[TM Editors' Note: This article discusses a penny stock and/or microcap. Such stocks, especially when not listed on the major exchanges, are easily manipulated. Do your own careful due diligence.]
Valens GroWorks Corp. (TSXV:VGW, OTC:VGWCF), a vertically integrated provider of cannabis extraction products and services and largest third-party extraction company in Canada, reported its financial results for the third quarter of fiscal 2019. (For more information on Valens please refer to a previous articleon TalkMarkets.)
Key Financial Highlights of The Third Quarter of Fiscal 2019 (All amounts are expressed in thousands of Canadian dollars, unless otherwise noted and except for per gram, kilogram, kilogram equivalents, and per share amounts and all figures are in comparison to the previous quarter.)
- Revenue increased by 87.1%
- Gross profit increased to 77.8% of revenue compared to 57.9% of revenue in the second quarter in-line with industry leaders, such as The Supreme Cannabis Company (TSX:FIRE) at 59% in Q4/19, Aurora Cannabis (TSX:ACB; NYSE;ACB) at 56% in Q4/19, and Organigram Holdings (TSX:OGI; Nasdaq:OGI) at 50% in Q2/19.
- Adjusted EBITDA increased to 59.4% of revenue compared to 23.0% of revenue in the second quarter.
- Net income increased to $5.9 million (or $0.05 per share basic and diluted), compared to a net loss of $10.5 million (or a loss of $0.10 per share basic and diluted) in the second quarter, which is the highest reported net income derived from cannabis operations in the industry to date. (MediPharm Labs (TSX:LABS) (OTCQX:MEDIF) reported $2.0M in net income during Q2/19 and, while Aphria (TSX:WEED; NYSE:CGC) - see this week's Talkmarkets article - reported positive net income during the past two quarters, it was the result of non-operating income and fair-value adjustments.)
Source: Company Reports, Ubika
Key Operating Highlights of The Third Quarter of Fiscal 2019
- processing of dried cannabis and hemp biomass increased by 212%.
Activities Subsequent to the End of the Quarter
- signed an agreement to become the first third party processor to supply Shoppers Drug Mart (one of Canada’s leading pharmacies, with 1,338 stores across the country) with cannabis oil products for their online medical cannabis site.
- signed its first beverage agreement with Iconic Brewing to manufacture 2.5 million cannabis beverages over the term of the 5-year agreement.
- granted 445,000 options to certain new employees to purchase common shares of the Company:
- at an exercise price of $2.79 per share,
- expiring on October 14, 2024 and
- vested quarterly over a three-year period.
Shares of Valens GroWorks ended Wednesday’s trading session 1% lower at $3.26 but rebounded Thursday to C$3.38 [Ed. note: down 3.35% US on Friday]. Valens stock has a market cap of $399.2M.
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