MediPharm Labs posts second straight quarterly profit as revenue rises 18%
International medical sales supplied 59 per cent of quarterly revenue, while gross margin and adjusted EBITDA declined sequentially.
Adrian Kessler
A second consecutive quarterly profit accompanied 18 per cent sequential revenue growth as MediPharm Labs Corp. TSELABS OTCMKTSMEDIF FRAMLZ reported its results on Thursday. Net income reached C$112,000 for the quarter ended Sept. 30, an improvement of C$2.3 million from a year earlier.
Revenue reached C$11.8 million, according to the company's Nov. 12 release. Cash at Sept. 30 was C$10.1 million, up from C$9.9 million at the end of June. Management will discuss the results on a Nov. 12 conference call.
MediPharm is a small Canadian manufacturer of pharmaceutical-quality cannabis extracts and medical products sold domestically and overseas.
The Toronto-listed shares TSELABS closed at C$0.065 at 4 p.m. EST on Nov. 11, before the results. That quote does not establish the market's response to Thursday's announcement.
Quarterly Margins Narrowed As Sales Rose
For the quarter ended Sept. 30, gross profit fell to C$3.8 million from C$4.3 million in the June quarter despite the sequential sales increase. Gross margin narrowed to 32 per cent from 43 per cent over that period. Those comparisons use the release's reclassified figures for patient education fees.
For the September quarter, operating expenses fell 11 per cent sequentially to C$3.6 million and were 25 per cent below the year-earlier level. Adjusted EBITDA remained positive for a third consecutive quarter, although it declined to C$442,000 from C$894,000 in the second quarter.
Adjusted EBITDA is a non-IFRS measure, and a higher quarter-end cash balance alone does not establish positive operating cash flow. The cash-flow statement was not reviewed, leaving operating cash generation unverified.
MediPharm's Nov. 12 release described its balance sheet as providing flexibility for organic growth and selective acquisitions. It said it remained virtually debt-free and current on excise duties, sales taxes and trade payables, while owning its licensed production facilities outright. The release put their combined appraised value above C$15 million, a property valuation separate from the reported cash balance.
Read more: Curaleaf reports competition clearances for Aurora Cannabis bid
Medical Exports Drive The Revenue Mix
International medical revenue reached C$6.9 million in the September quarter, an increase of 20 per cent sequentially. That business supplied 59 per cent of total revenue. German revenue rose 81 per cent from a year earlier, supported by demand for flower, oil and dronabinol, MediPharm said.
For the quarter ended Sept. 30, sales in other international markets rose to C$1.8 million from C$0.7 million in the June quarter. MediPharm cited growth in the UK and Brazil, where its products had launched through national pharmacy channels.
For the first nine months of 2026, more than 80 per cent of revenue came through prescription-based medical channels. International channels accounted for more than 55 per cent over the same period.
"We delivered one of our strongest revenue quarters in recent years, achieved positive net income for the second consecutive quarter and generated our third consecutive quarter of positive Adjusted EBITDA," chief executive Greg Hunter said in the release.
Canadian medical revenue was stable sequentially at C$2.3 million but lower than a year earlier. MediPharm attributed the decline to Veterans Affairs Canada's April 1 reimbursement changes. Its release said the maximum covered rate fell to C$6 per gram from C$8.50.
A larger export competitor, Village Farms International, Inc. NASDAQVFF, reported on Nov. 9 that third-quarter cannabis revenue reached US$55 million. Its cannabis operations generated US$7.3 million in operating cash flow. International export sales rose 75 per cent year over year to US$20.8 million, showing growth alongside an operating cash contribution in that business.
Read more: Village Farms International reports record cannabis revenue
MediPharm's next scheduled investor event is the Nov. 12 results call. Management's discussion will provide an opportunity to address the sequential margin decline and the conversion of reported profit into operating cash.
