MediPharm Labs announced its financial results for the three months ended March 31, 2023.
Subsequent to closing of the MediPharm Labs' acquisition of VIVO Cannabis on April 1, 2023, the Company has implemented its plans to reduce the combined MediPharm and VIVO non-direct labour workforce by approximately 30%, since the announcement of the Transaction. This is in addition to previously announced significant restructuring efforts made separately by both companies in 2022. This reduction is expected to save over $4M on an annualized basis as MediPharm Labs progresses towards achieving positive EBITDA synergies between $7M to $9M on an annualized basis.
The company achieved its strongest EBITDA in two years as compared to prior quarters, reducing losses to $2.1M with continued focus on growing gross margin positive revenue segments, streamlining operations and reducing operating expenses. Adjusted EBITDA of $3.1M with the inclusion of a one-time reversal of bad debt collected.
Q1 2023 saw growth in revenue of 20% on a year over year basis and slightly increased quarter over quarter despite the seasonality of the Canadian adult-use market. Operating expenses reduced by 47% as compared to Q1 2022.
Management commentary
David Pidduck, CEO, MediPharm Labs commented, "Revenue, gross profit and EBITDA all improved versus prior year, versus prior quarter and versus trailing twelve months. All key metrics both financial and non-financial are going in the right direction and according to plan. We are exactly where we planned to be for readiness to implement the VIVO integration."
Greg Hunter, CFO, MediPharm Labs added, "In Q1, we continued to make progress by growing our revenue base, improving gross margin, reducing expenses and reducing cash burn as we drive towards profitability. Sales and Adjusted EBITDA improved year over year and sequentially and gross profit was positive for the second consecutive quarter. In addition, we implemented a restructuring plan post-closing of the Transaction with VIVO, which we expect will save over $4M on an annualized basis as we progress towards our synergy target. I am pleased with the progress we made but we still have more to do as we move towards positive EBITDA and cash flow."
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