Annual Revenue and Adjusted EBITDA Improve by 50%
TORONTO, March 27, 2024 /CNW/ - MediPharm Labs Corp. (TSX: LABS) (OTCQB: MEDIF) (FSE: MLZ) ("MediPharm", "MediPharm Labs" or the "Company") a pharmaceutical company specialized in precision-based cannabinoids, today announced its financial results for the full year and three months ended December 31, 2023.
Select Highlights
-- 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 of December 31, 2023.
Continued Growth in International Medical Cannabis
-- In Q4 2023, MediPharm completed an in-person inspection from the Brazilian Health Regulatory Agency (ANVISA). The first cannabis company in North America to complete an in-person inspection for Good Manufacturing Practice (GMP) cannabis production for Brazil. -- 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-end MediPharm 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 of North America which The Pennington Institute (Cannabis in Australia 2023 report) estimates generated over $400m AUD in 2023.2
Progress Towards Profitability
-- 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 sold MediPharm 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.
Management Commentary
David Pidduck, CEO, MediPharm Labs commented,
"MediPharm now has the margins, Opex and
Adjusted EBITDA results all trending in the right direction. We also have a robust revenue pipeline with multiple partners in multiple markets.
The transformation to a profitable growing company continues. Over the years we have invested in our infrastructure as a high quality and high capacity pharmaceutical grade manufacturer, allowing us to grow sales with new opportunities and markets, without additional investment into capital or resources.
We are proud of the work completed in 2023 and excited about the future of MediPharm Labs." Greg Hunter, CFO, MediPharm Labs added, "2023 was a transformation year for MediPharm, with the acquisition of VIVO, revenue increased by approximately 50% year over year and expanded our reach into Australia and the Canadian Medical business.
Gross margins expanded significantly to 24% in Q4 and OPEX was reduced to produce the best Adjusted EBITDA in 4 years. In Q4, we continued to make progress by improving gross margins, reducing expenses and reducing cash burn as we drive towards profitability.
Adjusted EBITDA of negative $1.6 million improved sequentially and year over year and is our best result in over 4 years. I.
MediPharm is in a strong financial position to capitalize on our strong suite of licences, global customer contracts and an addition, we ended the year with a strong balance sheet with $18 million of cash and less than $3 million of debtssets as we move in to 2024"