WeedMD Inc (CVE:WMD) (OTCQX:WDDMF) posted record revenue in its first quarter as the company benefits from its combination with medical cannabis group Starseed Medicinal Inc and continues to see its brands gaining recognition.
In the three months to March 31, the cannabis producer and distributor posted net revenue of C$12.2 million, which was 327% higher than the C$2.9 million seen in 4Q, 2019 and 265% more than the C$3.3 million generated in 1Q last year.
Gross profit before changes in fair value was C$1.4 million, leading to an 11% gross margin compared to a gross loss of 70% in the previous quarter, mainly down to the sale of dried cannabis and revenue generated during the full quarter post the Starseed acquisition in December last year, the firm said.
Starseed provides medical cannabis as a fully covered drug benefit for union members and gave WeedMD a built-in partnership with Canada’s largest construction union, the Laborers’ International Union of North America (LiUNA), with over 100,000 members.
"The first quarter began to show the benefits of our combination with Starseed, as exemplified in our sales revenue mix along with the $25 million strategic equity investment we received from the LiUNA Pension Fund of Central and Eastern Canada,” Lincoln Greenidge, the finance chief at WeedMD, explained in the group's results statement.
"We have both the operational infrastructure and balance sheet to support our continued commercial growth and broader distribution channels," he added.
The addition of Starseed gives WeedMD potential access to a substantial and direct consumer audience, which is expected to drive growth and margin expansion, the company added.
In the first quarter, WeedMD sold 5,084 kgs of dried cannabis, up 744% on the previous quarter, while as at end-March, the company held C$37.8 million in inventory and biological assets and its total assets stood at C$213.7 million.
The loss for the three months came in at C$9 million, up from a loss of C$7.2 million in the preceding quarter.
"With our unique medical platform and expanded market presence of our mass-craft adult-use products, we are well-positioned to advance our customer-centric strategy and capitalize on positive market trends in the Canadian cannabis market," concluded Angelo Tsebelis, the chief executive of WeedMD.
Shares slipped 10.6% in Toronto to C$0.42.
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