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Roundup of latest financial results in the European cannabis space

Financial results for Q2 and H1 of 2022 are in. Cannabis Wealth rounds up the results of six major players in the UK and European cannabis space.

Over the past month, cannabis companies have shared their financial results for the last quarter. It has been a tumultuous year so far, characterised by a global economic downturn, inflation and geopolitical unrest. Despite this, the cannabis sector is continuing on an upward trajectory.

The likes of Jazz Pharma, Flora Growth, MGC Pharma and other companies active in the European cannabis space have reported significant revenue growth as markets such as Germany, Spain and Malta continue to open up.

Jazz Pharma revenues up 24 per cent

Jazz Pharmaceuticals, a Dublin-based firm, acquired GW Pharmaceuticals for $7.2 billion in 2021, taking over as the manufacturer of the UK’s only licensed cannabis-based medicines, Sativex (nabiximols) and Epidyolex.

Epidyolex is now commercially available and fully reimbursed in four of the five key European markets: United Kingdom, Germany, Italy and Spain, with an anticipated launch in France this year. The company anticipates a total of 10 new market and indication launches across 2022, continuing to drive growth.

The company hit a roadblock with its plans to introduce nabiximols to the US market after it failed a phase 3 trial earlier this year. Sativex is approved as a treatment for spasticity in MS patients in 28 countries, including the UK, but the drug has yet to be approved by the FDA.

Despite this set back, growing and durable commercial franchises drove total revenues of $932.9 million in the second quarter, a 24 per cent increase compared to the same period in 2021.

The company also announced it has achieved its net leverage ratio (ratio of debt to earnings) target six months ahead of its stated timeline. As of 30 June, Jazz Pharma reported a net leverage ratio of 3.2x, demonstrating rapid deleveraging following the close of the GW Pharmaceuticals acquisition last year which was partly funded by debt.

“We have achieved our net leverage ratio target ahead of our stated timeline and therefore our focus will be to continue to manage the balance sheet through disciplined capital allocation, providing us with further flexibility to pursue corporate development opportunities,” said Renée Galá, executive vice president and chief financial officer of Jazz Pharmaceuticals.

“Our strong second quarter financial results and top- and bottom-line growth put us well on track to achieve our 2022 financial guidance. Operational excellence will also remain a key area of focus for us as we build the foundation for future growth and progress toward achieving Vision 2025.”

Flora Growth doubles revenue and expands presence in Europe

The Toronto-based global cannabis company Flora Growth announced its total revenue for the first half of the fiscal year (ended 30 June 2022) was $14.9 million, up more than seven times year-over-year and two times sequentially. The growth was driven by Flora’s House of Brands division, the company said, which includes the acquisitions of JustCBD and Vessel.

Flora Growth said it has increased its presence in Europe with the opening of an office in London, while also receiving approval to sell JustCBD products on Amazon UK. The company also established a brick-and-mortar JustCBD store in the Czech Republic and intends to launch more stores in Germany through a partnership with Greenyard.

The company also acquired the CBD brand Masaya to expand its life sciences offerings. Masaya formulations were submitted as part of a clinical trial program in partnership with the NHS and the University of Manchester.

“In the first half of 2022, Flora delivered on its promise to double revenue compared to the second half of 2021, and we expect to maintain that trajectory to deliver our full year guidance as a result of continued growth in our House of Brands, the launch of several new brands in the United States, and the commencement of sales in our Commercial Wholesale and Life Sciences business,” said Luis Merchan, chairman and CEO of Flora.

“We started 2022 with the integration of both Vessel and JustCBD, and despite macro headwinds in the global markets as well as global cannabis regulations, we are extremely pleased with our growth year-to-date. We are also seeing positive movement in our Life Sciences division with progress on the approval of our clinical trials in the United Kingdom and the acquisition of Masaya, a science-backed, high-potency CBD brand.”

Sales up 57 per cent for MGC Pharma

MGC Pharmaceuitcals, a European-based bio-pharma company specialising in phytocannabinoid-derived medicines, has announced a 57 per cent increase in sales – amounting to around A$4.6million – in the financial year ending 30 June.

The company supplies cannabis-based medicines to Europe, North America and Australasia, targeting two widespread medical conditions – epilepsy and dementia – and has further products in the development pipeline.

Sales of ArtemiC together with the company’s phytocannabinoid medicine products ($2.7m) drove the major sales growth and record
revenue result for the financial year. The company also completed or advanced a number of critical clinical trials during the year as part of its significant investment in R&D activities. This is reflected in the company’s recorded loss of A$17.1m.

