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  • MediPharm Labs (LABS) has issued a confidence-building announcement after share price volatility earlier this week
  • The company’s shares fell over 18 per cent on news of legal action against HEXO Corp (HEXO)
  • The positive news included a liquidity position of C$67 million and successful shipments to three key provinces
  • MediPharm shares are up 2 per cent to C$3.07, with a market cap of C$401.73 million

MediPharm Labs (LABS) has rushed to restore investor confidence with an update on the company’s promising growth and “very strong balance sheet.”

The all-is-well announcement comes after MediPharm shares fell over 18 per cent on Monday after news that the company had filed a statement of claim against a licensed producer.

While MediPharm did not identify the party at the time – which we now know to be HEXO Corp. (TSX:HEXO) – they did say that the claim related to, among other things, “the payment of outstanding amounts of approximately C$9.8 million.”

Today’s announcement stated that MediPharm expects to collect its existing receivables over the regular course of business, and does not perceive any further credit risk – referring to the claim as “a singular event and not representative of the strong liquidity of its customer base.”

The company was also quick to draw attention to its liquidity position of C$67 million, which is set to support its plans for domestic and international growth.

“With our strong balance sheet, a healthy aggregate liquidity position, supply of pharmaceutical-quality products and the fact that the Cannabis 2.0 market is opening, we are well positioned to support our customers in Canada as they ramp up sales, as well as new potential customers in emerging international markets,” said Pat McCutcheon, CEO of MediPharm Labs.

“In Canada, as the consumer market begins to achieve its full potential, we have remained disciplined in shaping our committed wholesale and service agreements based on our credit policies and sizeable upfront payments.”

With the legalisation of edible and ingestible cannabis products in October 2019 – a new industry phase referred to as Cannabis 2.0 – MediPharm has been quick off the mark to commence shipments to three of Canada’s provinces: British Columbia, Manitoba and Saskatchewan.

With the success of these initial shipments, MediPharm has already received several purchase re-orders across its range of product categories; a pivotal factor, the company says, in its risk-reduction strategy and diversified growth plan.

“As the Canadian market builds on the launch of the next generation of cannabis products, our specialized GMP certified platform and ability to produce a stable supply of pharmaceutical-quality concentrates will continue to position us to support various licensed producers and new upcoming direct to consumer brands launching innovative products,” said Mr. McCutcheon.

The implementation of Cannabis 2.0 on a national scale, in conjunction with the Ontario government’s moves to accelerate license applications for prospective retailers, is expected to vastly improve product choice and accessibility for consumers in markets around the country.

MediPharm shares are up 2 per cent to C$3.07, with a market cap of C$401.73 million.

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