MediPharm Labs Corp.

Thank you for standing by and welcome to the Metaform Labs conference call to discuss its first quarter 2025 results. Our speakers on today's call are David Piddick, President and Chief Executive Officer, and Greg Hunter, Chief Financial Officer. As a reminder, all participants are in listen-only mode and the conference is being recorded. After management's presentation, we will take questions from the analyst community on the telephone and then take written questions through the Q&A feature on the webcast. The information contained in this presentation should be considered together with the more detailed information, disclosure, financial data, and statements available on the company's website and on CEDARplus profile. As seen on slide two and three, I would like to note that this earnings call contains forward-looking information that is based on the company's current expectations, estimates, and beliefs as of today's date, and will also use terms that are non-IFRS financial measures. Please review the company's most recent disclosure materials for the risks associated with the use of forward-looking information and the use of non-IFRS financial measures in this presentation. Please note that all dollar amounts mentioned on today's call are in Canadian dollars, unless otherwise noted. And now I would like to turn the call over to Mr. David Pittek.

Good morning, everyone, and thank you for joining us today. We will focus on the strategic progress and momentum in our business that has driven our improved results. Later in the call, I will discuss the evolving situation involving a dissident shareholder. Since becoming CEO in 2022, the MetaFarm team and I have worked tirelessly to implement a strategic plan that focused on growing and diversifying revenues, improving margins, lowering operating costs, strengthening our balance sheet, and building out our international medical business, where we believe we have a clear competitive advantage. As part of this strategy, we acquired Vivo in 2023 with the objective of combining two leaders in the medical wellness cannabis industry with complementary strengths and the ability to deliver a diversified revenue stream in multiple markets. Most notably, Vivo provided us with an expanded international platform via the established Australian and German medical cannabis brand Beacon Medical. Today, the Vivo business has been fully integrated into MetaFarm, and I can say it has been a transformational transaction and a genuine success story in the cannabis industry. The positive Q1 results we'll discuss today and the broader improvements across our business is evidence of the success of this acquisition and the overall strategy endorsed by our board. For shareholders, We believe we have the platform and a strong financial base to deliver further growth, both organic and inorganic. That, in turn, will position the company to deliver long-term shareholder value. We had a successful first quarter of 2025, continuing the steady improvement since I joined the company in 2022 across all our key financial metrics. Two key indicators that we believe measure our performance and demonstrate improvement across our business are gross profit and adjusted EBITDA. As seen on slide five, our gross profit in Q1 2025 of 4.2 million, or 38.7% of sales, was our highest gross margin we've achieved in many years. And as seen on slide six, this chart demonstrates the consistent progress we've made. When I joined the company three years ago, we had a negative gross margin, meaning we were losing money on every sale we were making. Adjusted EBITDA was negative $6 million per quarter when I joined in 2022. Clearly, this was not sustainable, and if we did not change course, we would have ended up bankrupt, like many other cannabis companies have over the past few years. Instead, we generated a new plan that would get us to profitability. Through hard work and commitment by the team, we undertook many initiatives over the past several years to grow revenues, increase gross profit, and reduce operating expenses. The positive trends in gross margin and adjusted EBITDA are proof that our plan is working. As I mentioned a moment ago, several peers in the cannabis sector have excessive debt, insufficient cash, negative working capital, and are generally in a very weak financial position. Many sell products below cost, some don't pay excise taxes, and many have stretched accounts payables and lose money. Several have entered CCAA protection and or gone bankrupt and have wiped out shareholders' investments. As a result of our improved financial performance in recent quarters, Metafarm now enjoys a strong balance sheet, a favorable cash position, positive working capital. We're able to invest in working capital and virtually no debt. We also own all our facilities outright, and we are very proud to be up to date on excise taxes and accounts payable, unlike many others in the sector. All of this is testament to our focus on strategic execution and creating long-term sustainable value. Given our financial strength, Medifarm stands out as an attractive international distribution partner, and we are able to invest quickly in emerging growth opportunities globally. As an example, you will see that we have now begun to deploy some of our cash to support our international growth through investments in working capital, specifically in inventory and accounts receivable. These investments are driving our strong international revenues. The well-run, financially stable, and a proven reliable partner enabled us to secure many b2b partnership opportunities in both canada and abroad we actually pay our bills which is not always a given by others in our industry our strong cash position also gives us flexibility to consider various m a opportunities in a quickly consolidating market which cannot be understated let's take a more detailed look at our international business which has quickly become the most exciting segment for us On slide eight, you can see the evidence of our international success with the upward trend in our international revenues since 2022. International sales now represent more than 50% of our total revenues in each of the past two quarters, and it's the fastest growing segment of our business. Many Canadian licensed producers, or LPs, have been approached by international customers regarding possible supply of their cannabis products, including flour, in some cases for premium prices. For most of these producers who are new to the international market, the complexity and unique challenges of the international cannabis supply chain are significant. These complexities include regulatory issues, export and import permit management, logistics, changing quality testing requirements, and cash flow and other commercial and operational challenges. Many LPs have found that the allure of premium prices are offset by difficulties in navigating the complexities in these international MediPharm has solved these challenges while developing and earning the trust of our partners. We have several years of experience in selling into markets in the UK, Germany, Australia, Brazil, and other European countries. We also have a competitive advantage by possessing a robust suite of licenses, including good manufacturing process, GMP, and our drug establishment license, the Dell, that are required in the pharmaceutical industry. We benefit from longstanding global relationships and partnerships. established regulatory and supply chain pathways, and commercial agreements and operational processes to smoothly facilitate international sales. As a result, we have a growing reputation as a reliable supplier. This position of strength enables MetaFarm to work with several existing and new international partners to significantly increase revenues. We have already begun to serve as a partner in bringing together high-quality cannabis products from Canadian LPs, including flour, and then facilitating the smooth and efficient supply of these products to international markets. The Beagle acquisition accelerated our international growth, led by the Beacon brand, which is very strong in Australia and roads in Germany and elsewhere. A couple of other quick highlights before I turn it over to Greg. More information on some of these can be found in our investor deck. In Brazil, Teodo has now received their controlled substance import authorization quota, a key step to the coming 2025 product launch. we assigned five new international distribution partners. Our clinical trial investments continue to progress through the respective milestones. Our inhaler technology from Emidose is being launched in various countries. And our Hope facility, sale to Rubicon for $4.5 million, is on track to close in Q2, thus allowing us to monetize a dormant non-core asset. Clearly, as you can see, there is momentum across our business. This is being driven by the implementation of our strategy, which is focused on leveraging our key operational and product advantages to drive growth, both internationally and domestically. We're excited about the future. At this point, I'll ask Greg to review our Q1 financial results in greater detail.

