Auxly Cannabis Is Clearly Leading The Cannabis 2.0 Movement In Canada

Earnings season has kicked into high-gear for the cannabis industry and the recent trend has been to the upside. 

Today, we want to highlight 3 mid-tier Canadian Licensed Producers (LPs) after their respective earnings report and believe our readers should be aware of these opportunities. 

Auxly Cannabis: Leading Canada’s Cannabis 2.0 Market 

Yesterday, Auxly Cannabis Group Inc. (TSX: XLY) (OTCQX: CBWTF) released third quarter financial results and the market responding negatively to the numbers. Although the company recorded strong growth when compared to the same period from last year, the stock fell almost 20% on earnings and we will monitor the trend from here. Below, we have highlighted several important data points from Auxly’s third quarter financial report and will continue to closely follow the operator:

1. During the quarter, Auxly generated $24.5 million of revenue which is 95% higher than the same period last year and 17% higher than the prior quarter
2. Reported to have more than $37 million of cash and cash equivalents as of September 30th 
3. The company reported $6.5 million of negative adjusted EBITDA which is a modest improvement when compared to the same period in 2020
4. In regards to the sale of cannabis 2.0 products, the company reported to have 15.6% market share of the Canadian recreational cannabis industry
5. During the quarter, the Canadian LP strengthened its Board of Directors with the appointment of Murray McGowan as Chief Strategy and Development Officer for Imperial Brands.

MediPharm: International Revenue Surpasses Domestic Revenue

MediPharm Labs Corp. (TSX: LABS) (OTCQX: MEDIF) (FSE: MLZ) released third quarter financial results and this is an operator that we have been following for several years. The company has been executing on a strategy to become an international pharmaceutical company that specializes in cannabis and we have provided additional insight on this trend from the quarterly earnings report.

1. MediPharm recorded a milestone by receiving North America’s Drug Establishment License (DEL), which will allow it to conduct pharmaceutical manufacturing and sale of Active Pharmaceutical Ingredients (APIs) and Finished Dose Goods containing cannabis. MediPharm’s current and future domestic Canadian cannabis partners will benefit since it can provide them a conduit to pharmaceutical and international markets. The DEL is expected a key enabler of future successes.
2. During the quarter, MediPharm reported a more than $7 million net loss. During this time, international sales increased 16.5% when compared to the prior quarter and represented 53% of sales in the entire quarter 
3. Appointed Bryan Howcroft as the new CEO and he is expected to drive international and pharmaceutical sales growth
4. As of September 30th, the company reported to have $38 million of cash and cash equivalents as of 
5. The management team believes the cash balance is strong enough to support its long-term growth strategy.

Sundial: An Emerging Growth Story to be Aware of

Last week, Sundial Growers Inc. (NASDAQ: SNDL) ended the week on a high note and surged higher after releasing third quarter financial results and announcing plans to repurchase up to C$100 million of outstanding common shares. We believe 5 developments that are worth highlighting include: 

1.  When compared to the same quarter last year, net earnings improved from a $71.4 million loss to a $11.3 million gain. This is a significant improvement and we will monitor how the business performs in future quarters
2. Adjusted EBITDA came in at $10.5 million for the quarter, which is a substantial improvement from the $4.4 million adjusted EBITDA loss that was reported in the third quarter of 2020.
3. As of November 9th, Sundial reported to have $1.2 billion of cash, marketable securities and long-term investments. The company has $571 million of unrestricted cash and no outstanding debt. We are surprised by the strength of its balance sheet and consider this to be a core pillar of the long-term story. 
4. During the quarter, Sundial’s average cost per gram sold increased to $3.23 from $2.67. The increase was primarily due to an increase in prices for sales to other Canadian LPs and we find this to be an important metric.
5. Sundial continued to execute on a expansion strategy that is centered around on making strategic investments and we consider some of its deals to be transformational. Due to the strength of the balance sheet, we expect the management team to announced additional accretive transactions in 2022.

If you are interested in learning more about mid-tier Canadian LP earnings reports, please send an email to support@technical420.com with the subject “Mid-Tier Canadian LP Earnings Reports” to be added to our distribution list. 

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Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

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