Medipharm Labs (TSX: LABS) appears to be scrambling to quell investor fears, releasing an update this morning identifying that the firm still has ample liquidity to continue its operations. The news release and reassurance from the company comes as investors become increasingly concerned about the firms financial position following Medipharm filing a statement of claim against significant customer Hexo Corp.
The firm was quick to highlight this morning that it has a “strong balance sheet” with a liquidity position of $67 million on an unaudited basis, although Medipharm refrained from using the word “cash”. It is believed that the firm is referring to its working capital position overall, which represents total current assets minus total current liabilities. If this in fact correct, then the firms liquidity has decreased from the $87.2 million liquidity position that it was in as of September 30, 2019.
A slight bit of color was provided by Medipharm in reference to the statement of claim as well, with the firm indicating that as of December 31, 2019, $8.6 million was sitting in accounts receivable, of which approximately $7.7 million was in relation to the current statement of claim. The firm also indicated that a portion of the unrelated receivable has already been collected, and that there is no perceived addition credit risk to its outstanding receivables.
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In terms of sales, Medipharm also stated that it has seen multiple product re-orders following the roll out of second generation cannabis products. No other color was provided in terms of revenues.
Medipharm Labs has seen its equity struggle over the last several days following the announcement of the statement of claim being filed for a significant portion of its receivables. The news caused investors to panic, with the equity falling from $3.72 to that of $3.00 as of yesterdays close over the course of the weak as the bull’s case for Medipharm realized the risk that credit poses to the firms investment thesis.
Medipharm Labs last traded at $3.00 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.
