WeedMD Inc. (
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 fiscal year ended December 31, 2020. The
Company also announced preliminary unaudited first quarter 2021
gross revenue of $12 million, which represents a direct-to-consumer
and patient record increase of approximately 40% when compared to
prior year period, after removing a one-time bulk sale revenue
recorded in the prior year period. The Company expects to file its
first quarter 2021 financial results on or before June 30, 2021.
“We kicked off this year having accomplished
several important milestones aligned with our 2020 business
transformation initiatives whereby we realized the benefits of our
cultivation efficiencies and production capabilities that drove
increased brand recognition, retail outreach of our premium
adult-use brands, and engagement with new partners positioning us
for strategic growth,” said George Scorsis, Interim CEO and
Executive Chair, WeedMD. “We are seeing steady growth in consumer
demand across Canada for our top-selling Color Cannabis dried
flower, pre-rolls, vapes and live resin products, as well as our
Saturday Cannabis multi-pack pre-rolls and vapes. This is
reflective in our products expanding into over 1,100 national
retail locations this year, a 350% year-over-year increase from
previous year which is a testament to our marketing strategy and
quality of products. Likewise, our Starseed Medicinal brand reached
a milestone of 36 new product SKUs over this past year and 20%
increase in patient activations to date - all trends that we expect
to continue throughout the remainder of 2021.”
Summary of
Results
For the Year-Ended |
|
Dec. 31, 2020 |
|
Dec. 31, 2019 |
|
|
|
($000’s) |
|
($000’s) |
|
Net revenue |
|
29,434 |
|
20,820 |
|
Gross (loss)
profit before changes in fair value |
|
(21,991 |
) |
4,049 |
|
Income (loss) and
comprehensive (loss) |
|
(89,607 |
) |
(10,392 |
) |
Adjusted EBITDA* |
|
(43,584 |
) |
(11,883 |
) |
|
|
|
|
As at |
|
Dec. 30, 2020 |
|
Dec. 31, 2019 |
|
|
|
($000’s) |
|
($000’s) |
|
Cash and cash
equivalents |
|
22,322 |
|
8,184 |
|
Inventory |
|
30,665 |
|
31,287 |
|
Biological
assets |
|
1,956 |
|
7,666 |
|
Working
Capital |
|
45,060 |
|
30,618 |
|
*Adjusted EBITDA is not a recognized measurement
under International Financial Reporting Standards (“IFRS”) and this
data may not be comparable to data presented by other companies.
Management defines Adjusted EBITDA as EBITDA adjusted to exclude
interest, tax, and depreciation, stock compensation, fair value
changes and other non-cash items, and non-recurring items. This
data is furnished to provide additional information and does not
have any standardized meaning prescribed by IFRS. The Company uses
this non-IFRS measure to provide shareholders and others with
supplemental measures of its operating performance. The Company
also believes that securities analysts, investors and other
interested parties, frequently use this non-IFRS measure in the
evaluation of companies, many of which present similar metrics when
reporting their results. As other companies may calculate Adjusted
EBITDA differently than the Company, this metric may not be
comparable to similarly titled measures reported by other
companies. We caution readers that Adjusted EBITDA should not be
substituted for determining net loss as an indicator of operating
results, or as a substitute for cash flows from operating and
investing activities. See the Company’s management’s
discussion and analysis for the 12 months ended December 31, 2020
(the “2020 MD&A”) for a detailed reconciliation of Adjusted
EBITDA to Net Income / (Loss). The Company’s financial statements
for the 12 months ended December 31, 2020 and the 2020 MD&A are
available on SEDAR at www.sedar.com
Preliminary Q1 2021 Revenue(1)
WeedMD also provided preliminary unaudited
revenue highlights for the three-month period ended March 31, 2021.
