidly expand our footprint and achieve significant revenue and positive operating cash flow just weeks after receiving our sales License, and our strong operations have continued into 2019. The strength of this performance validates our uniquely focused strategy and investments. We are proud that the MediPharm Labs team stands out among the top global players in the cannabis industry producing tangible results with significant future potential.”
MediPharm’s Gross profit margins were around 39 percent, and gross profits at $4.0 million. The company also reported that it expanded its extraction capacity to around 150,000 kg per year, a further 50 percent increase.
The company also signed a large private cannabis oil agreement with Canopy Growth Corp , providing the cannabis giant up to 900 kg of high quality concentrated oil over the next 18 months. MediPharm also has agreements with other companies such as Emerald Health Therapeutics, The Supreme Cannabis Company, James E. Wagner Cultivation Corp, and INDIVA Limited.
“Looking ahead, we are now working on an ambitious, well-planned agenda for 2019 that will enable MediPharm Labs to extend our first-mover advantage. We are ramping up production, adding capacity, targeting EU GMP certification, expanding product offerings, developing R&D and IP, signing new sales agreements, and executing on our M&A and international growth pipeline,” added the CEO. “Most importantly, we see all of this as a starting point. We expect to accelerate our growth globally as the size of our addressable market increases and we strengthen our foothold domestically with the expected legalization of vapeables, edibles, beverages and topicals providing a strong growth trajectory in Canada. We will continue to capitalize on the numerous opportunities available to us through effective capital deployment and continued expert execution to create shareholder value for the long term.”
While good enough, these figures failed to impress investors who expected more from the company. Some experts argue that the industry has an unreasonable expectation placed upon it with results less than excellent being seen as a disappointment to investors. MediPharm’s stock saw shares decline mildly in response, dipping around 5 percent in a decline that, while noticeable, is likely to correct itself over the coming days.