Annual Revenue and Adjusted EBITDA Improve by 50%
- 2023 full year revenue increased approximately 50% to
$33M versus prior year of$22M . - 2023 full year Adjusted EBITDA(1) improved 50% to negative
$10M in 2023 from negative$21M in 2022. - Q4 2023 gross profit was
$2.2M or 24%. Gross profit showed significant improvement over Q4 2022 of$0.2M or 4%. - Q4 2023 Adjusted EBITDA(1) of negative
$1.6M improved 55% from negative$3.6M in Q4 2022 and improved over 30% from negative$2.4M in Q3 2023. Adjusted EBITDA(1) continues to improve driven by margin expansion initiatives and cost reductions. - Strong balance sheet, relative to many peer companies, with approximately
$18M million of cash and less than$3 million of debt as ofDecember 31, 2023 .
- In Q4 2023, MediPharm completed an in-person inspection from the
Brazilian Health Regulatory Agency (ANVISA). The first cannabis company inNorth America to complete an in-person inspection for Good Manufacturing Practice (GMP) cannabis production forBrazil . Brazil , with a population of 215M, has seen tremendous growth in medical cannabis patients with a 480% increase in prescriptions in 20221.MediPharm has two medical cannabis products with ANVISA authorizations and will increase deliveries to a new pharma partner in 2024.(2)- In Q4 2023, MediPharm completed the development and initial deliveries of THC isolate, commonly known as Dronabinol, for the
European Union market. Subsequent to year-endMediPharm has made deliveries of this product to multiple customers and it anticipates it having a materially positive impact to sales and gross profit. (2) - In 2023, MediPharm expanded its top Australian medical cannabis flower brand, Beacon Medical, to include high quality GMP oils and vapes.
Australia is the largest medical cannabis market outside ofNorth America whichThe Pennington Institute (Cannabis inAustralia 2023 report) estimates generated over$400m AUD in 2023.2
MediPharm achieved a 2023 gross margin of 18% versus negative 9% in 2022. Positively moving to 24% in Q4 2023. This improvement is a trend the Company believes will continue. With the success in improving product mix and cost of goods soldMediPharm now has the foundation for a profitable future.- Total Opex, which includes general administrative, marketing and selling, and research and development expenses, was reduced by
$2M or 10% on a year over year basis, while growing sales by 50% in the same time period. Additional reductions implemented in Q4 2023 will further reduce Opex in 2024. (2)This execution of doing more with less has resulted in a revised cost base, positioning the company for profitability. MediPharm plans to further improve on profitability in 2024 including optimizing facility utilization with additional contract manufacturing, growing sales of healthy margin products, increasing international sales with local pharmaceutical partners, and refreshing the Canadian adult use and wellness portfolio to grow sales in our largest addressable market.
Financial Summary
(1) Opex includes general administrative expense, marketing and selling expenses and R&D expenses. |
(2) Adjusted EBITDA is a non-IFRS measure. See "Non-IFRS Measures". |
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Founded in 2015,
In 2021,
In 2023,
- This is a non-IFRS reporting measure. See "Non-IFRS Measures" below.
- This is a forward-looking statement and based on a number of assumptions. See "Cautionary Note Regarding Forward-Looking Information" below.
This press release contains references to "Adjusted EBITDA", which is a non-IFRS financial measure. Management believes that this supplementary non-IFRS financial measure provides useful additional information related to the operating results of the Company. This non-IFRS financial measure is not recognized under IFRS and, accordingly, users are cautioned that this measure should not be construed as an alternative to net income (loss) and gross profit determined in accordance with IFRS as measures of profitability or as alternatives to the Company's IFRS-based Financial Statements. The non-IFRS measure presented may not be comparable to similar measures presented by other issuers. Adjusted EBITDA is a measure of the Company's overall financial performance and is used as an alternative to earnings or income in some circumstances. Adjusted EBITDA is essentially net income (loss) with interest, taxes, depreciation and amortization, non-cash adjustments and other unusual or non-recurring items added back. Adjusted EBITDA has limitations as an analytical tool as it does not include depreciation and amortization expense, interest income and expense, finance fees, gain in revaluation of derivative liabilities, taxes, government grants including rent and wage subsidies, one-off transactions, impairment losses on inventory and on fixed assets and intangibles, write down of deposits and share-based compensation. Because of these limitations, Adjusted EBITDA should not be considered as the sole measure of the Company's performance and should not be considered in isolation from, or as a substitute for, analysis of the Company's results as reported under IFRS. Adjusted EBITDA, as used within the Company's disclosure, may not be directly comparable to Adjusted EBITDA used by other reporting issuers. Adjusted EBITDA does not have a standardized meaning and the Company's method of calculating such non-IFRS measure may not be comparable to calculations used by other companies bearing the same description.
The following table reconciles the Company's net operating income (loss) (as reported) and Adjusted EBITDA for the periods presented:
Three months ended | Twelve months ended | |||
$'000s |
$'000s |
$'000s |
$'000s | |
Net operating loss | (2,935) | (6,390) | (18,252) | (29,533) |
Adjusted for: | ||||
Share-based compensation expense | 306 | 1,390 | 2,027 | 2,872 |
Depreciation and amortization | 717 | 540 | 2,516 | 2,872 |
Restructuring related severance expenses | 335 | - | 2,303 | 1,233 |
Government grants | - | - | - | (21) |
Transaction fees | - | 813 | 883 | 1,164 |
Recovery of impaired receivables (1) | - | - | (2,010) | - |
Impairment loss on remeasurement of | - | - | - | - |
Impairment loss on remeasurement of assets | 23 | 13 | 40 | 81 |
Gain on disposition of assets | (174) | - | (174) | - |
Incremental cost of cannabis inventory | 372 | - | 2,427 | - |
Fair value adjustments in gross profit | (223) | - | (1,188) | - |
Write down of inventories (3) | - | - | 1,204 | 766 |
Adjusted EBITDA | (1,579) | (3,634) | (10,224) | (20,566) |
- This relates to the reversal of a former impairment of a long outstanding receivable.
- Incremental cost of cannabis inventory acquired in a business combination represents the fair value realized on sale of cannabis inventory acquired in a business combination.
- This adjustment is for unusual inventory write-downs only and not the total value of inventory written down.
This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements relate to, among other things, statements regarding: the Company's progress toward profitability; potential improvements in gross margin and revenue, potential future and annualized savings to be realized as a result of Company's restructuring efforts; growth of the Brazilian medical cannabis market, ability to gain further medical cannabis product approvals in
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