First quarter 2021 gross revenues of $12 million represents 72%
growth sequential Q1 2021 versus Q4 2020, reflecting the Company’s
record sales increase of higher-margin, direct-to-consumer and
direct-to-patient products. Revenue from Adult-Use and Medical
channels increased meaningfully quarter-over-quarter to record high
sales in the first quarter 2021 driven by expanded product
availability across retail outlets, new distribution channels
including the addition of the Province of Quebec, and customer
acquisition initiatives.
Revenue Highlights
|
|
Q4 2020 |
Q1 2021(1) |
|
|
($000’s) |
($000’s) |
Revenue by
Channel |
|
|
|
Medical |
|
2,577 |
5,500 |
Adult-Use |
|
4,386 |
6,500 |
Total Gross Revenue |
|
6,963 |
12,000 |
“With the $30 million credit facility we closed
with LiUNA Pension Fund in the fourth quarter of 2020, and the
$17.25 million bought deal equity financing secured in March 2021,
we have improved our liquidity and secured the capital resources to
further execute on our strategic growth plans,” said Beth Carreon,
CFO. “We are on track for continued revenue growth while we
continue to improve our internal cost structure with production
efficiencies implemented in 2020 and now being realized along with
improved margins during the remainder of 2021 and beyond.”
Key Financial Highlights
- For the fiscal
year ended December 31, 2020, WeedMD recorded net sales of $29.4
million, compared to approximately $20.8 million for the fiscal
year ended December 31, 2019, an increase of 41%
year-over-year.
- Gross loss
before changes in fair value was $22.0 million for full year 2020
versus gross profit of $4.0 million for full year 2019. The decline
was mainly driven by inventory write-down.
- Kilograms
harvested for full year 2020 increased by 15,763 kg or 88% to
33,751 kg compared to full year 2019 partly due to additional
flowering rooms becoming operational at Strathroy.
- Weighted average
cost per gram of inventory on hand was $0.46 for period ending
December 31, 2020, compared to $0.79 for the same period in
2019.
- Adjusted EBITDA
decreased by $31.7 million to $(43.6) million for full year 2020
from $(11.9) million for full year 2019, primarily driven by the
full-year impact of the Starseed integration, as well as commercial
costs incurred in order to drive overall Company growth.
Corporate Highlights During Fiscal Year
Ended December 31, 2020
- During the
period, WeedMD entered into a Cannabis 2.0 supply partnership with
Pax Labs, Inc., a leader in premium cannabis vaporizer technology,
with award-winning devices for both oil concentrates and flower.
Most recently in 2021, the Company began selling Pedro’s Sweet
Sativa, strain-specific PAX® ERA® products to its Starseed
Medicinal clients.
- WeedMD also
entered into a commercial arrangement with leading Canadian
retailer, Fire & Flower Inc. to manufacture, package and ship
the retailer’s Revity CBD™ product line, which is now available at
Fire & Flower stores in the province of Saskatchewan.
- The same year,
WeedMD entered into an exclusive licensing agreement with Mary’s
Medicinals to bring its award-winning, premium line of self-care
products to Canada, including adult-use and direct-to-consumer
medical channels. The products kicked off its initial release with
Starseed Medicinal in February 2021, followed by expansion in
Ontario retail markets via the Ontario Cannabis Store in May
2021.
- Also in 2020,
WeedMD expanded access to its Starseed Medicinal products into
Atlantic Canada under the purview of New Brunswick-based physician,
Dr. Julie Hildebrand. Dr. Hildebrand is widely recognized for
specializing in cannabis medicine and education, and is working
with patients and benefits providers in New Brunswick, Nova Scotia,
Prince Edward Island and Newfoundland.
- On the medical
side, during the course of 2020, the Company signed four strategic
partners and their benefits providers to exclusive supply
arrangements.
- In 2020, the Company’s shareholders
elected Bruce Croxon, a prominent Canadian entrepreneur and venture
capitalist and co-founder of Lavalife, to WeedMD’s board of
directors (the “Board”).
