Despite almost everything else in the cannabis sector going down, MediPharm Labs Corp. (TSX:LABS) (OTCQX:MEDIF) has been growing. Ever since Rich reported on its Q2 profit, the company has driven cannabis investors to demand similar results industry-wide.
Earlier today, MediPharm announced its Q3 earnings. For the period ending September 30, the company posted strong growth in revenue, adjusted EBITDA, and net income. It did all this while making significant investments in capacity that will help the company continue to grow in future quarters.
“This company is just far and above their peers,” says Rich. “They’re in a league of their own.”
MediPharm’s Q3 Earnings
For the months of July, August, and September, MediPharm earned $43.4 million in revenue, a 38% increase over the previous quarter.
Gross profit came in at $14.8 million, and gross margin was 34%. Adjusted EBITDA was $10.1 million, representing a 31% increase from Q2. The adjusted EBITDA margin was 23% compared to 24% in Q2, even as MediPharm made “targeted audit-related expenditures to grow its EU-GMP-standard-built production facilities” and improve its product capabilities.
In the end, net income before tax was $5.4 million, which is a step up from last quarter’s net income before tax of $4.1 million.
Most of the company’s growth is targeted at international expansion, as CEO Patrick McCutcheon explains:
“During the quarter our team has made great strides towards European GMP and Australian compliance of our facilities and continued to build out our capabilities and capacity across our global platforms in Canada and Australia. These investments will prepare us for a very exciting future as the market and world leader in extraction and white label production.”
MediPharm’s ability to expand its business ventures while still posting profit has Rich feeling pretty bullish on it.
“This is the only company that everybody should have bought this year,” he says. “454% up this year, 62% in the last three months. This company is delivering exactly what the Street is looking for. Growth.”
For the year-to-date, the company’s revenue is $96.8 million, gross profit is $32.9 million, adjusted EBITDA is $22.1 million, and net income before tax is $9.2 million. The company also recently applied for listing on the NASDAQ.
MediPharm’s Global Forecast
McCutcheon says that his company is on track to surpass $100 million in revenue for the year, which is a rare feat in the cannabis industry.
“With the completion of the roll-out of our initial white label products in sight, and as the regulated retail distribution system starts to hit stride, we can seize the opportunities that Cannabis 2.0 brings beginning next year.”
As of Q4, MediPharm Labs now has a production capacity of 300,000 kgs. Some of that production will ultimately go to its Australian and European efforts as it receives GMP certification.
The company’s Australian subsidiary is currently building sales through agreements with licensed cultivators in the country. It’s also securing a manufacturing agreement for the production of cannabis oil and derived products.
On top of that, in September, MediPharm entered into an export agreement with ADREXpharma GmbH, a German pharmaceutical company. The agreement will see LABS export private label formulated cannabis oil to Germany.
“This could be one of the biggest opportunities of our lifetime,” says Rich. “In my opinion this is an incredible buying opportunity. I think we have a chance to double on LABS.”
What do you think? Is LABS a great pot stock? Will it turn out to be a slump-buster? Let us know what you plan to do about MediPharm Labs.
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