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Long term deals may not be the future in this market, and therefore the announcements may be fewer and farther between. We are coming off a Q4 that had price pressure in the spot market, which has changed the game for now (and maybe forever).
“During the fourth quarter of 2019, 46% of cannabis extract sold was pursuant to spot sales (30% in the third quarter of 2019; 29% in the second quarter of 2019; and 24% in the first quarter of 2019).” - Q4 MD&A
So we need to change our mindsets here. We may not see the regular contract announcements of the past, but it doesn’t mean they aren’t still selling.
I am very pleased with the Australia and New Zealand deals recently. These don’t have to be massive deals; they still make us money, and they help us establish international credibility.
Not that anyone probably had to guess, but I am still as bullish here as ever before.
Agreed. Very well made.
Thanks! Saw some of your posts on DEAC even if I did not contribute myself, so I was glad to see you here as well.
I am very bullish on DK overall. I will be back in, it’s just a matter of when. But I am less sure what it will do in the near term so I will be on the sidelines for the time being.
I am in here as well. I was able to make some great returns on DEAC calls already (sold them yesterday). Researching DEAC / DKNG is what led me here.
From here, I think INSE is the better play currently. And what I like is that this already has the fundamentals (when you layer in recent partnerships + their update from yesterday). But beyond that, the hype is starting to come and others will follow.
DK hasn’t even released the V-Play content yet, nor have they PR’ed it (neither did Diamond Eagle). Although there is mention out there of the Virtual Kentucky Derby, I have not seen a ton of coverage and I expect that to ramp up and then explode the day of.
By the way, you can find footage of the Virtual Grand National that they already did. As someone who watches all three legs of the triple crown every year (I even attended one last year), I thought the product was phenomenal. I am far from a horse race regular or expert, but I will share that opinion for what it is worth.
Companies aren’t even giving guidance right now due to COVID-19 in many cases, so soliciting a price target from this board (or anywhere) may not be the best idea right now. But I will share my thoughts generally for what they are worth.
There have been serious sector constraints (regulation, crowded market in calendar Q4 due to slow 2.0 rollout, failing companies bringing others down, etc.) and internal constraints due to multiple delays with their Phase II expansion in Canada and indefinite postponement of Phase IIIA expansion. And of course there is the market wide crash due to coronavirus. I’m not sure things will ever be worse for this company than what they just were before.
1m units per week of hand sanitizer is 13m units per quarter. That is accretive to their nutraceutical revenue (about $6.2m last Q I believe) and their barely started cannabis operations ($2.8m in revenue last Q I believe). In Q2 of calendar 2020, they will have sales of sanitizer plus full run rate of their newly functional Phase II operations in Canada for cannabis (200,000 kg capacity vs. 30,000 kg for Phase I). That will start to show us what we really have here, unless clearer details are provided to us on the next earnings call or otherwise.
I will share this comment, since you may really be after a firm answer on price. In February 2020, American Media provided services worth $4.7m USD in exchange for 1,175,000 warrants at a $8 strike (5 year term). Why would they provide services for warrants unless they expect them to end up in the money? Granted, they have 5 years for that and not your 6 month time frame. But it is some food for thought.
Not only that, but they still have their core operations for Cannabis in Canada, which has barely even been a factor so far in terms of revenue. But that is because of delays with their Phase II rollout which are finally over and done with. Things are setting up nicely here.
The economics of this could be significant in calendar Q2 and Q3. Obviously the demand for hand sanitizer will go down beyond that (or sooner potentially) but whatever chunk of business they can carve out and retain will be a nice plus. The partnership with Goodall is intriguing, especially when you figure this will become part of an expanded product line of home care and cleaning products. That could very well be the more profitable way to go as opposed to the crowded CBD market (with horrible regulation) in the U.S.
Shipping 1M hand sanitizers per week they just announced... wonder what the revenue will be on that for a full quarter. Plus, that is being done at their North Carolina plant. So it will be accretive to cannabis revenues in Canada, which they had announced earlier was running at full Phase II capacity (200,000 kg).
This is up 32% today and still no one posting but me?
Their 30 min presentation from Monday (virtual investor conference) is available online. Some google searching should get you there.
I thought it was interesting. Just wanted to let others know it’s out there. Nothing groundbreaking but some interesting tidbits imo.
