MediPharm Labs Corp.

Thank you for standing by and welcome to the MediPharm Labs conference call to discuss the second quarter 2025 results. Our speakers on today's call are David Piddock, President and Chief Executive Officer, and Greg Hunter, Chief Financial Officer. As a reminder, all participants are in the listen-only mode and the conference is being recorded. After management's presentation, we will take written questions through the Q&A feature on the webcast. The information contained on this presentation should be considered together with the more detailed information, disclosure, financial data and statements available on the company's website and on CDR Plus profile. As seen on slide two and three, I would like to note that this earnings call contains forward-looking information and 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 material 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 in today's call are in Canadian dollars unless otherwise noted. And now I would like to turn the call over to Mr. David Piddock. Please go ahead.

Thank you, operator. Good morning and thank you for joining us for MediPharm Labs' second quarter earnings call. As you saw in the news release we issued earlier this morning, we delivered solid operational and financial results with 14% revenue growth over the prior year while successfully defending MetaFarm in a proxy contest and executing effectively on our strategic priorities. Let me begin by sincerely thanking our shareholders. Your support and engagement during the proxy contest was impactful and very much appreciated. Over 200 million votes were cast in our June AGM, approximately four times the typical votes cast. We saw shareholders approve all management recommendations and all dissident board nominees were rejected by a margin of three to one. This level of participation reflects an encouraging alignment with our long term vision for Medifarm. Unfortunately, defending against this proxy contest was costly in terms of legal and advisory fees, and it temporarily diverted our focus from some exciting strategic initiatives. At the operational level, I'm proud to say that our leadership team was able to stay focused on executing our business strategy to reduce operating costs and increase revenue. That is reflected in our continued progress on both our day to day operations and key strategic initiatives. The proxy contest did create a valuable opportunity to engage directly with shareholders. The executive team, board members, and I had the chance to speak with many of you. I was impressed by the depth of knowledge and conviction many of you have of MediPharm's pharmaceutical and medical approach to cannabis. With your support, we are now in a stronger position to focus on the future and to accelerate our organic and M&A growth plans. We spend over $2.2 million during the second quarter to defend the company in the proxy battle. We believe those costs are largely behind us, although there may be further legal expenses associated with the frivolous personal lawsuits launched by the dissident. The company has a robust, you know, directors and officers liability insurance policy that will help mitigate any future legal expense exposure related to the dissident group. I do believe, and I know our board agrees, that it is important to reflect on some of the learnings through this challenging process. In particular, I note that while the resolution relating to the Omnibus Equity Incentive Plan was endorsed, it passed by a slim margin. We take that feedback from our shareholders seriously. The Compensation Committee of the Board, comprised entirely of independent directors, has already met and is engaging with how to further improve the company's approach to executive compensation. The Board is also reviewing the 15% cap for the Omnibus Equity Incentive Plan and exploring potential ways to reduce the cap over time. I'll add one final comment on governance. With the recent addition to the board of John Medlin and Emily Jamieson, five of our seven board members are now fully independent. Only Keith Straughan and I remain non-independent. This structure is an important safeguard for shareholders and reflects our commitment to strong, transparent governance. Returning to our second quarter performance, We believe the results offer further evidence that our strategy is working. We continue to deliver revenue growth, led by a 50% year-over-year increase in our international business. Our team is managing expenses effectively, including through the divestment of non-core assets with the sale of the dormant Hope facility closing in the quarter. As for our financial position, contrary to false claims you may have seen during the proxy contest, I want to assure you that MetaFarm continues to operate from a position of strength. We ended Q2 with $10.4 million in cash, which is up from the $8.4 million at the end of Q1. This increase came despite the $2.2 million in proxy-related expenses and was supported by the gross proceeds from the sale of our Hope facility of $4.5 million. Our financial strength is ultimately driven by improved operating performance. I shared these tables last quarter, and they continue to demonstrate consistent progress in improving adjusted EBITDA. As Greg will describe, the slight step backwards from positive adjusted EBITDA in Q1 was a result of some margin challenges based on product mix, notably in the international market. We have undertaken many initiatives in recent years to reduce standard costs and increase gross profit, while simultaneously reducing operating expenses and growing revenues. We continue to implement incremental cost-saving programs in our manufacturing facilities and in our commercial operations. As a result, our operational cash burn is now minimal. We are virtually debt-free. We own our facilities outright. We're current on our excise duties and continue to maintain strong relationships with our suppliers and partners. Our financial stability has made Metafarm an appealing and reliable partner internationally. We are continuing to invest in working capital to support growing global demand. That includes inventory and receivables to service our core export markets. enabling continued growth in Germany, Australia, and the United Kingdom. I will elaborate on some of our key growth opportunities and overall strategy momentarily. First, I will turn the call over to Greg to walk through our Q2 financial results in more detail. Greg?

