WeedMD Reports First Quarter 2021 Financial Results with 102% Record Increase in Sequential Net Revenue Growth
Jun. 29, 2021
Total revenue (before excise duties) of $12.9 million in Q1 2021, represents over 7% favourability over the $12.0 million Q1 2021 guidance previously provided
Net revenue of $10.3 million in Q1 2021, represents a 102% sequential increase over Q4 2020, reflecting record sales of higher-margin, direct-to-consumer, and direct-to-patient products
Reports significant improvement in SG&A expenses, down 66% from previous quarter
Gross Profit Before Fair Value Changes improved over $22 million sequentially from Q4 2020
Adjusted EBITDA sequential improvement of over $31 million versus Q4 2020, reflecting improved gross profit and reduced expenses resulting from optimization initiatives
Outstanding Shares 246,624,214 05/31/2021
TORONTO, June 29, 2021 (GLOBE NEWSWIRE) -- WeedMD Inc. (WDDMF) (TSX-V:WMD) (OTCQX:WDDMF) (FSE:4WE) (“WeedMD” or the “Company”), a federally licensed producer and distributor of medical-grade cannabis, announced today its financial results for the three months ended March 31, 2021. The Company recorded net revenues of $10.3 million (gross revenues of $12.9 million), a 102% sequential quarter increase compared with net revenues of $5.1 million for Q4 2020. This also represents a direct-to-consumer and patient record increase of over 40% year-over-year, after removing a one-time bulk sale revenue recorded in Q1 2020. The Company will host its annual general and special meeting of shareholders (the “AGM”) on June 30, 2021 where it will highlight details for the period.
“Our year-to-date, record-breaking growth reflects our robust sales strategy rooted in our optimization initiatives that drove product innovation, brand recognition, retail engagement, and a 30% increase in grade A production to consistently meet our targets and fill rates – all of which contributed to record revenues from our direct-to-consumer channels in both adult-use and medical sales,” said George Scorsis, Interim CEO and Executive Chair, WeedMD. “Our Starseed Medicinal patient activations increased meaningfully during Q1 2021, contributing to a 125% sequential increase in medical revenue growth from Q4 2020. Additionally, our expanded product availability across new distribution and retail channels saw impressive growth in the Province of Quebec – quickly growing into one of our top-selling provinces for Color Cannabis. Moreover, both our Color and Saturday Cannabis storefront presence in Canada increased 375% over the prior year, and we are now in over 75% of the 700 retail stores in Ontario. Our products are taking top billing at many provincial retail outlets, with Ontario recently adding three of our Color cultivars as ‘Core Strains’ due to their consistent availability and 100% fill rates. With the pending addition of craft cultivation brand Royal City Cannabis Co. and parent CannTx, we will continue our channel expansion – all of which will provide ongoing sustainable revenue growth.”
Summary of Results
For the Quarter-Ended Mar. 31, 2021 Dec. 31, 2020 ($000’s ) ($000’s ) Total revenue 12,900 6,962 Net revenue 10,278 5,077 Gross (loss) profit before changes in fair value 251 (22,533 ) Gross margin % before changes in fair value 2.4 % (-444% ) Income (loss) and comprehensive (loss) (7,008 ) (45,545 ) Adjusted EBITDA* ($432,000) 000's added (31,655 )
As at Mar. 31, 2021 Dec. 31, 2020 ($000’s ) ($000’s ) Cash and cash equivalents 20,513 22,322 Inventory 30,353 30,665 Biological assets 4,395 1,956 Working Capital 52,174 45,060
“During the first quarter, we continued to leverage our transformation initiatives in the areas of growth, efficiency, optimization, quality and talent – all major contributors to our solid performance that led to 102% sequential net revenue growth and over $31 million sequential margin improvement,” said Beth Carreon, CFO. “With our continued emphasis on increasing our market share, securing lower cultivation costs, reducing expenses – down 66% from fourth quarter 2020 - paying down debt, and prudently managing our cash flow, we have strengthened our balance sheet to support our commercial growth into new product segments and distribution channels. We remain on track to driving further revenue growth and achieving profitability.”
Key Financial Highlights
For the first quarter ended March 31, 2021, WeedMD recorded net sales of $10.3 million, compared to $5.1 million in Q4 2020 and $12.2 million in Q1 2020 (Q1 2020 included a $5.0 million one-time bulk sale). Gross revenues for the first quarter ended March 31, 2021 were $12.9 million. Gross profit before changes in fair value was $0.25 million for Q1 2021, compared to a gross loss of $22.5 million for Q4 2020 and gross profit of $1.4 million . Excluding impact of inventory adjustment, Q1 2021 gross profit improved versus Q4 2020 and Q1 2020, reflecting management’s continued focus on optimization.
Average yield per plant was 104 grams during Q1 2021, compared to 76 grams in Q1 2020.
Total dried cannabis sold in Q1 2021 was 3,878 kgs, compared to 5,084 kgs in Q1 2020. The decrease was mainly driven by bulk, partly offset by the growth in medical and adult-use channels.
Weighted average cost per gram of inventory on hand was $0.51 for the three months ending March 31, 2021, compared to $2.54 for the same period in 2020.
As at March 31, 2021, WeedMD held $34.7 million in inventory and biological assets with total assets of $176 million.
Selling, General & Administrative Expenses for Q1 2021 was $6.0 million, compared to $11.0 million in Q4 2020 and $6.5 million in Q1 2020.