Partnership with Dr. Jane Goodall for Forest Remedies announced and they mentioned a Summer launch of co-developed products. Didn’t see the PR on the company website earlier (may be on there soon / now) but it is on the PR wire and on SEDAR.
5% of sales (+5% more if a particular promo code is used) will go to the Jane Goodall Institute.
Better days are definitely ahead. The easy wins (for those who call the bottom or buy the dip) are starting to go away in the market.
We need to string together some positive sentiment (because the numbers are already here) and parlay that into an uplisting on the NASDAQ. They were asked about that on the last earnings call and obviously all they could do was defer due to the stock no longer meeting the minimum bid requirement. I fully believe that the uplist will be back on track once the stock price is, but there would be no reason to do something foolish like reverse split just to meet that requirement.
This gets little attention in the U.S. right now. Very little talk on ST or even here at times. The volume on MEDIF is pathetic most days. A NASDAQ uplist would, in my opinion, make a big difference. Because it’s not the performance that needs to improve (not that it would hurt), this just needs some more attention.
Based on Aphria’s earnings last week (as of 2/29/20), I personally infer that Q1 is looking bullish for the cannabis sector as a whole.
Even if COVID-19 is still at large deeper into Q2, the world will not be shut down forever. People will still be buying weed (as they are now... in fact on the Aphria call there was even talk of “pantry stuffing” in March in one of the provinces but I forget which).
Even if you want to talk about retail demand being down in Q2 (which I’m sure it will be), that doesn’t matter so much so long as they can still sell their product. And for a sin product like this, that demand isn’t going to evaporate it will simply convert to online sales primarily (imo). I actually find the opposite argument to ring true that more people at home bored, if anything, may help overall demand.
80.8m O/S in their QB certification at 4/14/20 vs. 79.1m O/S in their Form 7 per CSE at 4/7/20. The growing O/S could just be due to warrants being exercised, we will find out.
That does not include the 56m in shares pending close of the AltMed acquisition.
The market cap right now on this seems way too high. What am I missing?
Thanks for the response. But my concern is that I find no trace of these companies online outside of PR’s from Champignon and blogs about said PR’s. They also happen to have names just slightly different than legitimate companies that do come up. For instance, there is an AltMed in Florida I saw that deals in cannabis if I recall correctly. There is also a Novo Formulations in the UK but it is not the acquired company from BC. The only thing I found about Gareth Birdsall is that he played bridge online. Everything else is Champignon only.
I may not be current, especially if it’s true there are 23 new filings, but I read all the filings myself. And particularly when you look at the cast of characters in the prospectus, it gives you some concern as to the legitimacy here. This company was operating since March 2019 but what did they spend $172k on? Their sales were about $250 (less actually) in that period. I am not sure what their competency is outside of acquiring companies. So why are they the ones in charge?
They have links to websites for the acquired companies. Here are a few observations:
1.) None of them are archived prior to around end of March (Source: Wayback Machine). The same is true of Vital Superteas. That doesn’t necessarily prove they weren’t created before then, but it is unlikely they were seeing much activity if they were never picked up by the web crawler.
2.) The websites appear to be made with the same basic web design tool.
3.) if you check the social media links, they have no legitimate business posts (that I saw — I did not check every single link) and very few followers.
I also looked into Roadman Investments (RMANF) which entered into an advisory agreement with AltMed Capital Corp back in September 2019 I believe. Take a look into RMANF and you won’t like what you see.
That is among many other things that make me suspicious. Some other posters here want to be tight-lipped about their positive DD. I will be entirely transparent with mine, good or bad. Because I think there are red flags and people should hear that.
I entertain any responses to this. Happy to be proven wrong because as I said, I would be very interested if this turns out to be legit.
I am still on the fence. Even if legit, the valuation could be wack. If you read the IPO prospectus this doesn’t sound like a bunch of all-stars at Champignon imo. It is a 24 year old CEO.
I found an AltMed filing on SEDAR that said their assets were less than $5m (this was filed near the end of March) yet they received how much in stock again to be acquired? Sure, you will end up seeing some heavy goodwill or intangible assets as a result I bet (to prop up the offered share value). And maybe that is fair, but I need to be convinced first.
With this one being Pink Sheet in the U.S. (and a secondary market) and having pretty illiquid volume it makes me want to be extra cautious. I am intrigued because if the MediPharm CEO is truly involved here it could be very compelling especially the idea of getting in early.
