Medical-grade cannabis producer WeedMD Inc. reported a wider loss in the first quarter of 2019 due to higher costs and expenses despite a 192% surge in revenue. Looking forward, the company expects significant revenue increases throughout the balance of the year.
Net loss was CAD2.40 million or CAD0.02 per share, wider than a loss of CAD1.32 million or CAD0.01 per share in the previous year quarter. Net revenue soared by 192% to CAD3.34 million. The top line consisted of the sale of dried cannabis, live cannabis plants, cannabis seeds, and cannabis extracts.
Total dried cannabis sold was 793,003 grams at an average selling price of CAD4.15 per gram compared to 53,386 grams at a price of CAD6.47 per gram in the prior-year quarter. The decline in average selling price is due to the implementation of the excise tax, lower price per gram in the wholesale adult-use market as well as the company selling a larger than the usual proportion of the lower-priced extract-grade product.
Looking ahead, the company expects significant revenue increases throughout the balance of the year with the successful harvests from six additional grow rooms licensed at the end of 2018 now coming to market. The company planned to expand its capabilities to more than 100 acres for a total yield of more than 100,000 kilograms of outdoor cannabis for 2020.
Deloitte’s most recent projections for 2019 have estimated the value of the total Canadian cannabis market, including medical, illegal and legal adult-use products at $7.17 billion, of which $4.34 billion will come from the legal adult-use market. The cannabis beverage market will also be a key market, with 31% stating that they would be interested in using these products in the future.
Adult-use cannabis consumption usage is being driven by a number of factors, with roughly two-thirds of adult-use consumers stating that they purchase cannabis to relax, sleep, or reduce stress and anxiety. Majority of the women claim of using cannabis for relaxation and sleep in comparison with men.
Also read: Aurora Cannabis Q3 earnings
According to Desjardins & Health Canada, the number of registered medical patients using cannabis will reach 500,000 by 2020 or market size of about CAD2 billion. It is expected that the number of users and grams used per occasion are the biggest growth drivers for the medical market and could be in excess of $3 billion.
Shares of WeedMD ended Thursday’s regular session up 1.10% at CAD1.84 on the TSX Venture Exchange. The stock has fallen over 11% in the past three months while it has risen over 40% in the year so far.