WeedMD owns and operates a 158-acre state-of-the-art greenhouse, outdoor processing facility in Strathroy, Ontario as well as a fully-licensed 26,000 square foot Aylmer, Ontario processing facility, specialising in cannabis extraction.
MMJ Group Holdings Ltd (ASX:MMJ) (OTCMKTS:MMJJF) (FRA:2P9) investee WeedMD Inc (CVE:WMD) (OTCMKTS:WDDMF) (FRA:4WE) has reported an 8% growth in net revenue quarter-over-quarter for the three months ended September 30, 2020.
For the three and nine months ended September 30, 2020, WeedMD recorded net sales of $6.3 million and $24.4 million, respectively, compared to around $6.7 million and $18.0 million for the same periods ended September 30, 2019.
Gross profit before changes in fair value was $700,000 for the third quarter of 2020.
The increase of $1.0 million from Q2 2020 was mainly attributable to the higher volume of sales to licence holders in the current quarter.
Excluding non-cash items, gross margin increased from 39% in Q2 2020 to 42% during the third quarter, demonstrating management’s continued focus on optimisation.
Growing momentum in adult-use segment
Chief executive officer Angelo Tsebelis said: “Our revenue growth quarter-over-quarter demonstrates the current momentum we are seeing in our business, particularly in our adult-use segment where consumer appeal for our Color Cannabis products continues to grow.
“With our expanded national sales team, we are making steady traction in establishing new retail accounts and shipping product across the country at a faster pace.
“We remained highly focused on delivery of our expanding quality product portfolio to consumers during the quarter in the adult-use market and our proprietary direct-to-patient medical channel leading to improved margins going forward.”
Cultivation costs during the quarter were $0.34 per gram and $0.53 per gram respectively compared to $0.72 and $0.84 for the comparative periods in Q3 2019.
WeedMD also sold 2,088,706 grams of dried cannabis at a weighted average selling price, net of excise taxes, of $2.55 per gram during the third quarter of 2020 as compared to 2,740,217 grams sold during the third quarter of 2019 at a weighted average selling price, net of excise taxes, of $2.36 per gram during the same period the year prior.
The increase in weighted average selling price, net of excise taxes, was due to due to a greater proportion of direct-to-patient sales in the quarter compared to the same period in the previous year.
"Sharpened focus"
Chief financial officer Lincoln Greenidge: “This quarter, our team sharpened its focus to concentrate on capturing long-lasting opportunities and initiatives that will help achieve further cost improvement, margin expansion and drive organic growth across our adult-use and medical channels.
“With WeedMD’s second year of outdoor harvest now complete and our cultivation rooms cycling consistent yields, we expect continued revenue growth going forward as we introduce new products in 2021.”
