WeedMD Inc (CVE:WMD) (OTCMKTS:WDDMF) shares rose on Thursday after the firm posted financial results after the market close on Wednesday that showed a notable jump in revenue in the second quarter as successful harvests boosted cannabis supply and operational strength pushed progress forward.
In morning trade in Toronto on Thursday, WeedMD shares were 4.4% higher at C$1.66.
For the quarter ended June 2019, the Toronto-based company recorded record revenue of C$8 million, representing a quarter-over-quarter increase of 139% and a 282% increase from the same period last year.
"WeedMD continues to make solid progress and we're proud to post another record quarter that highlights the strength of our operations and the demand for our products," said CFO Nichola Thompson. "Our gross margins improved to 46% as we realized scale in our cultivation operations and continued optimizing our supply chain. With another 10 newly-licensed 10,000 sq. ft. cultivation rooms coming online alongside our 27-acre outdoor harvest, we expect to realize some of the best cultivation margins in the industry."
Key financial highlights
- The company sold 1,979 kgs of dried cannabis, representing an increase of 150% from the previous quarter.
- Improved gross profit margin to 46%, up from 15% in the previous quarter
- WeedMD holds $29.5 million of inventory and biological assets as of June 30, 2019, an increase of $15.6 million or 113% from the prior quarter
- The all-in weighted average cost per gram for 2Q was $1.84, compared to $2.90 for 1Q and $3.59 in the year-ago quarter.
"This quarter was indicative of WeedMD's long-standing drive for execution and quality," said CEO Keith Merker. "Consistent product, efficient operations and capital discipline remain our core focus. We are delivering on our commitments to build an industry-leading cannabis production platform with our low-cost outdoor cultivation platform. Additionally, with the licensing of 10 more precision cultivation rooms that are now being planted at our Strathroy facility, and through the introduction of CX Industries, we continue on our path to become Canada's best source for premium cannabis flower, oils and extracts at scale."
Pushing forward at both facilities
WeedMD owns and operates two facilities in southwestern Ontario to produce and distribute cannabis. Its158-acre Strathroy, Ontario facility includes both indoor and outdoor grow capacity. WeedMD completed planting more than 20,000 clones in early June, one of the first licensed producers to introduce outdoor cultivation in Canada.
On August 2, WeedMD received Health Canada approval to expand the facility into 10 additional 10,000 square foot cultivation rooms and 10 new processing rooms.
The Aylmer, Ontario facility is being converted and optimized into a focused extraction and processing hub. In June, the firm launched Color Cannabis, a premium adult-use brand available to certain distributors and retailers.
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Contact Katie Lewis at [email protected]