WeedMD Inc’s (TSXV:WMD) first-quarter 2019 results demonstrate great improvement from the previous quarter, and there is a lot to look forward to in the future
John Brooker | June 4, 2019 | SmallCapPower: WeedMD Inc. (TSXV:WMD), a Canadian licensed cultivator, reported Q1/19 earnings on May 30, 2019.
These results featured a jump in revenue sparked by successful harvests from six additional grow rooms. WeedMD recorded net sales of $3.3M, an increase of approximately 23% from the previous quarter. This increase in sales was driven by the sale of 793 kg of dried cannabis throughout the quarter, an increase of 46% quarter-over-quarter. This increase in sales helped to drive up WMD’s gross profit margin to 15% (before changes in fair value). Another driver of these increased gross margins were lower COGS. The all-in weighted average cost per gram for the first quarter was $2.90, compared to $3.28 for the previous quarter. This decrease in cost per gram can be attributed to a portion of the production capacity in its Strathroy facility (both outdoor and greenhouse) being brought online.
During Q1, WeedMD purchased a 98-acre property in Strathroy where its 610,000 square foot greenhouse resides, in addition to the neighbouring 60-acre property. The Company funded this transaction with a $39M credit facility from BMO at a rate of interest that is expected to average approximately 5% per annum over a three-year term. WeedMD also secured a processing license at its Strathroy facility, a greenhouse facility with a neighbouring outdoor cultivation farm. WMD was also able to obtain a Health Canada licence amendment for an additional processing area equipped with semi-automated packaging lines at its Aylmer facility, to increase speed to market and drive costs lower.
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WeedMD secured additional provincial distribution agreements with Manitoba and Saskatchewan. With these supply agreements now in place, WMD is now able to reach about 70% of Canada’s projected adult-use market, including markets in B.C, Alberta, Manitoba, Saskatchewan, Ontario, and Nova Scotia.
Locations of WeedMD’s Provincial Supply Agreements
Source: WeedMD MD&A
WeedMD Inc’s first-quarter 2019 results demonstrate great improvement from the previous quarter, and there is a lot to look forward to in the future. WeedMD’s next licensing stage consists of licensing the 110,000 square feet of hybrid greenhouse that it has already fully built out, which is expected to lead to further production growth.
WeedMD shares closed at $1.88 on Friday, May 31, 2019. WeedMD stock currently trades a market cap of $215.0 million.
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