Liberty Health Sciences (CSE: LHS) released its second quarter 2020 financials this evening, posting net revenues of $10.6 million for the three month period ended August 31, 2019. The firm posted a net income of $22.8 million for the quarter, thanks in part to a $14.7 million unrealized gain in biological assets, and the sale of Chestnut Hill Tree Farm.
The second quarter saw significant growth for Liberty Health, who grew revenues 92.5% on a quarter over quarter basis as the firm continues to execute within the state of Florida. Gross margins grew at an even faster rate of 126.7%, totaling out at $5.0 million before fair value adjustments.
Operating expenses for the quarter came in at $5.4 million, nearly in line with that of Liberty’s gross profits. The largest expense of which was labeled as “selling costs”, account for $1.5 million. Professional fees and office and general were the next largest expenses, at $1.2 million and $1.1 million respectively. On a cash flow basis, Liberty is currently running with ($4.1 million) in operational cash flow for the year, or approximately ($2.05 million) per quarter, signalling that the firm is very close to break even, or even cash flow positive operations.
Looking towards the balance sheet, Liberty Health posted an increase in its cash position, largely in part due to the sale of Chestnut Hill Tree Farm for $19.2 million. Liberty’s cash and cash equivalents as a result climbed to $23.9 million during the quarter. Inventory also climbed, coming in at $22.4 million. Total current assets increased to $52.1 million during the quarter.
In terms of liabilities, the firm saw its accounts payable decrease to $5.5 million from $7.0 million in the prior quarter. Total current liabilities came in at $6.4 million, giving Liberty Health Sciences a working capital of $45.8 million. On a quarter over quarter basis, working capital increased 129.3%, from that of $20.0 million.
Grams of harvested cannabis during the quarter increased to 3,426,432, however there are some discrepancies within the operational data between last quarters filings and the current quarter. Last quarter, the firm indicated it had harvested 532,445 grams of cannabis within its MD&A, however the filings for the latest quarter indicate that a total of 5,087,938 grams have been harvested during the six month period of FY2020. Evidently, the quarter by quarter production does not jive with the total provided by Liberty Health for the 6 month period.
In terms of cannabis sold, the latest quarter saw 946,610 equivalent grams leave Liberty’s retail locations, compared to last quarters 462,057. The average price per gram decreased slightly, from $11.95 to that of $11.23 in the current quarter, while the average transaction size grew from $98 to $121.
Liberty Health closed today’s session at $0.40 per share 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.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.