Little Green Pharma
Australian Stock Exchange (ASX) listed medical cannabis firm Little Green Pharma (LGP) saw its stock rally by over 60% this week after reporting record revenues.
On October 17 the company, which trades both in Australia and across Europe reported its financial performance for the quarter ending 30 September 2024.
LGP reported unaudited sales of over AUD 10m for the quarter, representing a 40% increase from the previous quarter and nearly 60% growth compared to the same period last year, bringing half-year revenue to nearly AUD 19m.
This revenue spike was driven by a 45% increase in oil sales and a 35% rise in flower products, although vape sales dropped 20%.
In Australia, flower and oil sales increased by 30% and 35% respectively, while Europe saw even more substantial growth, with 60% and 110% rises in flower and oil sales, respectively.
A key development for LGP was its commercial shipments to France, including a $650,000 batch following its involvement in a medicinal cannabis pilot program, which is now potentially being delayed for another year.
LGP also launched the Indicare brand during the quarter, introducing THC 22 sativa and THC 20 indica product lines. LGP-branded products grew by 30%, with strong sales in France, the UK, and Switzerland. White-label contracts also saw a 35% revenue boost.
The company’s operating efficiency also improved, with economies of scale driving a 30% rise in cash receipts and a 15% reduction in operating cash costs. LGP ended the quarter with AUD 4.8m in the bank, up from AUD 4.3m at the end of June.
Notably, this quarter saw LGP achieve positive free cash flow for the first time, thanks to its robust revenue growth and disciplined cost management. The company’s operating cash flow turned positive without relying on research and development (R&D) rebates, marking significant progress in its core business operations.
Its cash operating expenses now account for just 35% of its revenue, down from 66% in the prior corresponding period, with cost efficiencies stemming largely from its Denmark facility and the outsourcing of some operations in Australia.
This strong financial and operational performance underscores LGP’s promising growth trajectory in the medicinal cannabis industry.
In light of the strong performance, LGP has received an upgrade from leading cannabis financial services firm Cannacccord Genuity.
Canaccord raised its rating for LGP to Speculative Buy from Hold and increased its price target from $0.17 to $0.21.
SEED Innovations, which owns 2.34% of LGP’s issued share capital, said of its recent results: “The company is not only outpacing its competitors but is also generating positive cash flows from its operations. With minimal long-term debt and an improved cash position at the close of the quarter, these results highlight the strength of LGP’s strategy and business model.
“The recent rise in LGP’s share price reflects growing market recognition of its potential, and we believe there is considerable opportunity for further growth. We remain confident in LGP’s ability to sustain this momentum.”
Althea / Montu
Elswhere in Australia, cannabis manufacturer, retailer and distributor Althea Group has sold its UK and Ireland business MyAccess Clinics to Montu, another Australian cannabis operator.
Montu has purchased the UK medical cannabis clinic, previously a wholly owned subsidiary of Althea, for AUD $1m as part of its ongoing restructuring and cost saving initiatives.
The sale is expected to save Althea around AUD $1.5m in annual operating expenses, having already announced AUD$4m in savings through these efforts in May.
As part of the sale agreement, Montu is committed to purchasing at least 10,300 units of Althea products over two years, and Althea’s products will remain part of the clinic’s offerings for three years.
MyAccess Clinics, which Althea launched in 2019 with a flagship clinic in Belgravia, London, has been a key player in the UK’s flourishing medical cannabis market since inception.
The clinics, which offer both in-person and virtual consultations generated around AUD $4.23m in annual revenue by the end of FY24. The UK market, representing nearly 14% of Althea’s global revenue ($30.4 million), has been a key focus for the company.
However, the company has recently undergone a significant restructuring to bring its finances under control.
In June, it revealed an overhaul of its senior management, and later saw its Non-Executive Director and Chairman Andrew Newbold resign.
Despite the sale of its UK subsidiary, Althea stated during the boardroom overhaul that it plans to continue its expansion into emerging European markets, broadening its product range.
Yooma Wellness
Yooma Wellness, a Canadian multi-brand CBD and wellness company that officially filed for bankruptcy last year, will now see its stock delisted from the Canadian Stock Exchange (CSE).
The company’s shares have been suspended from trading since May 2023, and following months of financial turmoil, the company announced its collapse in December 2023.
Following a dual listing on the Aquis and CSE exchanges in August 2021, which saw the company raise gross proceeds of US$10,260,385 (£7,456,675), the company rolled out its ‘buy-and-build’ strategy at pace, purchasing a string of CBD companies.
By the end of 2021, these included EMMAC Life Sciences’ (which would later become Curaleaf International) CBD and wellness subsidiaries Blossom, MYO, Hello Joya, and What the Hemp in a transaction valued at US$8.1 million, hemp extracts producer Socati Corp in a deal worth US$25m, UK CBD brand Vitality for US$10.2m, US drinks business Big Swig for US$1.175m, Japanese CBD brand Vertex in a deal worth US$12m and US manufacturer of CBD products N8 Essentials, LLC in another transaction valued at US$0.79m.
This rapid acquisition strategy, alongside significant underperformance of its stock, ultimately contributed to its downfall in 2023.
In 2022, the company reported revenues of around US$10m, but losses topping US$33m due to the rapid string of acquisitions.
In October 2023, Yooma announced the sale of its last remaining revenue-generating asset Vitality CBD, as it warned that should it be unable to ‘secure additional sources of liquidity’, it could be forced into liquidation.
The post Little Green Pharma Stock Flies Amid Record Quarter, & Althea Sells UK Subsidiary appeared first on Business of Cannabis.
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