Liberty Health Becomes Operationally Cash Flow Positive In Third Quarter

Liberty Health Sciences (CSE: LHS) filed its third quarter financial results last night, although the firm has yet to issue a related press release. The lack of a release is puzzling, given strong results demonstrated by the firm on a quarter over quarter basis.

Third quarter revenues came in at $16.1 million, an increase of 51% on a quarter over quarter basis. Despite the significant revenue increase, cost of goods sold increased only marginally, giving Liberty Health a gross profit of $9.7 million for the quarter before biological adjustments, as compared to $5.0 million in the previous quarter, an increase of 94%.

Total operating expenses came in at $7.4 million, of which the largest cost was selling costs at $1.7 million, followed by professional fees at $1.2 million. The firm managed a net income before tax of $21.2 million for the quarter overall, thanks in part to a large fair value adjustment from biological assets.

The strong quarter also resulted in Liberty Health seeing a net positive operating cash flow for the nine month period of $4.5 million, as compared to -$4.1 million last quarter. Investing activities during the period provided a net figure of $13.1 million, while financing activity cash flows were -$2.8 million. A net increase in the firms cash position as a result has been seen over the period, with Liberty Health currently having a cash balance of $28.5 million, an increase from $23.8 million in the prior quarter.

Moving to the balance sheet, total current assets increased from $52.1 million to that of $75.8 million, which was largely a result of an inventory increase. Inventory during the quarter jumped from $22.4 million to $38.0 million. Current liabilities also jumped during the quarter however, from $6.3 million to $21.6 million. The significant increase is largely a result of a convertible note becoming current, which has a value of $13.0 million, along with an embedded derivative valued at $0.4 million. Payables meanwhile increased from $5.4 million to $7.4 million during the quarter.

Liberty Health Sciences last traded at $0.72 on the CSE.

Information for this briefing was found via Sedar and Liberty Health Sciences. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.