WeedMD Reports First Quarter 2019 Financial Results
Net revenues of $3.3 million continues trend of steady increases, up 23% from previous quarter. Management to host a Conference Call on May 31st at 10:00 a.m. Eastern
Toronto, Canada, May 31, 2019 – WeedMD Inc. (TSX-V:WMD) (OTCQX:WDDMF) (FSE:4WE) (“WeedMD” or the “Company”), a federally-licensed producer and distributor of medical-grade cannabis, is pleased to report its financial and operating results for the three months ended March 31, 2019.
"We continue to deliver consistent improvement in our results, quarter-over-quarter,” said Nichola Thompson, CFO of WeedMD. “With the successful harvests from six additional grow rooms licensed at the end of 2018 now coming to market, we expect significant revenue increases throughout the balance of the year.”
Key Financial Highlights
For the three months ended March 31, 2019, WeedMD recorded net sales of $3.3M, representing a quarter-over-quarter increase of 23%.
The Company sold 793 kgs of dried cannabis, representing an increase of 46% from the previous quarter.
Improved gross profit margin to 15% (before changes in fair value).
The Company holds $13.9M of inventory and biological assets as of March 31, 2019, an increase of $5.9M or 74% from the prior quarter.
The all-in weighted average cost per gram for Q1 2019 was $2.90, compared to $3.28 for Q4 2018 and $3.66 in Q1 2018. This is inclusive of all costs, direct and indirect, to produce and package a gram of cannabis.
WeedMD purchased the 98-acre property in Strathroy where its 610,000 sq. ft. greenhouse facility and associated infrastructure reside, as well as the neighbouring 60-acre property. The Company funded the transaction with a $39M credit facility from BMO.
Financial Highlights
| Q1 2019 ($) | Q4 2018 ($) | |
|---|---|---|
| Net Revenue | 3,335,788 | 2,970,400 |
| Gross profit before changes in fair value | 489,094 | (256,231) |
| Gross profit | 3,312,250 | (810,726) |
| Adjusted EBITDA* | (3,087,793) | (3,226,411) |
| As at | March 31, 2019 ($) | December 31, 2018 ($) |
|---|---|---|
| Cash and cash equivalents | 16,853,647 | 21,223,641 |
| Inventory | 8,713,069 | 5,834,051 |
| Biological assets | 5,141,680 | 2,150,079 |
| Working Capital | 35,709,988 | 29,838,984 |
*Adjusted EBITDA is not a recognized measurement under International Financial Reporting Standards (“IFRS”) and this data may not be comparable to data presented by other companies. Management believes Adjusted EBITDA to be an important measure of the Company’s day-to-day operations, by excluding interest, tax, and depreciation, stock compensation, fair value changes and other non-cash items, and non-recurring items. This measurement is useful in assessing the results of operating and strategic decisions.
“We are pleased with our performance improvements in Q1 2019, but the best is yet to come,” said Keith Merker, CEO of WeedMD. “In Strathroy, we have more than 20,000 clones ready to be planted across our outdoor operation once the licence is secured. Our next stage of licensing will be the 110,000 sq. ft. of hybrid greenhouse that is already fully built out, which will lead to rapid production growth, quarter-over-quarter in 2019 and beyond.”
Corporate Highlights During and Subsequent to the Quarter Ended March 31, 2019
Outdoor Grow. 27-acre, low-cost, outdoor grow operation ready to plant, pending licensing. With expansion capabilities to more than 100 acres for a total yield of more than 100,000 kgs of outdoor cannabis planned for 2020.
Facilities and Production Update. An additional 10 hybrid cultivation rooms, each 10,000 sq. ft., are complete and are expected to be licensed once the outdoor licence is secured. The Company is also now in the late stages of completing the retrofit of two large traditional greenhouse rooms that will add more than 300,000 sq. ft. in 2019.
Licensing and Packaging Efficiencies. Secured a Health Canada licence amendment for an additional processing area equipped with semi-automated packaging lines at its Aylmer facility to increase speed to market and drive costs lower. Also secured a processing licence at the Strathroy facility.
Extraction Initiative. WeedMD is currently converting its fully-licensed Aylmer facility into a large-scale cannabis extraction and processing hub with an annual capacity to process more than 200,000 kgs of biomass.
Operating Metrics Improve. Margins continue to improve through increasing yields, economies of scale beginning to be realized as production expands, and a focus on refining processes.
Supply and Distribution Agreements. WeedMD secured additional provincial distribution agreements with Manitoba and Saskatchewan. Shipping to a total of six provinces across the country, the Company is now able to reach about 70% of Canada’s projected adult-use market.
