Medipharm Labs (TSX: LABS) this morning announced that it will be delaying its first quarter financial results, with the company giving a blanket statement that it expects to file by the end of June. Furthermore, the company also announced that it will be conducting impairments on inventory among other items as a result of the ongoing pandemic.
With respect to inventory, Medipharm this morning let it be known that the company is expecting to impair anywhere from $10 to $15 million within its first quarter financials. The company blamed the impairment on reduced demand due to the current coronavirus pandemic. Overall, a number of reasons were cited that lead up to the announcement within the news release including:
- Reduced staff at provincial distributors and private retailers, which the company claims resulted in reduced purchase orders and delivery availability, impacting white label sales.
- Delays in anticipated expansions of retail channels and slower licensing of cannabis derivative businesses.
- Producers being slower to implement capabilities to convert bulk extract to finished goods due to operational slowdowns.
These factors were all blamed for oversupply conditions of bulk extract product within the Canadian market, including subsequent lower selling price points and volumes, which ultimately resulted in these writedowns occurring. The company provided no guidance on revenue figures.
Medipharm Labs reported product inventories of $51.5 million as of December 31, 2019. The company last traded at $1.54 on the TSX.
Information for this briefing was found via Sedar and MediPharm Labs. 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.