Thanks, Dave, and good morning, everyone. Medifarm management continues to focus 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 in the near term. Our progress on these efforts is reflected in our Q2 results, highlighted by a 14% year-over-year increase in revenue. Revenue for the second quarter was $11.8 million, an increase of $1.5 million, or 14%, compared to the same period last year, driven primarily by continued expansion of our international business. International medical cannabis revenue grew 2.2 million or 50% year over year to 6.7 million. This growth was broad based across our German, Australian and United Kingdom customer base. International medical cannabis accounted for approximately 57% of total revenue this quarter, up from 43% a year ago. Canadian medical cannabis revenue was 3.1 million and declined 0.1 million from Q1 2025. Canadian adult use and wellness revenue was $1.6 million, representing a 6% increase year over year and a 19% sequential improvement. Gross profit for the quarter was $3.3 million, or 28% of revenue, down from prior year and sequentially. This decline was largely due to product mix. Management remains focused on improving gross margins through product optimization and production efficiencies. general and administrative expenses adjusting for the 2.2 million expense related to the proxy contest would have decreased 0.8 million year-over-year and would be consistent with q1 2025 marketing and selling expenses were 1.4 million which is consistent with both the prior year and previous quarters Total operating expenses, which includes G&A, marketing and selling, and R&D, was $4.3 million when adjusting for several discrete items, including the $2.2 million expense related to the proxy contest. Operating expenses adjusted for these discrete items declined versus prior year and sequentially, reflecting our success in improving the efficiency of the organization. Management continues to focus on further expense reduction opportunities. Adjusted EBITDA for the quarter was negative 0.6 million, which declined versus prior year, driven by margin dilution from product mix. However, year-to-date adjusted EBITDA is negative 0.4 million, which improved 0.6 million versus prior year. While we don't provide guidance, we are very encouraged by our revenue trend and expected to continue to move in a positive direction, although there may be variability from quarter to quarter as international markets mature. Moving to a few notable items on the balance sheet. Our cash balance at the end of Q2 was $10.4 million, which increased versus the prior quarter cash balance of $8.4 million as we divested the whole facility for gross proceeds of $4.5 million. Let me expand on our cash position, given it was a topic of conversation during the recent proxy contest. During the most recent quarter, our operational cash flow would have been approximately negative $500,000 if it were not for the $2.2 million expenditure on the proxy contest. This is generally in line with our adjusted EBITDA as one would expect. Based on our current cash burn, we have many quarters of cash remaining to fund operations and move to become EBITDA and cash flow positive. Trade and other receivables balance at Q2 is $8 million, and 85% of trade accounts receivable is aged 60 days or less. Trade and other payables balance at Q2 is $8.2 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 has full ownership of two production facilities with an appraised value greater than $15 million. To summarize, although we still have work ahead of us to enhance our profitability profile and become cash flow positive, Q2 was a step in the right direction. Revenue in Q2 increased 14% versus prior year, and year to date has increased 12% versus prior year. International medical cannabis revenue in Q2 increased 50% versus prior year and represented 57% of total revenues in the quarter. Although gross profit margin for the quarter declined versus historically high recent periods, it was still 28%. Adjusted EBIT in Q2 declined sequentially. However, year to date, it is negative $0.4 million, which is an improvement versus prior year of negative $1.1 million. And finally, as previously discussed, we have a strong balance sheet relative to our peers with over $10 million in cash and virtually no debt. As a result of our strong balance sheet, we are well positioned to continue to invest in organic and inorganic growth opportunities as the industry continues to mature. I'll turn it back to Dave to expand on some of those opportunities.