Revenue Increases 14% Over the Prior Quarter; 14% Improvement in Net Income/Loss Position
TORONTO, ON – August 28, 2019 – CB2 Insights (CSE:CBII; OTCQB:CBIIF) (“CB2” or the “Company”), a leading technology company focused on mainstreaming medical cannabis to the healthcare industry through Real World Evidence (“RWE”), today reported its results for the second quarter of 2019. Additional information concerning the Company, including its unaudited financial statements and related management’s discussion and analysis (“MD&A”) for the quarter ended June 30, 2019, can be found at www.sedar.com and on the Company’s website. All amounts are expressed in Canadian dollars unless otherwise noted.
Q2 2019 Financial Highlights
- Revenue for the quarter was $3.3 million, a 14.3% increase over the previous quarter and did not include revenue from its recent New Jersey Alternative Medicine acquisition, which would have added an estimated $700 thousand for the quarter;
- Gross profit of $2.1 million or gross margin of 65.3%. The Company believes that gross margin will increase within the next quarter by way of economies of scale from its recent acquisitions which generally have a 3-6 months period to reflect in the Company’s results;
- Operating expenses increased quarter over quarter by $671 thousand, due in large part to the newly acquired clinics in Colorado and Arizona; as well as certain legacy expenses related to these clinics which the Company has since centralized and will see reflected in Q3;
- At quarter-end the Company had cash of $1.3 million on hand;
- Adjusted EBITDA1 loss of $790 thousand in Q2 2019 versus Adjusted EBITDA1 loss of $712 thousand in Q1 2019*. The Company expects further improvements in EBDITA through continued scalability, new revenue from New Jersey operations, new opportunities related to clinical trials and research activity; and,
- Net loss improved to $1.9 million versus $2.2 million the prior quarter, a 14% improvement.
*Note: Q2 2019 Adjusted EBITDA1. from US clinical operations remains positive. CB2 currently uses this surplus in cash flow to fuel its Research & Insights business, which includes but is not limited to clinical trials and research projects, software development, product development, analytical and commercialization teams.
“Our Clinical business continues to grow within our US patient registry, and we are also unlocking opportunities to leverage our experience in new international markets. There is now substantial demand in the market for solutions related to clinically-driven product research. Our expansive patient registry, cannabis-focused data collection technology, multi-jurisdiction experience and data analytics teams are allowing us to solidify research technology partnerships with the likes of the UK’s Drug Science,” said Prad Sekar, CEO, CB2 Insights. “While our newly acquired New Jersey operations are showing very promising patient volume and revenue contribution in early Q3, we are excited to see the investment made into our clinical research and technology divisions over the last few years will soon be starting to show a material return, and we look forward to making announcements in this regard within the quarter.”
Q2 2019 Operational and Strategic Highlights
- Completed acquisition of Relaxed Clarity Clinics in Colorado;
- Completed acquisition of MedEval Clinics LLC in Colorado and Arizona; and
- Company announced its listing in the US on the OTCQB Markets Exchange (Symbol CBIIF).
1See note on Non-GAAP Financial Measures.
Operational and Strategic Highlights Subsequent to Quarter End
- Completed an asset purchase of New Jersey Alternative Medicine LLC;
- With Premier Health Group, moved to second phase of primary care physician tools for medical cannabis evaluations
- Selected as the exclusive research technology platform for the UK’s largest medical cannabis pilot program led by Drug Science; and
- Expansion of the Board of Directors with the addition of former Johnson and Johnson Executive, Peter Cummins as Director and Corporate Finance and Cannabis Industry Leader, Gerry Goldberg.
| Quarter ended June 30, 2019 | Quarter ended March 31, 2019 | Quarter ended December 31, 2018 | |
| Revenue | $3,257,021 | $2,849,811 | $2,449,020 |
| Cost of sales | $1,129,270 | $655,688 | $747,496 |
| Gross Profit | $2,127,751 | $2,194,123 | $1,701,524 |
| Gross Margin | 65.3% | 76.9% | 69.5% |
| Adjusted EBITDA1 | $(790,818) | $(712,582) | $(1,811,463) |
| Net Income (Loss) | $(1,865,895) | $(2,161,546) | $(2,539,776) |
| Basic and diluted net loss per share | $(0.024) | $(0.031) | $(0.0452) |
Earnings Conference Call
CB2 Insights’ management team will hold a conference call to discuss our 2019 Q2 Earnings on August 28, 2019 at 4:30pm EDT (details below).
| Date: | Wednesday, August 28, 2019 |
| Time: | 4:30 p.m. (EDT) |
| US/Canada Toll Free Dial In: | 1-800-319-4610 |
| Toronto Local Dial In: | 1-416-915-3239 |
| International Dial In: | 1-604-638-5340 |
| Call Name: | CB2 Insights Earnings Call |
An archived replay of the conference call will be available on the Company’s website within 24 hours following the conclusion of the call.
Non-GAAP Financial Measures
This Press Release contains references to Adjusted EBITDA and Gross Margin. These financial measures are not measures that have any standardized meaning prescribed by IFRS and are therefore referred to as non-GAAP measures. The non-GAAP measures used by the corporation may not be comparable to similar measures used by other companies. Adjusted EBITDA is defined as “income (loss) before interest expenses, taxes, expenses related to listing on the Canadian Securities Exchange and other similar non-recurring expenses not related to operations, depreciation, foreign exchange and financial expenses.
The Company uses these non-GAAP measures because they provide additional information on the performance of its commercial operations. Such tools are frequently used in the business world to analyze and compare the performance of businesses; however, the Company’s definition of these metrics may differ from those of other businesses. CB2 Insights will, at times, use certain non-GAAP financial measures to provide readers with additional information in order to assist investors in understanding our financial and operating performance. CB2 Insights believes that these non-GAAP measures provide readers with useful information about the Company’s operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making.
Adjusted EBITDA excludes the effect of share-based compensation expenses and related payroll taxes as well as removes substantial one-time costs for unusual business activities. Within the 2018 reporting period, one-time costs associated with fees pertaining to the Company’s public listing are excluded from this figure. Additional discussion on this can be found in CB2 Insights’ Management Discussion and Analysis filed on SEDAR.
Such non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, the corresponding measures calculated in accordance with IFRS. See the Company’s audited Financial Statements for a reconciliation of the non-GAAP measures.