- In the fourth quarter of 2020,
WeedMD appointed veteran finance executive and former Deloitte
partner, Lu Cacioppo, FCPA, CA, to the Board as an independent
director and chair of WeedMD’s Audit Committee.
- Also in the fourth quarter of 2020,
the Company appointed seasoned human resources executive Deborah
Sikkema as its Chief People Officer. Ms. Sikkema was also appointed
to WeedMD’s Compensation Committee alongside its Board.
- During the course of 2020 and
subsequent to year-end, WeedMD’s Starseed Medicinal signed six
LiUNA locals to medical cannabis programs, while expanding coverage
to Manitoba in early 2021.
Preliminary First Quarter 2021
Highlights & Subsequent Events
- Starting 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.
- Also in January 2021, the Company
reallocated its medical packaging, labelling and distribution
activities from its Bowmanville, Ontario site to its Aylmer,
Ontario facility which also houses the Company’s extraction hub.
These strategic steps are part of WeedMD’s ongoing plan to maximize
the utilization of its facilities, improve operational efficiencies
and further align its cost structure.
- 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 per cent 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..
- In March 2021, 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. to release celebrated
cultivars “Rockstar Tuna” and “Royal Goddess” for its Starseed
Medicinal patients.
Conference Call Information:
WeedMD will host a conference call with George
Scorsis, Interim CEO and Executive Chair, and Beth Carreon, CFO on
Monday, May 31st, 2021. Management will be available for questions
following opening remarks.
Conference Call Details:
Date: |
Monday, May 31, 2021 |
Time: |
10 a.m. Eastern Time |
Dial-in Number: |
Canada/USA: 1-800-319-4610. International Toll:
1-604-638-5340Participants, please dial in and ask to join the
WeedMD call |
Replay Dial-in: |
Canada/USA: 1-800-319-6413. International Toll:
1-604-638-9010Replay Access Code: 6629Available after 12:00 p.m.
Eastern Time, until June 30, 2021 |
Management Cease Trade Order Update
WeedMD is providing a bi-weekly update on the
status of the management cease trade order granted on May 3, 2021
(the "MCTO") by its principal regulator, the
Ontario Securities Commission, in accordance with the alternative
information guidelines set out in National Policy 12-203 -
Management Cease Trade Orders ("NP 12-203"),
following the Company's announcement on April 21, 2021 (the
"Default Announcement"), that it would be unable
to file its annual audited financial statements, annual
management's discussion and analysis and related certifications for
the year ended December 31, 2020 (the "Required Annual
Filings") on or before April 30, 2021, as required under
applicable securities laws. On May 14, 2021, the Company also
announced that the filing of its unaudited interim financial
statements, management's discussion and analysis and related CEO
and CFO certifications for the three-months ended March 31, 2021
(the "Required Interim Filings") will be delayed
beyond the filing deadline of May 31, 2021. The Company will post
the Required Interim Filings on or before June 30, 2021.
Bi-Weekly Status ReportThe
Company confirms that since the date of the Default Announcement,
except as set out above, including with respect to the filing today
of the Required Annual Filings: (i) there has been no material
change to the information set out in the Default Announcement or
subsequent default status reports that has not been generally
disclosed; (ii) there has been no failure by the Company in
fulfilling its stated intentions with respect to satisfying the
provisions of the alternative information guidelines set out in NP
12-203; (iii) there has not been any other specified default by the
Company under NP 12-203; and (iv) there is no other material
information concerning the affairs of the Company that has not been
generally disclosed.
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 fiscal year ended
December 31, 2020 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. and Starseed Medicinal Inc., licence
holders 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, 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 as well as seven provincial distribution
agencies where adult-use brands Color Cannabis and Saturday are
sold.
