WeedMD Reports Fiscal Year 2020 Financial Results and First Quarter 2021 Preliminary Gross Revenue of $12 Million
Net revenue increased 41% YOY to $29.4 million for the full year ended December 31, 2020
Kilograms harvested in 2020 grew 88% over prior year to 33,751 with more Grade A flower
Weighted average cost per gram of $0.46 in 2020 decreased by 42% from $0.79 in 2019 partly due to cost efficiencies implemented
Preliminary unaudited Q1 2021 gross revenue of $12 million(1) represents 40% growth in high-margin, direct-to-consumer/patient sales when compared to prior year, and up 72% from Q4 2020
Management to host conference call on Monday, May 31st at 10:00 a.m. Eastern Time
Toronto, Canada, May 31, 2021 – WeedMD Inc. (TSX-V:WMD) (OTC:WDDMF) (FSE:4WE) (“WeedMD” or the “Company”), a federally licensed producer and distributor of medical-grade cannabis, announced today its financial results for the fiscal year ended December 31, 2020. The Company also announced preliminary unaudited first quarter 2021 gross revenue of $12 million, which represents a direct-to-consumer and patient record increase of approximately 40% when compared to prior year period, after removing a one-time bulk sale revenue recorded in the prior year period. The Company expects to file its first quarter 2021 financial results on or before June 30, 2021.
“We kicked off this year having accomplished several important milestones aligned with our 2020 business transformation initiatives whereby we realized the benefits of our cultivation efficiencies and production capabilities that drove increased brand recognition, retail outreach of our premium adult-use brands, and engagement with new partners positioning us for strategic growth,” said George Scorsis, Interim CEO and Executive Chair, WeedMD. “We are seeing steady growth in consumer demand across Canada for our top-selling Color Cannabis dried flower, pre-rolls, vapes and live resin products, as well as our Saturday Cannabis multi-pack pre-rolls and vapes. This is reflective in our products expanding into over 1,100 national retail locations this year, a 350% year-over-year increase from previous year which is a testament to our marketing strategy and quality of products. Likewise, our Starseed Medicinal brand reached a milestone of 36 new product SKUs over this past year and 20% increase in patient activations to date - all trends that we expect to continue throughout the remainder of 2021.”
Summary of Results
| For the Year-Ended | Dec. 31, 2020 ($000’s) | Dec. 31, 2019 ($000’s) |
|---|---|---|
| Net revenue | 29,434 | 20,820 |
| Gross (loss) profit before changes in fair value | (21,991) | 4,049 |
| Income (loss) and comprehensive (loss) | (89,607) | (10,392) |
| Adjusted EBITDA* (loss) | (43,584) | (11,883) |
| As at | Dec. 30, 2020 ($000's) | Dec. 30, 2019 ($000's) |
|---|---|---|
| Cash and cash equivalents | 22,322 | 8,184 |
| Inventory | 30,665 | 31,287 |
| Biological assets | 1,956 | 7,666 |
| Working Capital | 45,060 | 30,618 |
*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 defines Adjusted EBITDA as EBITDA adjusted to exclude interest, tax, and depreciation, stock compensation, fair value changes and other non-cash items, and non-recurring items. This data is furnished to provide additional information and does not have any standardized meaning prescribed by IFRS. The Company uses this non-IFRS measure to provide shareholders and others with supplemental measures of its operating performance. The Company also believes that securities analysts, investors and other interested parties, frequently use this non-IFRS measure in the evaluation of companies, many of which present similar metrics when reporting their results. As other companies may calculate Adjusted EBITDA differently than the Company, this metric may not be comparable to similarly titled measures reported by other companies. We caution readers that Adjusted EBITDA should not be substituted for determining net loss as an indicator of operating results, or as a substitute for cash flows from operating and investing activities. See the Company’s management’s discussion and analysis for the 12 months ended December 31, 2020 (the “2020 MD&A”) for a detailed reconciliation of Adjusted EBITDA to Net Income / (Loss). The Company’s financial statements for the 12 months ended December 31, 2020 and the 2020 MD&A are available on SEDAR at www.sedar.com
Preliminary Q1 2021 Revenue
(1)WeedMD also provided preliminary unaudited revenue highlights for the three-month period ended March 31, 2021. First quarter 2021 gross revenues of $12 million represents 72% growth sequential Q1 2021 versus Q4 2020, reflecting the Company’s record sales increase of higher-margin, direct-to-consumer and direct-to-patient products. Revenue from Adult-Use and Medical channels increased meaningfully quarter-over-quarter to record high sales in the first quarter 2021 driven by expanded product availability across retail outlets, new distribution channels including the addition of the Province of Quebec, and customer acquisition initiatives.
