Medreleaf loses $2.12-million in fiscal Q2 2018
MEDRELEAF CORP. has released financial and operating results for the second quarter fiscal 2018, ending Sept. 30, 2017.
For the second quarter of fiscal 2018, Medreleaf increased production and sales of cannabis-based extracts and increased adjusted contribution per gram sold when compared with the first quarter of fiscal 2018, while continuing to invest toward future growth in recreational and international medical markets.
“In the second quarter, we increased average selling price and lowered cash costs per gram sold, and this drove improvement from the first quarter to adjusted product contribution margin per gram,” said Neil Closner, chief executive officer. “This margin provides us with greater flexibility in our business model to adapt to changes and operate profitably as the industry evolves, and we are ideally positioned for growth now that the full impact of the Veterans Affairs Policy (VAC) changes on capping price and volume are behind us.”
(See LEAF Table 1 on page 37)
Second quarter highlights
• Sales of $9.8-million, a decrease of 9 per cent year over year;
• Sales of cannabis-based extract products were $1.8-million, or 18 per cent of total revenue, compared with 14 per cent of total revenue for the first quarter of fiscal 2018; sales of cannabis-based extracts began in the third quarter of fiscal 2017;
• Adjusted earnings before interest, taxes, depreciation and amortization of $700,000, a decrease of $4.0-million from the prior year period;
• Sold 1,051 kilograms of cannabis products, an increase of 23 per cent year over year;
• Average selling price per gram of $9.34, an increase from $9.04 for the first quarter of fiscal 2018 and a decrease from $12.61 for the prior year period;
• Adjusted product contribution margin per gram sold of $6.75, an increase from $6.53 for the first quarter of fiscal 2018 and a decrease from $9.82 for the prior year period;
• Cash cost per gram sold of $1.46, down from $1.49 for the first quarter of fiscal 2018 and the prior year period, representing the lowest cash cost per gram in the company’s operating history;
• Total yield produced across the Markham facility and first harvest at the Bradford facility for the quarter was approximately 2,500 kilograms, equivalent to approximately 300 grams per square foot per year.
Highlights subsequent to the quarter-end:
• On Oct. 4, 2017, Medreleaf became the first licensed producer in Canada to launch a topical cream.
• On Oct. 20, 2017, Medreleaf received its amended licence for two additional cultivation rooms, increasing annual production capacity to an estimated 5,600 kilograms at the Bradford facility.
• On Nov. 3, 2017, the company received an additional amended licence which permits the activity of sale to clients from the Bradford facility.
• On Nov. 8, 2017, Medreleaf announced the January, 2018, launch of ReleafDx, the first pharmacogenetics-based cannabis compatibility test to be available from a Canadian licensed producer.
At the end of Sept. 30, 2017, the company had cash and cash equivalen ts of $74.0-million and working capital of $89.3-million.
Inventories as at Sept. 30, 2017, were $21.6-million, an increase of $12.1-million from March 31, 2017.
Biological assets as at Sept. 30, 2017, were $2.9-million, an increase of $100,000 compared with March 31, 2017, of $2.8-million.
Cash flow used in operating activities for the six months ended Sept. 30, 2017, was $5.3-million, compared with cash flow provided by operating activities of $6.4-million for the prior year period.
Capital expenditures for the six months ended Sept. 30, 2017, were $13.0-million.
Medreleaf is fully financed to increase capacity to 35,000 kilograms in production annually with $40-million budgeted for the completion of the Bradford facility and an additional $15-million budgeted for the expansion of pharmaceutical manufacturing capabilities.
We seek Safe Harbor.
Karen Baxter condensed this news release (email@example.com).
Norma Beauchamp, Neil Closner, Ronald F Funk, Deborah E Rosati, Lloyd Mitchell Segal
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