In its financial report, the company stated: “Our research and development agenda, coupled with our robust clinical platform, sets us at the forefront of this significant emerging segment of the global pharmaceutical market. MGC intends to ensure our position over the coming years by continually bringing products to markets with full market authorisation and in keeping with global regulations, offering cost-effective treatments to patients with underserved indications the world over.”

Khiron sees growth in its medical cannabis segment

Khiron Life Sciences has reported a total revenue for Q2 2022 of C$4.5 million, up 60 per cent year-over-year and driven by growth in its medical cannabis segment in Colombia and the UK. Medical cannabis now represents 58 per cent of the company’s revenues, compared to 29 per cent in Q2 2021.

The company aslo recorded a net loss of C$2.2m for Q2 2022 which represents a 60 per cent decrease quarter-over-quarter and 55 per cent decrease year-over-year.

Compared to the first quarter of 2022, however, Khiron had a 4 per cent drop in total revenue, which it attributed to the reduction in medical cannabis sales in Germany while the company was closing its acquisition of Pharmadrug, an EU-GMP & GDP certified manufacturer and distributor in Germany.

This acquisition marks a “transformational inflection point” for Khiron’s operations in Europe as it gains direct access to a pharmacy sales team with a network of more than 18,000 pharmacies in Germany. It will also allow for revenue diversification through the distribution of different product portfolios and will give the company the ability to control last-mile manufacturing steps and quality control to the point of sale.

Alvaro Torres, Khiron CEO and director, said the company’s recent results show it is “able to reach profitability in the near term”.

“During Q2 2022, we made key decisions to continue to build our global platform with the strategic acquisition of Pharmadrug in Germany, the opening of our new flagship clinic in Rio de Janeiro in Brazil, as well as our new mid-sized clinic and pharmacy in Bogota in one of the city’s busiest shopping centre,” Torres said.

“These steps, coupled with the growing patient loyalty we experience across our bigger markets, will continue to drive Khiron’s leadership in Latin America and Europe.”

Tilray takes 20 per cent market share in Germany

In its 2022 financial year, the US-based global cannabis company Tilray Brands achieved a net revenue of $628m, a 22 per cent increase compared to the prior year. Fourth quarter net revenue grew 8 per cent to $153m compared to the same period last year.

In the company’s fourth quarter of the year (ending 31 May), it saw its international cannabis sales increase by 205 per cent compared to the same quarter last year. Now with 20 per cent market share in Germany, Tilray’s medical cannabis subsidiary, Tilray Medical said it is leading the European medical cannabis market.

In February 2022, Tilray launched its first medical cannabis products in Malta, further expanding its offering in March with the launch of the first mediucal cannabis oil products in the Maltese market. In May this year, the company announced the launch of CBD lifestyle brand, POLLEN, on Amazon UK.

Irwin D. Simon, Tilray Brands’ chairman and CEO, stated: “Over the past year, we have accelerated the optimisation of our operations and sharpened execution against our most profitable core business opportunities in medical, adult-use, wellness and beverage-alcohol across Canada, Europe and the US.

“At the same time, we accelerated our growth potential through tactical execution and strategic initiatives that enable accelerated revenue growth through improved cultivation, brand building, and distribution. These actions should also contribute to bottom-line performance improvement through production efficiencies and cost reductions. The outcome of this work is that we have driven top line growth across our markets, significantly improved our operating performance, and strengthened our balance sheet.”

CBD of Denver reports 40 per cent revenue boost as it undergoes rebrand

CBD of Denver has reported revenue of US$1.3m and net income loss of $366,000 in the second quarter of 2022. The revenue represents a 40 per cent increase over the first quarter thanks to customer activity picking up from Q1 and prices beginning to stabilise.

Earlier this year, CBD of Denver acquired the CBD e-commerce distribution platform and technology company, Mellow. The integration of the Mellow acquisition is starting to gather momentum, the company said, with five new customer contracts signed in July and more discussions underway to bring US brands into the Swiss and European markets.

As a primarily European-focused business, the company has also announced it will be changing its name to Mellow Enterprise over the coming months to avoid confusion. A complete rebrand in Switzerland to Mellow came into effect at the beginning of this month.

“The feedback from shareholders and clients has been universal towards our current company name. It is confusing and doesn’t represent our business or where the company is heading. This name change allows us to move forward and rebrand the company to better reflect our current business and future opportunities,” said CEO Paul Gurney.

“We continue to look at ways to diversify the business away from a low margin, commodity business into a more sustainable high growth business model. The cannabis sector is still in its infancy in Europe, and there are better ways to be positioned,” Gurney continued.

“In Switzerland, the sector continues to mature and gain acceptance. From August 1, the government changed the rules around medical cannabis, which reduces the barriers to getting access to the medicine. The pilot programs for adult-use cannabis are also beginning, and our company is looking at the best ways to participate.”

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