Retail Initiative. WeedMD partnered with Pioneer Cannabis and Pita Pit to pursue opportunities in cannabis retail. A Master Cannabis Retail and Licensing Agreement was signed with an Ontario cannabis retail lottery winner who will own and operate the first Pioneer Cannabis store located at 1200 Brant Street in Burlington, Ontario.
Leadership Positions
Derek Pedro, Chief Cannabis Officer. Expert and strategist in growing techniques, Derek leads the greenhouse and outdoor cultivation operations.
Dr. Alex Sibilev, VP, Quality Assurance & Global Regulatory Compliance. Veteran expert in navigating regulatory compliance, spearheads the shifting regulatory compliance in Canada and internationally.
Nichola Thompson, Chief Financial Officer. Affirmed the appointment from interim CFO.
Conference Call
WeedMD will host a conference call on Friday, May 31, 2019 to discuss the financial results. Keith Merker, CEO and Nichola Thompson, CFO, will host the call starting at 10:00 a.m. Eastern Time. A question and answer session for analysts and media will follow management's presentation.
Date:
May 31, 2019
Time:
10:00 a.m. Eastern Time
Dial-in Number:
Canada/USA 1-800-319-4610. International Toll: +1-604-638-5340
Participants, please dial in and ask to join the WeedMD call.
Replay Dial-in:
Canada/USA 1-800-319-6413. International Toll: +1-604-638-9010
Replay Access Code: 3055#
Replay will be available after 12:00 p.m. Eastern Time, until June 30, 2019.
The Company’s financial statements and related management’s discussion and analysis for the period are available under the Company’s profile on SEDAR at www.sedar.com. All amounts are expressed in Canadian dollars and are in accordance with International Financial Reporting Standards unless otherwise noted.
About WeedMD Inc.
WeedMD Inc. is the publicly-traded parent company of WeedMD Rx Inc., a federally-licensed producer and distributor of cannabis products for both the medical and adult-use markets. The Company owns and operates two facilities: a 26,000 sq. ft. facility in Aylmer, Ontario and a 158-acre state-of-the-art greenhouse and outdoor facility located in Strathroy, Ontario. The Company currently has 136,000 square feet of licensed indoor and greenhouse production space across its facilities and is expected to have a total footprint of more than 550,000 square feet of indoor and greenhouse production space online in 2019. In addition, 27 acres of outdoor cultivation has now been approved for cultivation with first harvest expected in the fall of 2019. WeedMD has a multi-channeled distribution strategy that includes selling directly to medical patients, strategic relationships across the seniors’ market and supply agreements with Shoppers Drug Mart as well as six provincial distribution agencies.
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For further information, please contact:
For Investor Enquiries:
Valter Pinto
Managing Director
KCSA Strategic Communications
1-212-896-1254
weedmd@kcsa.com
For Media Enquiries:
Marianella delaBarrera
VP, Communications & Corporate Affairs
416-897-6644
marianella@weedmd.com
All product images and labels are provided for information and illustrative purposes only, and do not represent the actual cannabis product, product label, or its appearance.
Forward Looking Information
This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation which are based upon WeedMD's current internal expectations, estimates, projections, assumptions and beliefs and views of future events. Forward-looking information can be identified by the use of forward-looking terminology such as "expect", "likely", "may", "will", "should", "intend", "anticipate", "potential", "proposed", "estimate" and other similar words, including negative and grammatical variations thereof, or statements that certain events or conditions "may", "would" or "will" happen, or by discussions of strategy.
The forward-looking information in this news release is based upon the expectations, estimates, projections, assumptions and views of future events which management believes to be reasonable in the circumstances. Forward-looking information includes estimates, plans, expectations, opinions, forecasts, projections, targets, guidance or other statements that are not statements of fact. Forward-looking information in this news release include, but are not limited to, statements with respect to internal expectations, expectations with respect to actual production volumes, expectations for future growing capacity and the completion of any capital project or expansions. Forward-looking information necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; loss of markets; future legislative and regulatory developments; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the cannabis industry in Canada generally; the ability of WeedMD to implement its business strategies; competition; crop failure; and other risks.
Any forward-looking information speaks only as of the date on which it is made, and, except as required by law, WeedMD does not undertake any obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for WeedMD to predict all such factors. When considering this forward-looking information, readers should keep in mind the risk factors and other cautionary statements in WeedMD's Annual Information Form dated December 13, 2017 (the "AIF") and other disclosure documents of WeedMD filed with the applicable Canadian securities regulatory authorities on SEDAR at www.sedar.com. The risk factors and other factors noted in the AIF and other disclosure documents could cause actual events or results to differ materially from those described in any forward-looking information.
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