CEWS $5.996m received by cannabis LP Zenabis not in EBITDA $5,996,459 received by licensed cannabis producer Zenabis Global Inc. (TSX: ZENA) thus far.
Zenabis has elected to back the benefit out of their EBITDA calculation.
For investors and analysts, an important takeaway from these programs is how companies that have been receiving federal subsidies are treating them for financial reporting purposes – particularly when it comes to Adjusted EBITDA. While some companies that have received these subsidies have elected to back the benefit out of their Adjusted EBITDA calculation, such as Zenabis and Sundial Growers Inc. (NASDAQ: SNDL), many have chosen to keep the benefits of the subsidy in their calculation.
For example, when MediPharm Labs Corp. (TSX: LABS) reported their results for the quarter ending June 30, 2020, they reported an Adjusted EBITDA loss of $2.18 million, a figure that was improved by wage subsidies of $1.81 million. Had they used a similar calculation to Zenabis or Sundial and backed out the subsidies, their Adjusted EBITDA loss would have increased by 82.9% to just shy of $4 million.
Thus, on top of the over $9.2m in postive Adjusted EBITDA for Zenabis this year (Q1, Q2, Q3), throw on another $6m from CEWS in Q1, Q2, Q3. With an expected Adjusted EBITDA of $7m for Q4, and another $2m or so from CEWS, nearly $25m for Zenabis rolling in FY2020.