Liberty Health Reported Revenue Growth of 51% Over Last Quarter and 403% Over Q3 2019
Another Quarter of Strong Growth has LHS Stock in Prime Position for a Breakout
Liberty Health (CSE: LHS) (OTCQX: LHSIF) (FRA: S6UQ) released earnings last night for the third quarter of fiscal 2020, followed by an official press release today after market close. The company experienced another quarter of strong financial and operational growth highlighted by impressive net revenue for the third quarter and nine months ended November 30, 2019, of $16,122,254 and $32,270,471, respectively. Liberty Health also recognized Victor Mancebo for his great leadership and dedication by officially promoting him from his previous role as interim CEO to the company’s new permanent Chief Executive Officer.
“Victor has achieved tremendous results for the company and we are confident that he will continue to lead the company into a new era of growth. He has delivered operational excellence across all areas of the business and the Board has confidence in his ability to deliver value to our shareholders.”
For your convenience, we’ve put together the following list of financial and operational highlights from Liberty Health’s impressive Q3 2020 financial results.
Q3 2020 Financial Highlights
- Third-quarter 2020 Net Revenue came in at $16.1 million, up 403% year over year and 52% over the $10.6 million posted in Q2 2020.
- Q3 2020 Gross Profit Before Biological Asset Adjustments amounted to $9.8 million, up 553% year over year and 94% over the previous quarter.
- Gross Margin Before Biological Asset Adjustments improved to 60.8% in Q3 2020. Up from 46.4% in Q3 2019.
- Third-quarter 2020 Gross Profit After Biological Asset Adjustments was $30.8 million, up 1,611% year over year.
- Q3 2020 Net Income was $6.89 million or $0.02 per share compared to last year’s Q3 net loss of $9.69 million or negative $0.03 per share.
- Net Income Before Tax for the third quarter of 2020 came in at $21.2 million. Last year Liberty reported a net loss of $9.7 million.
- Adjusted EBITDA for Q3 2020 was $4.4 million, much improved compared to the Adjusted EBITDA loss of $2.9 million recorded in last year’s third quarter.
- As of November 30, 2019, Liberty Health had $28,539,868 in Cash and Cash Equivalents.
- Total Assets at the end of Q3 2020 totalled $197,155,383. Up from $134,412,206 in the previous year. Total Current Assets amounted to $75.8 million.
- Total Liabilities at the end of the third quarter of 2020 amounted to $55.9 million. Total Current Liabilities totalled $21.6 million.
Q3 2020 Operational Highlights
- Total Grams harvested climbed 448% from roughly 583k in Q3 2019 to 3.2 million in Q3 2020.
- Equivalent Grams Sold increased to 1.43 million, up 677% compared to 184k sold in last year’s third quarter.
- Liberty’s Average Realized Price Per Gram was $11.26 in Q3 2020.
- The company’s Total Active Patients count expanded to 36,097, an increase of 149% over last year’s total of 14,499.
- Total Number of SKUs more than doubled from 70 last year to 144 in Q3 2020.
- Liberty’s total number of Dispensaries Open expanded to 19 compared to only 7 in Q3 2019.
“The third quarter of fiscal year 2020 has continued to show positive results. We are pleased with the results, which are made possible due in part to our loyal patients in Florida and our dedicated and knowledgeable staff working throughout the state,” stated Liberty Health CEO Victor Mancebo.
As of today, Liberty Health now operates a total of 23 dispensary locations throughout the state of Florida. For more information on the company’s individual dispensaries including address, hours of operation, phone number and product offering click here. The company’s product offerings now include the following high-quality brands: Liberty Health Sciences™, Zentient™, Pretty Pistil™, Papa’s Herb™, Mary’s Medicinal™, G Pen™, PAX™, and Lemon and Grass™.
Over the past five months, Liberty Health has been amongst the top sellers of whole cannabis flower in Florida, ranking number two in the entire state. At the end of Q3 2020, the company’s monthly sales grew to more than $6.1 million.
Liberty Health confirmed its commitment to being a leading low-cost producer in the state of Florida by announcing the company has commenced a new phase of expansion focused on cultivation and processing at its Liberty 360 Innovation Campus. Liberty 360 is a 387-acre state-of-the-art cannabis facility that consists of over 300,000 sq ft of premium greenhouse production and processing space. For more info on the Liberty 360 Innovation Campus click here.
LHS Stock Price Action & Chart
Despite the lack of an official earnings PR last night or this morning, shares of Liberty Health’s stock rose as much as 6.94% in early trading today but was unable to hold onto those gains. The company’s CSE listed LHS stock closed the day even at $0.72 per share. Liberty’s U.S. OTC Markets listed LHSIF stock closed today’s trading session at $0.55 per share, up 1.99% on the day. Across the Atlantic, the company’s German Frankfurt listed shares performed the best closing today up 6.36% at $0.485.
Thanks to Liberty’s consistent fundamental growth, LHS was one of the first pot stocks to put in a bottom during the cannabis carnage of 2019. While the majority of companies in the sector struggled into the fall and winter months, LHS had already reversed its downtrend and was trending higher thanks to its stellar fiscal Q2 2020 earnings in October 2019.
If we take a look at Liberty’s chart below, LHS gave a clear trend reversal signal on October 3rd, nearly a month before its Q2 earnings became the catalyst for a new uptrend. The reliable reversal signal in reference here is called a Bullish Divergence which we recently covered while reviewing Organigram’s (TSX: OGI) (NASDAQ: OGI) (FRA: 0OG) massive 44% breakout on January 15th. Bullish Divergence is a Technical Analysis tool used by traders to spot a change in a stock’s momentum leading to a reversal of its downtrend. The signal occurs when a stock’s share price drops to a new low while the Relative Strength Index (RSI) fails to reach a new low too. In Organigram’s case, a bullish divergence occurred just 2 days before OGI’s Q1 earnings catalyzed its reversal.
In regards to Liberty’s reversal, LHS stock declined to a low price of $0.355 with an RSI reading of 31.10 on August 26, 2019. After an attempted rebound over the next month, LHS eventually dropped to a new low of $0.335 on October 2, 2019, while its RSI reading of 43.98 fell way short of making a new low as well. This situation created a bullish divergence and sent a clear signal to technical traders that LHS had likely bottomed. Less than a month later the company’s Q2 earnings would serve as the catalyst to propel the stock upward and officially put an end to the downtrend.
LHS has been trading nicely in a clearly defined uptrend for the past 3 months and after a recent healthy pullback, the stock attempted to break through resistance located around $0.75 today. The resistance point of $0.75 is the same level LHS failed to break through on multiple occasions in early December. A breakout above this resistance level is important for LHS as it will validate a continuation of the uptrend. It’s completely normal for a stock to require multiple attempts to break resistance so today’s failure is no cause for concern. Investors should move LHS to the top of their watchlists to keep a close eye on the stock as its highly likely that a significant breakout is imminent.
Charts source: Barchart.com
Disclosure: The Cannabis Investor holds a position in Liberty Health.