Has anyone been able to adequately research any of these acquired companies? Even AltMed doesn’t seem to have much info, although I know that name is around. If they are all private companies then it makes sense, but by my count we are at upwards of 120m shares and I can’t tell yet what the acquired net assets will look like. Obviously the holdings at 12/31/19 are a bit scarce.
I have only been looking into this one very recently. So any thoughts would be appreciated.
Well said.
You need to remember this is a Canadian company. Heavier volume on the Canadian ticker LABS on the TSX. So what you are seeing on the U.S. ticker MEDIF could be indexing of a sort. I am not sure. I have seen what you are saying, but unless it is happening on the LABS L2 as well then I don’t think it means much. I don’t have an easy way to look at LABS since I’m in the U.S.
This was awfully prophetic... check the news / share price this morning.
This is trading at:
1. Less than 2x annual sales
2. Less than 10x annual adjusted EBITDA
That is based on 2019 numbers, not forward. That is insanely cheap. This was also profitable both from GAAP and adjusted EBITDA perspectives in its first full year of Cannabis operations.
With CV at large you discount every stock, I get that. But this is not a company that is shut down, consumers are still buying cannabis products, and the numbers speak loudly here even if no one cares to listen at the moment (other investors).
That is all while ignoring the fact that this company doesn’t make widgets, it makes Cannabis products and while the sector woes have clouded some investors’ long-term aspirations, I think we can all agree this sector is still in its early stages and there is massive growth potential for the companies that become successful.
http://investor.obalon.com/news-releases/news-release-details/obalon-engages-canaccord-genuity-explore-financial-and-strategic
Considering this is trading well below 12/31/19 (latest financials) book value, this could be an attractive entry point if a sale were to go through.
Market cap at this level is $5.6m as of the # of O/S shares disclosed on 2/20/20.
At 12/31/19, they have cash of $14m, total assets $20.4m vs. liabilities of $4.5m.
12m warrants hardly moved QoQ, those are not being dumped. I regularly track all dilutive and anti-dilutive equity components. Further, they disclosed that the O/S at 3/30/20 (per MD&A) is 134m which is only 3m higher than 12/31/19.
Lower revenue... for one quarter. And it still is higher than Q2 revenues (marginally).
Nasdaq $3 minimum bid requirement is well-known; their answer was only an update for those unaware.
No new deals? That’s just future revenue, so you are basically counting revenue performance twice. Who would be expecting contract announcements in this business environment? The hope is for ANY growth or protection of current business in a macro environment such as this.
I appreciate the response and I’m not trying to be argumentative, but it’s not quite registering with me. Would be curious to hear more about that other venture you brought up though, I am not aware.
Sure, but coronavirus doesn’t impact this as much as others. Or even if we say it impacts it the same, why is this at about 1/3 of its 2020 high of $3.41 (MEDIF ticker; $1.21 as of this posting) whereas the S&P is only about 25% off the highs (eyeballed using SPY chart)?
I realize that this is an imprecise comparison, but I just want to offer the standpoint that this has been beaten down too far to begin with. But I guess I can only be so surprised that the value is being missed here given that it’s been that way for a while now.
This moved on analyst downgrades when the price targets are still multiple dollars above current level. The action here is very hard to understand. I would love to be educated by anyone who feels they can reconcile the value here (raw numbers) to the current share price. Maybe there is something I’m missing.
I think the problem is just awareness. This feels the impacts of the sector, but doesn’t seem to get any of the benefit of its own individual merit. The Nasdaq uplist would be huge for that but unfortunately it sounds like that isn’t happening in the near term.
I think the Hexo garbage could be stirring up unnecessary fears. The auditors would’ve been all over that, and the receivables were not written off, so I think the downside risk is far heavier on Hexo’s end of the table. But their counterclaim plus the potential legal costs of this could be worrying some people. I’m not that concerned based on what I’ve heard, and Hexo has cash on hand to pay it in the event we do receive a favorable summary judgment (motioned for on 3/27 per the disclosures).
The declining sequential QoQ action is disappointing, but makes sense in the broader picture of the market. What’s frustrating is it seems like that was priced in multiple times over, yet we see no relief despite positive adjusted EBITDA for the quarter and the strong full year results. And Q4 was still higher revenue than Q2, so this was not some substantial setback from my view. The Cannabis 2.0 upside is still there in the future as well...
Hard to tell exactly what the market perception is here given that the sector is all bleeding today. But I am still a big believer in this company.
