WeedMD Inc (TSXV: WMD) filed its first quarter 2020 financial statements late last night, revealing net revenues of $12.2 million and a comprehensive loss of $9.0 million for the period ended March 31, 2020. Revenues were up substantially on a quarter over quarter basis, largely a result of bulk wholesale sales the occurred during the first quarter.
The first quarter revenues of $12.2 million generated cost of sales of $10.8 million during the quarter, leaving a gross profit before fair value adjustments of just $1.4 million. A total of 5,083,910 grams of cannabis were sold during the quarter, at a weighted average price of $2.37 per gram.
Direct to patient sales generated $5.3 million in gross revenue during the quarter, a significant increase on both a quarter over quarter and a year over year basis. Wholesale sales to federal license holders came in at $5.0 million during the quarter, while the remainder of sales was attributed to provincial sales channels for recreational consumption.
Direct to patient sales generated the most revenue on a per gram basis, with an average selling price of $7.34 per gram, followed by provincial sales at $4.21 per gram and sales to federal license holders (aka wholesale) at an average price of $1.25. The average pricing on the latter has proved to be troublesome, given that the weighted average cost per gram from WeedMD’s harvests this past quarter came in at $2.54 per gram, suggesting that such prices are not sustainable unless it is outdoor product being sold, which has a much lower cost basis.
WeedMD’s gross profit figure was not enough to cover operating expenses, which came in at $8.4 million. Operating expenses were largely comprised of selling, general and administrative expenses at $6.5 million, followed by financing costs of $1.3 million. After a marginal realized loss on investment and gain on interest income, the company reported a loss of $9.0 million for the three month period.
Looking to the balance sheet, WeedMD saw its cash and cash equivalents increase during the quarter from $8.2 million to $14.2 million, with the increase being attributed to the $25.0 million investment in February from LiUNA. Prepaid expenses fell from $3.0 million to $2.5 million, and biological assets fell from $7.7 million to $4.4 million, while inventory rose from $31.3 million to $33.4 million. Total current assets overall grew from $59.8 million to $63.8 million.
Accounts payable meanwhile fell from $23.3 million to $12.7 million, the result of several bills evidently being paid with LiUNA’s investment dollars. Unearned revenue also fell, from $2.5 million to nil, while the current portion of loans and borrowings grew to $2.9 million from $1.9 million. Total liabilities overall fell from $29.1 million to $16.8 million.
WeedMD last traded at $0.47 on the TSX Venture.
Information for this analysis was found via Sedar, and WeedMD Inc. The author has no securities related to this organization. WeedMD Inc was previously a client of CanaCom Group, the parent company of The Deep Dive. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
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.