Revenue Highlights
| Revenue by Channel | Q4 2020 ($000's) | Q1 2021 ($000's) |
|---|---|---|
| Medical | 2,577 | 5,500 |
| Adult-Use | 4,386 | 6,500 |
| Total Gross Revenue | 6,963 | 12,000 |
“With the $30 million credit facility we closed with LiUNA Pension Fund in the fourth quarter of 2020, and the $17.25 million bought deal equity financing secured in March 2021, we have improved our liquidity and secured the capital resources to further execute on our strategic growth plans,” said Beth Carreon, CFO. “We are on track for continued revenue growth while we continue to improve our internal cost structure with production efficiencies implemented in 2020 and now being realized along with improved margins during the remainder of 2021 and beyond.”
Key Financial Highlights
For the fiscal year ended December 31, 2020, WeedMD recorded net sales of $29.4 million, compared to approximately $20.8 million for the fiscal year ended December 31, 2019, an increase of 41% year-over-year.
Gross loss before changes in fair value was $22.0 million for full year 2020 versus gross profit of $4.0 million for full year 2019. The decline was mainly driven by inventory write-down.
Kilograms harvested for full year 2020 increased by 15,763 kg or 88% to 33,751 kg compared to full year 2019 partly due to additional flowering rooms becoming operational at Strathroy.
Weighted average cost per gram of inventory on hand was $0.46 for period ending December 31, 2020, compared to $0.79 for the same period in 2019.
Adjusted EBITDA decreased by $31.7 million to $(43.6) million for full year 2020 from $(11.9) million for full year 2019, primarily driven by the full-year impact of the Starseed integration, as well as commercial costs incurred in order to drive overall Company growth.
Corporate Highlights During Fiscal Year Ended December 31, 2020
During the period, WeedMD entered into a Cannabis 2.0 supply partnership with Pax Labs, Inc., a leader in premium cannabis vaporizer technology, with award-winning devices for both oil concentrates and flower. Most recently in 2021, the Company began selling Pedro’s Sweet Sativa, strain-specific PAX® ERA® products to its Starseed Medicinal clients.
WeedMD also entered into a commercial arrangement with leading Canadian retailer, Fire & Flower Inc. to manufacture, package and ship the retailer’s Revity CBD™ product line, which is now available at Fire & Flower stores in the province of Saskatchewan.
The same year, WeedMD entered into an exclusive licensing agreement with Mary’s Medicinals to bring its award-winning, premium line of self-care products to Canada, including adult-use and direct-to-consumer medical channels. The products kicked off its initial release with Starseed Medicinal in February 2021, followed by expansion in Ontario retail markets via the Ontario Cannabis Store in May 2021.
Also in 2020, WeedMD expanded access to its Starseed Medicinal products into Atlantic Canada under the purview of New Brunswick-based physician, Dr. Julie Hildebrand. Dr. Hildebrand is widely recognized for specializing in cannabis medicine and education, and is working with patients and benefits providers in New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland.
On the medical side, during the course of 2020, the Company signed four strategic partners and their benefits providers to exclusive supply arrangements.
In 2020, the Company’s shareholders elected Bruce Croxon, a prominent Canadian entrepreneur and venture capitalist and co-founder of Lavalife, to WeedMD’s board of directors (the “Board”).
In the fourth quarter of 2020, WeedMD appointed veteran finance executive and former Deloitte partner, Lu Cacioppo, FCPA, CA, to the Board as an independent director and chair of WeedMD’s Audit Committee.
Also in the fourth quarter of 2020, the Company appointed seasoned human resources executive Deborah Sikkema as its Chief People Officer. Ms. Sikkema was also appointed to WeedMD’s Compensation Committee alongside its Board.
During the course of 2020 and subsequent to year-end, WeedMD’s Starseed Medicinal signed six LiUNA locals to medical cannabis programs, while expanding coverage to Manitoba in early 2021.
Preliminary First Quarter 2021 Highlights & Subsequent Events
Starting in January 2021, WeedMD appointed executive chairman, George Scorsis, as interim Chief Executive Officer. Concurrent with this, WeedMD’s Chief Legal Officer, Jason Alexander, was appointed to the Board.
