On this call Medical Marijuana, Inc. (Pink Sheets: MJNA) CEO Dr. Stuart Titus and COO Blake Schroeder provide updates on the financial and operational performance of the Company in the second quarter of 2019, share recent research and development progress, and discuss where the company is headed for the remainder of the year and in the future.
Second Quarter 2019 Financial and Operating Highlights
- Record revenue of $20.7 million in the second quarter of 2019, a 30.8% increase over the same quarter in 2018;
- 13 of 14 quarters of sequential revenue growth;
- Generated $1.4 million of cash from operations, with total cash balance increasing to $5.4 million at quarter end;
- Gross Profit of $15.4 million in the second quarter of 2019, a 61% increase over the same quarter in 2018;
- Adjusted EBITDA of $1.5 million in the second quarter of 2019, an increase of 129% over the same quarter in 2018;
- Cost of Goods Sold decreased as a percentage of sales from 39% in Q2 of 2018 to 26% in Q2 of 2019, resulting in gross profit margins increasing 74% as compared to 60% in Q2 2018;
- General & Administrative expenses decreased from 21% of sales in Q2 2018 to 16% of sales revenue in Q2 of 2019;
- Net Ordinary Income for the period was $877,964; compared to a LOSS of $2 million in the same period last year;
- The Company’s CEO Dr. Stuart Titus was chosen as one of 65 speakers to present oral comments at the U.S. Food & Drug Administration (FDA)’s public hearing discussing products containing cannabis-derived compounds;
- Subsidiary Kannaway® was recognized by Direct Selling News as one of the top revenue-generating direct selling companies on the 2019 DSN Global 100 list;
- Subsidiary Kannaway®, was named the winner of a Gold Stevie® Award in the Medium Company of the Year – Health Products & Services category in The 17th Annual American Business Awards®;
- The Company reached a major milestone for long-term stability testing on its flagship THC-free cannabidiol (CBD) oil product Real Scientific Hemp Oil-X™ (RSHO-X™);
- Subsidiary Kannaway® began pre-marketing initiatives in Japan ahead of significant expected growth.
“We are excited to continue our tremendous sequential success with the second quarter of 2019 proving to be the largest sales revenue quarter in the history of our Company,” said Dr. Stuart Titus, Chief Executive Officer of Medical Marijuana, Inc. “As the world continues to become more receptive to learning about the benefits of hemp-derived CBD, we are enthusiastic about being at the forefront of the global cannabis industry which, according to Arcview Market Research, could be worth $57 billion by 2027.”
Operating Results – Q2 2019 Compared to Q2 2018
Sales for the second quarter of 2019 exceeded $20.6 million, an increase of more than 30% over Q2 2018. Second quarter sales growth reflects the Company’s international and domestic expansion into all sales channels, including direct-to-consumer, wholesale and direct selling channels.
The Company reported net ordinary income of $877,964 in the second quarter of 2019, compared to a LOSS of $2 million in the second quarter of the prior year.
The Company executed on a strategic profitability and sales growth plan that resulted in gross margins increasing from 61% in Q2 of 2018 to 74% in Q2 of 2019 as well as decreased General & Administrative Expenses as they relate to percentage of sales revenue.
“We hope that these impressive results excite our valued shareholders and look forward to providing more transparency and accountability moving forward,” said Medical Marijuana, Inc. COO Blake Schroeder. “Our number one priority is profitability and we are not only reaching our quarterly goals for this but are surpassing them.”
Non-GAAP Adjusted EBITDA for the second quarter of 2019 was $1.5 million or 7.4% of net revenue, compared to $0.7 million or 4.2% of net revenue, in the second quarter of 2018.
Finally, the Company generated $1.9 million of cash flow, with total cash balance increasing to $5.4 million at quarter end.
Financial Data: Q2 2019 Compared to Q2 2018 Numbers
Q2 2019 – $20.7 million
Q2 2018 – $15.8 million
Cost of Goods Sold:
Q2 2019 – $5.3 million, which represents 25.7% of sales
Q2 2018 – $6.2 million, which represents 39.5% of sales
Q2 2019 – $15.3 million
Q2 2018 – $9.6 million
Q2 2019 – 74.3%
Q2 2018 – 60.6%
Sales & Marketing Expense (includes direct selling commissions):
Q2 2019 – $10.9 million, which represents 53% of sales
Q2 2018 – $8.2 million, which represents 52% of sales
General & Administrative Expense:
Q2 2019 – $3.5 million, which represents 16.9% of sales
Q2 2018 – $3.4 million, which represents 21.6% of sales
Net Ordinary Income/(Loss):
Q2 2019 – $.09 million
Q2 2018 – ($2.0 million)
Q2 2019 – ($15.0 million)
Q2 2018 – ($21.1 million)
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