Creso Pharma reports rapid growth in fourth quarter with 740% increase in sales
Health & Biotech
Health & Biotech
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Special Report: Creso Pharma (ASX:CPH) shares have risen this morning after the cannabis company announced it continued its strong growth in the last three months of 2020.
Creso generated $709,000 in cash receipts, a 740 per cent increase over the September quarter, highlighting Creso’s growing sales pipeline.
The balance of cash receipts for the purchase orders not received in the quarter will be recorded in the first and second quarter receipts – and Creso expects ongoing substantial growth in purchase orders during the current period and beyond.
The company manufactures recreational cannabis in Canada via its Mernova Medicinal subsidiary, while in Switzerland it produces hemp-based animal health products it has been selling to Latin America.
It also produces CannaQIX CBD nutraceutical lozenges for sale in Australia and South Africa, and its distribution partner plans to expand sales elsewhere in Africa. Australian sales currently require a prescription, but Creso is optimistic recent regulatory changes will let pharmacists sell the product directly.
“The quarter was a period of rapid growth for the company,” says non-executive chairman Adam Blumenthal.
“Pleasingly, Creso continued to expand its global footprint. Through the company’s animal health business, we entered into the Latin American market and Mernova continued to gain traction in Canada, progressing agreements and purchase orders to unlock a number of new provinces. The company also furthered its presence in the Australian and New Zealand market, securing an agreement with Martin & Pleasance to drive growth.
“Strong sales were achieved over the period, stemming from a scale-up of Mernova’s operations and the receipt of a number of new orders.
“While the uptick in customer receipts is very pleasing, we are now focused on continuing this rapid growth.
“The company has a number of purchase orders on and across all business divisions, which we expect to complete in the coming months, allowing further sales to be recognised.
“Board and management will continue to monitor regulatory shifts in key markets. Recent developments in the US have the potential to positively impact Creso Pharma and we are very well placed and funded to capitalise on these opportunities.
“We remain in a very strong position underpinned by growing sales revenue and burgeoning market opportunities, and we look forward to accelerating our strategic initiatives to deliver returns for our valued shareholders.”
Importantly, Creso also extinguished all its convertible note structures during the period, incurring certain one-off costs but streamlining the company’s balance sheet.
The company raised $8.99 million in capital raising during the quarter, with Blumenthal committing to a $1 million share purchase. Blumenthal also lent the company $3 million on an unsecured, interest-free basis, which was fully repaid following shareholder approval December 23 with the issuance of shares and options.
Lastly, Creso gained the services of leading cannabis entrepreneur Bruce Linton during the quarter. Linton is the founder of Canopy Growth (TSE:WEED), the biggest marijuana companies in the world with a $19 billion capitalisation. Linton was attracted to Creso for its “unique IP, established global distribution footprint and robust product pipeline targeting distinct categories,” Creso says.
This article was developed in collaboration with Creso Pharma, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.