Thanks for posting. Great sign.
I agree, the value here is pretty hard to believe. I think it being OTC in the U.S. plays a part in that because the trade volume is very low here on the MEDIF ticker. The eventual Nasdaq uplisting could be huge for this to bring more money and attention.
Phenomenal news. Not just the news itself, but this news also provides evidence that operations are still running and growth is still a focus now and not just later. That’s not to say COVID-19 won’t have an impact, but I’m glad to see it hasn’t halted all progress for MediPharm.
The anticipation for the earnings call on Monday is growing. I think if we can get solid Q4 results and at least some mild optimism about 2020 that would be huge right now for the price action. If not, this could take longer to rebound, but I will be here either way most likely.
I try to focus on the tomorrows (plural) to come rather than tomorrow (singular). Better days are ahead, but the markets are fearful and the impacts on buying pressure are felt widespread, even in smaller cap companies like MediPharm.
I’m not seeing this as a big risk to MediPharm.
As I mentioned in a previous post, the worst case scenario is that the auditors tell MediPharm they have to recognize the two agreements as one, which potentially would mean the the sales would be net of the cost they are paying paying for the supplies. The only difference then would be that revenue is lower, but cost of sales would be equally lower so there would be no net income impact.
Furthermore, this is a $30m deal over 18 months. That is $5m per quarter so while it’s not nothing, it isn’t the company’s lifeblood we’re talking about here.
The other post about inventory just seemed bizarre to me. MediPharm will have inventory from the tolling arrangement but why in the world would it be impaired when there is a guaranteed sales contract in place? Any slow moving retail product would most likely be the finished product forms that are being sold to Cronos.
Over the top fear in the market? Yes. In this ticker? I’m not so sure.
From Monday through now, there has been only 2.4m in share volume on the MEDIF ticker. The O/S is about 131m. That is not warp speed selling, that is decreased buying pressure forcing the relative few that are selling to sell at a deep discount.
The sector appears to be in free fall without much separation between the good and bad. Sadly I am not surprised since that has already been the case with the sector’s earlier fall from grace this past 12 months or so. So there are definitely diamonds in the rough and I am optimistic MediPharm is one of them.
I think as always your individual liquidity, risk appetite, and time horizon will dictate how to react. I would never advise buying as a blanket statement because everyone has different situations, I simply try to share my own views.
I am a patient man and I don’t see how CV does anything to constrain the future growth in this sector; it simply delays it at worst. So for companies with strong balance sheets and cash flows (of which there are not many in this sector) they will easily weather the storm.
Severe market tension like this creates volatility, and volatility drives up what investors consider attractive returns. But that won’t last forever. I don’t expect that to change overnight but it will change.
Someone can keep me honest here if I’m wrong on any inputs, but from recent filings I see 130.9m O/S plus 12.7m in outstanding warrants that are dilutive.
So fully diluted we are looking at about $165m market cap in USD based on $1.15 a share.
That is laughable and I think everyone here knows it. I understand why people always second guess themselves about buying more to average down, but the value certainly seems like it is there right now.
Just my two cents.
Enjoyed your recent posts. I think you bought at a good time. I reentered here around $1.70 and bought more today at $1.40. I may average down one more time if it continues to fall but I’m not sure yet.
Let’s keep this in perspective, only about ~$1m in dollar volume was traded in the past two days combined. If people want to sell far below value because the market is ripe with fear, they can (and will) go ahead. Cooler heads will prevail and my suspicion is that they will quickly. Earnings is coming up at the end of the month, and when people see the full year numbers compared to the market cap it’s trading at, I think that will reset us back in the right direction.
The sector isn’t constraining it is growing and when people realize that there are profitable and scalable business models like what we have here, they will be better late than never to invest.
I agree with you on pretty much everything you said here. But I would be surprised if the entry opportunities stay this low for a year, if nothing else because the sector will begin to recover and the legalization expansion will continue to broaden the industry’s overall market cap.
I think Neptune has the right ingredients, including some impressive retail experience and connection within its leadership.
But things can change very quickly. If and once Phase IIIA expansion is back in the mix and the revenue and contracts start coming in this can explode. I am holding out hopes that a massive deal with Unilever could still be a possibility, but other large players may be attracted by Neptune’s legitimacy in the nutraceuticals space and their potential capacity still has some merit given that they already have the facility and the funds approved by the board.