Follow WeedMD and its brands on
LinkedIn
Twitter:
WeedMD, Color
Cannabis, Saturday
Cannabis &
Starseed
Instagram:
WeedMD, Color
Cannabis, Saturday
Cannabis &
Starseed
For further information, please
contact:
For Investor Enquiries:Valter
Pinto or Scott EcksteinKCSA Strategic
Communications1-212-896-1254weedmd@kcsa.com
For Media Enquiries:Marianella
delaBarreraVP, Communications & Corporate
Affairs416-897-6644marianella@weedmd.com
To learn more, visit us at www.weedmd.com
Notes:
(1) Preliminary and unaudited
financial results are subject to customary financial statement
procedures by the Company and its auditors. Actual results could be
affected by subsequent events or determinations. While the Company
believes there is a reasonable basis for these preliminary
financial results, the results involve known and unknown risks and
uncertainties that may cause actual results to differ materially.
These preliminary fiscal results represent forward-looking
information. See "Forward Looking Information".
Forward Looking Information
This press release contains "forward-looking information" within
the meaning of applicable Canadian securities legislation which are
based upon WeedMD's current internal expectations, estimates,
projections, assumptions and beliefs and views of future events.
Forward-looking information can be identified by the use of
forward-looking terminology such as "expect", "likely", "may",
"will", "should", "intend", "anticipate", "potential", "proposed",
"estimate" and other similar words, including negative and
grammatical variations thereof, or statements that certain events
or conditions "may", "would" or "will" happen, or by discussions of
strategy. Forward looking information included in this press
release includes, but is not limited to, statements in respect of
the Company’s financial results for the three months ended March
31, 2021 and the filing of the financial statements and related
management’s discussion and analysis in respect thereof.
The forward-looking information in this news
release is based upon the expectations, estimates, projections,
assumptions and views of future events which management believes to
be reasonable in the circumstances. Forward-looking information
includes estimates, plans, expectations, opinions, forecasts,
projections, targets, guidance or other statements that are not
statements of fact. Forward-looking information in this news
release include, but are not limited to, statements with respect to
internal expectations, expectations with respect to actual
production volumes, expectations for future growing capacity and
the completion of any capital project or expansions.
Forward-looking information necessarily involve known and unknown
risks, including, without limitation, risks associated with general
economic conditions; adverse industry events; loss of markets;
future legislative and regulatory developments; inability to access
sufficient capital from internal and external sources, and/or
inability to access sufficient capital on favourable terms; the
cannabis industry in Canada generally; the ability of
WeedMD to implement its business strategies; the COVID-19 pandemic;
competition; crop failure; and other risks.
Any forward-looking information speaks only as
of the date on which it is made, and, except as required by law,
WeedMD does not undertake any obligation to update or revise any
forward-looking information, whether as a result of new
information, future events or otherwise. New factors emerge from
time to time, and it is not possible for WeedMD to predict all such
factors. When considering this forward-looking information, readers
should keep in mind the risk factors and other cautionary
statements in WeedMD's disclosure documents filed with the
applicable Canadian securities regulatory authorities on SEDAR at
www.sedar.com. The risk factors and other factors noted in the
disclosure documents could cause actual events or results to differ
materially from those described in any forward-looking
information.
Financial Outlook
This press release contains a financial outlook within the meaning
of applicable Canadian securities laws. The financial outlook has
been prepared by management of the Company to provide an outlook
for the Company's forecasted revenue for the three month period
ending March 31, 2021 and may not be appropriate for any other
purpose. The financial outlook has been prepared based on a number
of assumptions including the assumptions discussed under the
heading " Forward Looking Information" above and assumptions with
respect to market conditions, pricing, and demand. The actual
results of the Company's operations for any period will likely vary
from the amounts set forth in these projections and such variations
may be material. The Company and its management have approved the
financial outlook in this press release and believe that it has
been prepared on a reasonable basis and such financial outlook is
being provided for the purpose of providing further information
about the Company's future business operations. However, because
this information is highly subjective and subject to numerous
risks, including the risks discussed under the heading "Forward
Looking Information" above, it should not be relied on as
necessarily indicative of future results.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS
REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE
POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR
THE ADEQUACY OR ACCURACY OF THIS RELEASE
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