Thanks, Dave, and good morning, everyone. Medifarm management has been focused on growing our revenue base through both organic and inorganic initiatives while reducing expenses and cash burn with the goal of becoming a profitable and cash flow positive organization. The results of these efforts can be seen in our Q1 results highlighted by the major milestone of becoming EBITDA positive. Revenue for the first quarter of 10.8 million increased 1 million or 10.6% versus the same quarter a year ago, driven by the expansion of our international business. International medical cannabis revenue increased 2.8 million or 87% versus prior year to 5.9 million. The growth was broad-based across our German, Australian, and United Kingdom customers and across our flour, oil, and Gernavanol product portfolio. The international medical business represented approximately 55% of total revenue in the quarter versus 33% in the prior year. Canadian medical cannabis revenue for the quarter was $3.2 million and increased 3.7% sequentially from Q4 2024. Canadian adult use and wellness revenue of $1.3 million in the quarter declined versus prior year and sequentially as we have chosen to prioritize profitability over volume in this highly competitive market. It is common knowledge that many cannabis companies sell products at a loss or very low margins to achieve market share goals. Medifarm is not willing to sacrifice profitability for the sake of market share, and that has been a major factor in our margin expansion. Gross profit for the quarter was $4.2 million, or 38.7% of revenue, and improved significantly versus Q1 2024 gross profit of $2.7 million, or 27.4%. This was Medifarm's highest gross profit and gross profit margin in many years. As you can see on the slide, gross profit margin has steadily improved over the past three years, driven by product mix, production efficiencies, and cost reductions. Management continues to focus on efficiencies to drive gross profit. General and administrative expenses for the quarter of $3 million decreased 1.2 million or 29% versus prior year. In addition, G&A decreased 0.7 million or 19% sequentially from Q4 2024. Marketing and selling expense of 1.2 million for the quarter was consistent with prior year and prior quarter. Total operating expenses, which includes G&A, marketing and selling, and R&D expense was 4.4 million for the quarter and decreased 1.3 million or 23% versus prior year and decreased 0.8 million or 15% sequentially versus Q4 2024. Management continues to focus on further expense reduction opportunities. Adjusted EBITDA for the quarter was positive $141,000 and improved $1.1 million from prior year's $949,000 loss. This improvement in adjusted EBITDA was driven by continued revenue growth, margin expansion, and the reduction of expenses. While we don't provide guidance, we are very encouraged by the EBITDA trend and expected to continue to move in a positive direction, although there may be variability from quarter to quarter as international markets develop. Moving to a few notable items on the balance sheet. Our cash balance at the end of Q1 was $8.4 million and declined versus the prior quarter as we invested in inventory to support our international expansion and growth. We plan to maintain this level of working capital to be able to remain nimble so we can quickly respond to growth opportunities as they arise. Trade and other receivable balance at Q1 is $7.8 million and 89% of trade accounts receivable is aged 60 days or less. Trade and other payable balance at Q1 is $8.5 million and unlike many other cannabis companies, we are up to date on cannabis excise duties, sales taxes, and trade payable obligations. The company has virtually no debt and full ownership of three production facilities with an appraised value greater than $20 million. As Dave mentioned, we expect to see a further strengthening of our balance sheet when the $4.5 million sale of the Hope facility closes during the current quarter. Although we still have work ahead of us to enhance our profitability profile and become cash flow positive, Q1 was a significant step in the right direction. International medical cannabis revenue increased 87% versus prior year and represented 55% of total revenues in the quarter. Gross profit margin for the quarter was 38.7% and was the highest in over five years. Adjusted EBITDA was positive for the first time in over five years. And finally, as previously discussed, we had a strong balance sheet relative to our peers. As a result of our strong balance sheet and significantly improved financial performance, We are well positioned to continue to invest in organic and inorganic growth opportunities as the industry continues to mature. With that, I'll turn it back to Dave to discuss our upcoming AGM.