Adjusted EBITDA improved to $(0.4) million for Q1 2021, up from $(31.6) million in Q4 2020 and $(2.5) million in Q1 2020, primarily driven by growth in high-margin, direct-to-consumer and patient sales as well as the Company’s optimization initiatives.
Corporate Highlights During First Quarter 2021 and Subsequent Events
In January 2021, WeedMD appointed executive chairman, George Scorsis, as interim Chief Executive Officer. Concurrent with this, WeedMD’s Chief Legal Officer, Jason Alexander, was appointed to the Board.
The Company announced the reallocation of its medical packaging, labeling and distribution activities from its Bowmanville, Ontario site to its Aylmer, Ontario facility which also houses the Company’s extraction hub. This strategic reallocation reflects WeedMD’s ongoing progress to maximize the utilization of its facilities, improve operational efficiencies, and further align its cost structure. The Company subsequently sold the Bowmanville operating assets and licence to a third-party buyer in June 2021.
WeedMD signed the sixth LiUNA local with the addition of Manitoba Local 1258 to Starseed’s medical cannabis program.
In February 2021, the Company announced the expansion of its Color Cannabis products into the Province of Quebec which makes it accessible to over 85% of Canada’s retail market. Consumers in Quebec, one of Canada’s largest markets, may purchase Color products via the Société québécoise du cannabis (SQDC) in partnership with local producer ROSE LifeScience.
WeedMD significantly increased its adult-use offerings during the first quarter of 2021, including: "Top Selling Vape Cart" in Ontario with Saturday Cannabis terpene-infused, one-gram carts in Sour Pineapple and Lemon Haze (data: Ontario Cannabis Store “OCS”); one-gram, strain-specific Saturday pre-rolls in Ghost Train Haze (GTH); Color Cannabis dried flower in 15 gram pouches; following its release in March 2021, Color Cannabis, Live Resin vape carts in Pedro Sweet Sativa reached #2 top selling unit sales in Ontario (data: OCS); introduced Color's strain-specific single-session pre-roll products in Mango Haze, GTH and Pedro's Sweet Sativa; and Color Cannabis GTH pre-roll multi-packs landed #4 top-seller in BC (data: BC Liquor Distribution Branch).
Company expanded its Starseed medical products extensively in Q1 2021 including: Mary's Medicinals Topical Balms in 1:1 (CBD/THC) and CBD compounds; Aurum 4 Indica in Juicy-Fruit strain; Strain-specific PAX Vapor Pods in Pedro Sweet Sativa, Mango Haze and Black Sugar Rose; CBD Softgel capsules in 1:1, THC and CBD formats; and new strains Lemon Z and Hybrid Reserve whole flower.
In February 2021, WeedMD introduced Boveda humidity control "terpene shield" packets into all dried flower products commencing with Color, Saturday and subsequent Starseed product lines.
Starseed added three partner clinics to its medical cannabis program, which now totals 24 clinics.
WeedMD announced and closed its oversubscribed $17.25 million bought deal equity financing.
In April 2021, the Company named Beth Carreon as Chief Financial Officer. Formerly of Tilray Canada and Nestlé Canada, Ms. Carreon is a seasoned financial executive with broad experience in corporate finance, mergers and acquisitions, banking and consumer-packaged goods.
In May 2021, WeedMD entered into an exclusive licensing and supply agreement with Ontario craft cannabis producer CannTx Life Sciences Inc. (“CannTx”) to release celebrated cultivars “Rockstar Tuna” and “Royal Goddess” for its Starseed medicinal patients.
Shortly after entering into the CannTx licensing and supply agreement, the Company signed a Letter of Intent to acquire all the issued and outstanding shares of CannTx in an all-stock transaction.
In June 2021, WeedMD announced the expansion of Color Cannabis products into the Province of New Brunswick with products expected to be available in July 2021. Annual General & Special Meeting of Shareholders (AGM) Information:
WeedMD’s Annual General and Special Meeting of Shareholders will be held virtually from Toronto, Ontario on June 30, 2021 at 11:00 a.m. Eastern Time. George Scorsis, Interim CEO and Executive Chair, and Beth Carreon, CFO will be available for questions following opening remarks.
Conference Call Details:
Date: Wednesday, June 30, 2021 Time: 11 a.m. Eastern Time Location: Virtual meeting link here. Updated investor presentation and corporate deck can be found here. Access WeedMD’s 2021 Shareholder Newsletter here and information about upcoming corporate events here.
The Company’s financial statements and related management’s discussion and analysis for the first quarter ended March 31, 2021 are available under the Company’s profile on SEDAR at www.sedar.com. All amounts are expressed in Canadian dollars and are in accordance with International Financial Reporting Standards unless otherwise noted.
About WeedMD Inc. WeedMD Inc. is the publicly traded parent company of WeedMD RX Inc., a licence holder producing and distributing 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, ON as well as a fully-licensed 26,000 sq. ft. Aylmer, ON processing facility, specializing in cannabis extraction. With the addition of Starseed Medicinal, a medical-centric operator, WeedMD has expanded its multi-channeled distribution strategy. Starseed’s industry-first, exclusive partnership with LiUNA, the largest construction union in Canada, along with 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 (SHDMF) as well as eight provincial distribution agencies where adult-use brands Color Cannabis and Saturday are sold. WeedMD is also the exclusive Canadian producer and distributor of award-winning U.S.-based wellness brand Mary’s Medicinals sold in both medical and adult-use channels.
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For further information, please contact:
For Investor Enquiries: Valter Pinto or Scott Eckstein KCSA Strategic Communications 1-212-896-1254 weedmd@kcsa.com
