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by Stockwatch Business Reporter
The S&P/TSX Cannabis Index gained 0.41 point to 153.88 Thursday, while the Canadian Securities Exchange Composite Index rose 5.59 points to 379.88. Pat McCutcheon and Keith Strachan's cannabis extraction company Medipharm Labs Corp. (LABS) dropped 24 cents to $1.46 on 5.49 million shares after releasing its first quarter results for 2020. It was undoubtedly the company's worst results in a while, with its revenue plummeting to $11-million in Q1 2020 from $32.4-million in Q4 2019. Even the Q4 revenue was down from $43.4-million in Q3 2019. Analysts had expected a decline this quarter, but not this severe. According to Yahoo Finance, the three-analyst average estimate was $22.2-million for Medipharm's Q1 revenue.
Its $22-million loss in Q1 2020 was much worse than its $2.4-million loss in Q4 2019, which followed two nicely profitable quarters in Q2 and Q3 2019. The loss stemmed largely from a $12.8-million writedown that Medipharm took on its inventory, which the company attributed to oversupply in the Canadian concentrates (particularly distillates and resins) market and falling prices. Even without the writedown, though, Medipharm would have had a gross margin of just 17 per cent. Its gross margin in 2019 was between 31 and 36 per cent in all four quarters.
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