MediPharm Labs Nears Positive Adjusted EBITDA in Q2 with Improving Gross Profit

MediPharm Labs Corp., a pharmaceutical company based in Toronto specializing in precision-based cannabinoids, recently disclosed its financial outcomes for the second quarter of 2024. The company reported a notable turnaround in its financial performance, highlighted by improved revenue and reduced losses.

In the second quarter of 2024, MediPharm saw a negative Adjusted EBITDA of $124,000, a significant improvement from the negative $949,000 recorded in the first quarter of 2024. This marks a 96% growth in Adjusted EBITDA compared to the same period in 2023. The company also achieved its highest net revenue in over three years, amounting to $10.3 million, which represents an 8% increase compared to the second quarter of 2023 and a 6% rise from the first quarter of 2024. International sales contributed to 44% of the total revenue for the quarter.

Gross profit surged to 33% in the second quarter of 2024, up from 8.1% in the same period the previous year. This growth was driven by cost reductions, production efficiencies, and a favorable product mix. The company ended the quarter with a cash balance of $16 million and reduced its operating expenses by $2 million compared to the second quarter of 2023, thanks to acquisition synergies and overall cost reductions.

MediPharm achieved significant milestones in innovative cannabis products. The company's dronabinol sales in the European Union doubled in the second quarter, reaching total sales of $1.9 million year-to-date. Dronabinol is a pharmaceutical product produced through an all-natural process by MediPharm. Additionally, a licensing agreement with Remidose Aerosols has granted MediPharm exclusive rights to advanced non-combustible cannabis products, expected to expand their offerings in various markets.

Furthermore, MediPharm successfully launched self-emulsifying drug delivery systems (SEDDS) capsules in partnership with Avicanna, now available to Canadian patients in two formulations. MediPharm also became a significant player in the Australian market, holding the third largest market share for GMP vapes by units sold and patient revenue as of July 2024, merely nine months after the product launch.

Operationally, MediPharm streamlined its medical cannabis operations by reducing the scale at its Hope, British Columbia facility and relocating direct-to-patient medical sales logistics to its Barrie, Ontario facility. This restructuring is expected to save approximately $1 million annually and deliver better service to patients. The sale of the Hope facility could also generate additional cash in the near term. Moreover, the Landesamt für Arbeitsschutz Verbraucherschutz und Gesundheit (LAVG) in Germany inspected and confirmed the renewal of EU-GMP certification for MediPharm's facilities in Napanee and Barrie, effective until July 2027.

Another significant achievement was the submission of a Drug Master File for cannabidiol (CBD) active pharmaceutical ingredients to Health Canada, which complements a similar file submitted to the U.S. Food and Drug Administration in 2021. This allows MediPharm’s pharmaceutical partners to reference their CBD API in new and generic drug applications.

In July 2024, MediPharm began offering new high-potency medical cannabis flower, branded under Beacon Medical GmbH, to distribution partners in Germany. This move aligns with regulatory changes that are fostering market growth in the region.

CEO David Pidduck expressed satisfaction with the company's Q2 results, pointing out the substantial improvements in both revenue and profitability. CFO Greg Hunter emphasized that Q2 2024 was a pivotal step toward profitability, noting that the company’s revenue and Adjusted EBITDA were the highest in over three years. MediPharm's cash burn rate decreased, leading to a strong financial position with a cash balance of $16 million and less than $3 million in debt at the end of the quarter.

In conclusion, MediPharm Labs is in a robust financial position, well-placed to capitalize on its licenses, global customer contracts, and assets as it aims for profitability in the latter half of 2024.