Mr. David Pidduck reports

MEDIPHARM LABS REPORTS FIRST QUARTER RESULTS

Medipharm Labs Corp. has released its financial results for the three months ended March 31, 2024.

Select Highlights

• Revenue increased 67 per cent to $9.8M during the three months ended March 31, 2024 ("Q1 2024") versus revenue for the same quarter in 2023 ("Q1 2023") of $5.8M.
• Q1 2024 gross profit was $2.7M or 27 per cent which improved significantly versus Q1 2023 gross profit of 6.6 per cent and versus the three months ended December 31, 2023 ("Q4 2023") of 24.3 per cent
• Adjusted EBITDA(1) improved 70 per cent to negative $0.9M in Q1 2024 from negative $3.1M in Q1 2023 and improved sequentially from negative $1.6M in Q4 2023.
• Medipharm anticipates further improvement on profitability in 2024 with plans being implemented to improve Adjusted EBITDA(2) by a further $1M to $2M, which plans include the ongoing optimization of production and logistics facilities.
• Strong balance sheet with $17M million of cash, and less than $3 million of debt as of March 31, 2023.

US Update and Strategy

• Medipharm is optimistic about recent Associated Press reports that the US Drug Enforcement Agency ("US DEA") will move cannabis from a Schedule I to a Schedule III drug. This is a solid step towards recognizing the medical benefits of cannabis and allow for the increased study of those benefits. Today, researchers face significant challenges in getting trial approvals and then dealing with the logistics of sourcing, and managing Clinical Trial Materials that may contain cannabis.
• The company believes that the US Food and Drug Administration ("FDA") could regulate these cannabis activities, as they do with tobacco products, food, cosmetics, natural health products and drugs. (2)
• Medipharm is the only purpose-built cannabis facility that has been inspected by the FDA and holds a current Drug Establishment Licence. Medipharm has been referenced in FDA Investigational New Drug Applications, an Abbreviated New Drug Application and a Drug Master File. The company has also sent multiple cannabis oil shipments for clinical trials which are DEA approved.
• In the short-term Medipharm will use this leading FDA and US DEA experience to position itself as the go-to partner for cannabis research in the US.
• Longer term, it is likely that any new US FDA regulations will raise the bar on manufacturing quality requirements. Medipharm intends to use its advanced GMP process validation and pharmaceutical product characterization to launch products into the future regulated US market. (2)

Continued Growth in International Medical Cannabis in Q1 2024

• Changes to the German legislation in removing cannabis from the narcotic lists has opened new commercial opportunities to streamline in-county operations and expand the addressable patient base.
• In Q1 2024, Medipharm's Beacon Medical GMBH hosted a successful audit at its German office for the continued import, manufacturing and release of cannabis products. This was followed by EU GMP renewal inspections at the company's Canadian sites. This clears the path to increase branded product sales in the second half of 2024(2). Medipharm now has 14 product registrations under the Beacon brand in Germany, up from 5 in Q4 2023.
• Increase in German medical cannabis sales to $1.4M, a 36 per cent increase versus Q4 2023. 70 per cent of these sales were non-flower products including oil, CBD isolate and dronabinol, contributing to improved overall international margin profile.
• In Q1 2024, Medipharm medical cannabis sales in Australia were $1.8M a 64 per cent increase from Q4 2023. The main contributor to the increase was both branded and white label GMP vape sales. New tighter rules requiring all products to meet GMP standards in Australia has opened many branded and B2B opportunities for the company.

Management Commentary

David Pidduck, CEO of Medipharm Labs, commented, "This quarter shows another quarter of growing revenue, stronger gross profit, decreasing costs and improving Adjusted EBITDA. Medipharm's balance sheet is in an excellent position to consider future investments in growth. With Adjusted EBITDA getting close to breakeven, the leadership team can now devote even more energy to growing our business. Regulatory changes in Germany and Australia and potential upcoming changes in the US are all very favourable for the company."

Greg Hunter, CFO of Medipharm Labs, added, "Q1 2024 was another step in the right direction towards profitability and becoming cash flow positive. Our revenue and Adjusted EBITDA were both the highest in over 3 years. Revenue was $9.8 million or 67 per cent higher than prior year and Adjusted EBITDA loss was $0.9 million which is $2.1 million better than prior year. Our cash burn was approximately $1 million resulting in an ending cash balance of $17 million with less than $3 million of debt. Medipharm is in a strong financial position to capitalize on our strong suite of licences, global customer contracts and assets as we strive for profitability in 2024."

Q1 2024 Financial Results Conference Call

Medipharm's executive management team will also host a conference call and audio webcast on Wednesday, May 15, 2024 at 8:30 a.m. eastern time to discuss the company's financial results.

Conference Call:

Toll-Free number: (888) 330-2454

International number: +1 (240) 789-2714

Conference ID: 4921762

Participants are asked to dial in approximately 15 minutes before the start of the call.

Audio Webcast:

An audio webcast will be available by visiting the following link here.

For those who are unable to participate on the live conference call or webcast, a replay will be available at https://www.medipharmlabs.com/investors approximately one day after completion of the call.

About Medipharm Labs

Founded in 2015, Medipharm Labs specializes in the development and manufacture of purified, pharmaceutical-quality cannabis concentrates, active pharmaceutical ingredients (API) and advanced derivative products utilizing a Good Manufacturing Practices certified facility with ISO standard-built clean rooms. Medipharm Labs has invested in an expert, research driven team, state-of-the-art technology, downstream purification methodologies and purpose built facilities with five primary extraction lines for delivery of pure, trusted and precision-dosed cannabis products for its customers. Through its wholesale and white label platforms, Medipharm Labs formulates, develops (including through sensory testing), processes, packages and distributes cannabis extracts and advanced cannabinoid-based products to domestic and international markets.

In 2021, Medipharm Labs received a Pharmaceutical Drug Establishment Licence from Health Canada, becoming the only company in North America to hold a domestic Good Manufacturing Licence for the extraction of natural cannabinoids. The company carries out its operations in compliance with all applicable laws in the countries in which it operates.

In 2023, Medipharm acquired VIVO Cannabis Inc. which expanded Medipharm's reach to medical patients in Canada via Canna Farms medical ecommerce platform, and in Australia and Germany through Beacon Medical PTY and Beacon Medical GMBH. This acquisition also included Harvest Medical Clinics in Canada which provides medical cannabis patients with Physician consultations for medical cannabis education and prescriptions.

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