WeedMD Reports Fiscal Year 2019 Financial Results and First Quarter 2020 Preliminary Revenue of $12 Million
WeedMD Inc. (TSX-V: WMD) (OTCQX: WDDMF) (FSE:4WE) is a federally-licensed producer and distributor of medical-grade cannabis. The company announces its financial results for the fiscal year ended December 31, 2019, including a 162% net revenue increase to $20.8 million, compared with $8.0 million for the prior year. The Company also announces preliminary unaudited first quarter 2020 revenue of $12 million, representing the first full quarter of integration with Starseed Holdings Inc., following the previously completed acquisition in December 2019. The Company expects to file its first quarter financial results on or before July 15, 2020.
WeedMD Inc. is the publicly-traded parent company of WeedMD RX Inc. and Starseed Medicinal Inc., federally-licensed producers of 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, Ontario as well as CX Industries Inc., a wholly-owned subsidiary which specializes in cannabis extraction from the Company’s fully-licensed 26,000 sq. ft. Aylmer, Ontario processing facility. With the addition of Starseed, a medical-centric operator based in Bowmanville, Ontario, WeedMD has expanded its multi-channeled distribution strategy. Starseed’s industry-first, exclusive partnership with LiUNA, the largest construction union in Canada, along with other 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 six provincial distribution agencies where adult-use brands Color Cannabis and Saturday are sold.
“With the significant ramp-up of our production platform, 2019 was a year of planned investment coupled with a strategic focus on building strong brands and distribution channels,” said Angelo Tsebelis, CEO of WeedMD. “The Company’s $2.9 million in fourth quarter 2019 net revenue was comprised entirely of consumer sales as availability and demand for our Color Cannabis adult-use brand continued to expand. The strong momentum carried into the first quarter of 2020 where the Company generated preliminary unaudited net revenue of $12 million, a record high quarter for WeedMD, with the Starseed medical brand and direct-to-consumer platform contributing significant high margin revenue. This solid year-over-year and quarter-over-quarter revenue growth is reflective of our strategy emphasizing customer-centric initiatives to drive direct-to-consumer sales and stronger margins and cash flow as we execute on our commercial plan.”
Key Financial Highlights
- Net revenue for the year ended December 31, 2019 was $20.8 million, representing a $12.8 million or 162% increase year-over-year, attributable to increased sales to other Licensed Producers (“LPs”) and the provincial distribution channel for the Adult-Use market.
- As a percentage of revenue, for 2019 consumer revenue accounted for $1.8 million or 8.6%, and wholesale accounted for $19.0 million or 91.4%.
- 2019 gross profit before changes in fair value was $4.0 million, a 19.4% gross margin compared with 40.7% in the prior year. Gross profit margin decreased year-over-year primarily due to the Company ramping up production as it brought 10 newly-licensed cultivation rooms online as well as decreases in selling prices due to the implementation of excise tax.
- The Company harvested 17,988 kgs in 2019, a 921% increase compared with 2018 which includes 8,950 kgs attributable to the WeedMD’s harvest of outdoor crops.
- WeedMD holds $38.9 million of inventory and biological assets as of December 31, 2019.
- WeedMD’s total assets reached $209.8 million as of December 31, 2019.
- Adjusted EBITDA* loss totalled $13.9 million for the year ended December 31, 2019 as compared with a loss of $5.7 million for the prior year period, mainly driven by increased general and administrative expenses, partially offset by the improvement of gross profit before changes in fair value of $2.1 million driven by the sales increase.