This morning MediPharm Labs (TSX: LABS) released their fourth quarter results for the year ended December 31, 2019. The quarter saw revenues decline approximately 25.4% from the previous quarter with a 73.6% decline in Adjusted EBITDA over the same period.
The previously beloved cannabis market darling saw a decline in pretty much everything on a quarterly basis:
|Q4 2019||Q3 2019||% Change|
|Cash||$ 38,627||$ 42,116||-8.3%|
|Inventory||$ 51,486||$ 54,086||-4.8%|
|Receivables||$ 27,540||$ 40,756||-32.4%|
|Accounts Payable||$ 20,946||$ 41,704||-49.8%|
|Revenue||$ 32,444||$ 43,486||-25.4%|
|Gross Profit||$ 9,987||$ 14,754||-32.3%|
|Net Income (pre Tax)||$ (2,401)||$ 5,395||-144.5%|
|Adjusted EBITDA||$ 2,661||$ 10,066||-73.6%|
|Operating Cash Flow||$ 14,100||$ 17,069||-17.4%|
|Investing Cash Flow||$ (2,182)||$ (10,799)||-79.8%|
The company cited oversupply of bulk extract, reduction in selling price, lower volumes, slower rollout of cannabis 2.0, slower rollout of retail and lastly a slower rollout of bigger companies entering the space.
The Company reported that the Canadian cannabis sector experienced significant challenges in the fourth quarter that resulted in an oversupply of bulk extract in the market and subsequent reduction in selling price and lower volumes. These factors included: a slower than anticipated expansion of retail channels in Canada, slower licensing of new and specialized cannabis 2.0 businesses, lower than expected conversion of bulk extract inventory into finished goods by vertically integrated players and slower than expected entry to the market by larger consumer packaged goods and pharmaceutical companies.
The company informed shareholders the manufacturing facility was exempted from the recent provincial mandated workplace closures as an essential service. But the company sees some issues with the supply chain potentially breaking down.
At the time of publishing MedipPharm Labs is down 14.65% to $1.69.
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.
SmallCapSteve started blogging in the Winter of 2009. During that time, he was able to spot many take over candidates and pick a variety of stocks that generated returns in excess of 200%. Today he consults with microcap companies helping them with capital markets strategy and focuses on industries including cannabis, tech, and junior mining.