As of now, MediPharm is the better price-value disparity in my opinion but I will continue to hold both and watch both closely for re-evaluation.
A lot of it will come down to how much you believe in a CBD market, which also will take time to develop as the legislative climate clears up. Neptune’s capacity (1,500,000 kg) and location of operations (U.S.) are surely industry leading, no? They also make some money on the nutraceuticals side and have rebranded that under Ocean Remedies for their recent marketing push. These other revenue streams may not break the bank but they could be a nice bonus.
Oh, I forgot one major thing. The recent deals with IFF and the advertising firm are very encouraging as well. Take a look at the strike of those warrants compared to where we are now. And beyond that, one of the two provided upwards of $5m worth in services in exchange for warrants if I am remembering correctly. That speak volumes about what sophisticated companies think about the potential here.
I usually don’t care about hiring news, but I will admit the resume looks strong here. Beyond that, wanted to share some various general thoughts as well.
The issues are well known at this point but there is still plenty to like for the future. The oversupply of hemp can only benefit a company such as Neptune with both extraction capacity (1,500,000 kg on the CBD side with SugarLeaf in the U.S.) as well as retail sales channels developing (Forest Remedies). I have to imagine there is plenty of very cheap biomass out there right now based on what I’ve been reading about that industry.
The 200,000 kg capacity in Canada should be able to sustain some revenue finally since we have been working with 30,000 kg or less in all likelihood this past quarter or two. They mentioned the ability to expand that in the near-term I believe, but I need to freshen my memories again.
The offering at $4.40 with insider buying (including CEO) is encouraging when you are at a price level like this just shortly after. I think the company’s history in the nutraceuticals sector as well as the new CEO bring a lot of credibility to the table, and what they talked about on the earnings call about targeting customers that have longer sales cycles was interesting and would be a potential way to capitalize on that.
However, what I really do not like is the announcement that Phase IIIA will not be completed in the “near term” and I say that for a few reasons. First, as usual, they are vague in their language and somehow the clueless analysts (of which there are not many) don’t even ask about that on the call. Second, being able to boast about soon having industry leading capacity was the biggest competitive advantage they had in terms of extractors, because they don’t have much else. Yes, they should be achieving GMP certification this year, but they are not the only ones (MediPharm).
It is clear that the previous leadership was in over their heads. When you repeatedly provide date ranges and fail to achieve them that is embarrassing for the company. Now, I don’t necessarily think this is a situation Cammarata created at all, but he did inherit it. So I am at least glad he cleared the air in the recent ER and reset expectations even if it’s not what I or any investor wanted to hear. I am willing to give him the benefit of the doubt for now and continue to have some patience.
To me, the long-term potential for this is still here. Will they be top of the extractors, that I really can’t say. But I think the path to profitability is here and if they can get back on track (hopefully sooner rather than later) on their aggressive growth strategy in terms of capacity, I think there is certainly plenty of money to be made here.
However, what has changed the most is the short and mid term potential. This can still recover quickly but I suspect it will follow the sector (although the whole sector is due for a rebound so maybe that is not all bad). If a company like MediPharm can’t detach from the sector’s doldrums despite its huge growth and solid profitability, you have to imagine this one can’t either.
I continue to hold plenty of shares here and have not sold, but this has been a sobering quarter or two. I like my position a lot but I will admit I don’t love it like I did before.
Not sure about your short circuit question, will have to defer on that one.
I am back in on MEDIF for the second or third time, reentered last Friday when the PPS was too good to pass up.
I think very highly of this company. That was true before too but I had sold for a gain during whatever run up that was going on at the time. I think the market can only ignore the numbers on this one for so long, and once it’s off the OTC in the U.S. it will hopefully bring some much needed volume.
I will share my thoughts for what they are worth, which may not be much.
I’m not sure people can truly justify the market’s bull run we had up until this recent correction. Clearly the public is worried about CV, but I think while that may have helped spur the correction, it is not the only cause. People were widely predicting a pullback before this ever came along, and I find that sometimes can be a self-fulfilling prophesy in a manner of speaking.
Does CV really reduce the value of the market by 10% or more? I would argue not. Now if we were saying the market was overvalued to begin with (which I would say personally) then it starts to make more sense to me why the drop was so severe.
Maybe I am wrong, but I think people are letting emotions guide them too much when it comes to CV. It’s not nothing, but it isn’t everything either.