Also in January 2021, the Company reallocated its medical packaging, labelling and distribution activities from its Bowmanville, Ontario site to its Aylmer, Ontario facility which also houses the Company’s extraction hub. These strategic steps are part of WeedMD’s ongoing plan to maximize the utilization of its facilities, improve operational efficiencies and further align its cost structure.
In February 2021, the Company announced the expansion of its Color Cannabis products into the Province of Quebec which makes it accessible to over 85 per cent of Canada’s retail market. Consumers in Quebec, one of Canada’s largest markets, may purchase Color products via the Société québécoise du cannabis (SQDC) in partnership with local producer ROSE LifeScience.
In March 2021, WeedMD announced and closed its oversubscribed $17.25 million bought deal equity financing.
In April 2021, the Company named Beth Carreon as Chief Financial Officer. Formerly of Tilray Canada and Nestlé Canada, Ms. Carreon is a seasoned financial executive with broad experience in corporate finance, mergers and acquisitions, banking and consumer-packaged goods.
In May 2021, WeedMD entered into an exclusive licensing and supply agreement with Ontario craft cannabis producer CannTx Life Sciences Inc. to release celebrated cultivars “Rockstar Tuna” and “Royal Goddess” for its Starseed Medicinal patients.
Conference Call Information:
WeedMD will host a conference call with George Scorsis, Interim CEO and Executive Chair, and Beth Carreon, CFO on Monday May 31st, 2021. Management will be available for questions following opening remarks.
Conference Call Details:
Date:
Monday, May 31, 2021
Time:
10 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: 1-604-638-9010Replay Access Code: 6629
Available after 12:00 p.m. Eastern Time, until June 30, 2021
Management Cease Trade Order Update
WeedMD is providing a bi-weekly update on the status of the management cease trade order granted on May 3, 2021 (the "MCTO") by its principal regulator, the Ontario Securities Commission, in accordance with the alternative information guidelines set out in National Policy 12-203 - Management Cease Trade Orders ("NP 12-203"), following the Company's announcement on April 21, 2021 (the "Default Announcement"), that it would be unable to file its annual audited financial statements, annual management's discussion and analysis and related certifications for the year ended December 31, 2020 (the "Required Annual Filings") on or before April 30, 2021, as required under applicable securities laws. On May 14, 2021, the Company also announced that the filing of its unaudited interim financial statements, management's discussion and analysis and related CEO and CFO certifications for the three-months ended March 31, 2021 (the "Required Interim Filings") will be delayed beyond the filing deadline of May 31, 2021. The Company will post the Required Interim Filings on or before June 30, 2021.
Bi-Weekly Status Report
The Company confirms that since the date of the Default Announcement, except as set out above, including with respect to the filing today of the Required Annual Filings: (i) there has been no material change to the information set out in the Default Announcement or subsequent default status reports that has not been generally disclosed; (ii) there has been no failure by the Company in fulfilling its stated intentions with respect to satisfying the provisions of the alternative information guidelines set out in NP 12-203; (iii) there has not been any other specified default by the Company under NP 12-203; and (iv) there is no other material information concerning the affairs of the Company that has not been generally disclosed.Updated investor presentation and corporate deck can be found here. Access WeedMD’s 2021 Shareholder Newsletter here and information about upcoming corporate events here.The Company’s financial statements and related management’s discussion and analysis for the fiscal year ended December 31, 2020 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. and Starseed Medicinal Inc., licence holders producing and distributing cannabis products for both the medical and adult-use markets. The Company owns and operates a 158-acre state-of-the-art greenhouse, outdoor and processing facility located in Strathroy, ON as well as a fully-licensed 26,000 sq. ft. Aylmer, ON processing facility, specializing in cannabis extraction. With the addition of Starseed, a medical-centric operator, WeedMD has expanded its multi-channeled distribution strategy. Starseed’s industry-first, exclusive partnership with LiUNA, the largest construction union in Canada, along with employers and union groups complements WeedMD’s direct sales to medical patients. The Company maintains strategic relationships in the seniors’ market and supply agreements with Shoppers Drug Mart as well, as seven provincial distribution agencies where adult-use brands Color Cannabis and Saturday are sold.
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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; the COVID-19 pandemic; 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 disclosure documents filed with the applicable Canadian securities regulatory authorities on SEDAR a www.sedar.com. The risk factors and other factors noted in the disclosure documents could cause actual events or results to differ materially from those described in any forward-looking information.
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