Shares of Medicine Man Technologies Inc (OTCMKTS: MDCL) have been tearing up the charts all year. Earlier this month, the stock blasted through the $2.50 resistance zone and it’s been no looking back since then. A strong quarterly earnings report has further lifted the bull’s spirits as the outlook for 2019 looks even better. As we take a closer look at the numbers, there’s a lot to like with Medicine Man Technologies.
First up, a little background info for those that are not familiar with MDCL. Medicine Man Technologies is a fully integrated operator in the cannabis industry, offering consulting, retail pharma-grade products, and turnkey solutions for cannabis cultivators for over a decade. Medicine Man Technologies is leveraging its expertise and intellectual property to vertically integrate retail, cultivation, formulation, and distribution operations. The Company’s client portfolio includes active and past clients in 18 states and seven countries. The Company currently has or has had active clients in California, Iowa, Oregon, Colorado, Nevada, Illinois, Michigan, Arkansas, Pennsylvania, Florida, Ohio, Maryland, New York, Oklahoma, Massachusetts, Puerto Rico, Canada, Australia, Germany, and South Africa.
Impressive 2018 numbers
We said back in March that “we find that there’s a lot to like with Medicine Man and that new highs could be in the cards very shortly.” MDCL put out its 2018 numbers this month backing up our thesis. During the year ended December 31, 2018, the Company generated operating revenues of $9,442,555, an increase of approximately 168%, compared to revenues of $3,529,584 in the year ended December 31, 2017.
The increase in the Company’s overall revenue was driven by an increase in new clients, and new states adopting cannabis legislation and initiatives. Other factors driving the Company’s overall revenue was due to an increase in new clients, providing additional services to existing clients, and expanding its geographic footprint by entering into strategic licensing agreements to offer services to new markets with established companies in those areas.
Gross profit during the year ended December 31, 2018, increased 208% to $6,865,045 from $2,227,303 for the year ended December 30, 2017. Operating expenses during 2018 decreased by 37% to $4,694,704 from $7,463,253 during 2017, due primarily to stock compensation. MDCL reported income from operations of $2,170,341 for the year ended December 31, 2018, compared to a net loss of $5,235,950 for the year ended December 31, 2017.
For us, the highlight is the outlook going forward. Andy Williams, Co-Founder and CEO of Medicine Man Technologies, said:
“Today we are proud to say that we have been able to successfully utilize our expertise and intellectual property to integrate research, retail, cultivation, formulation and distribution operations with active and past clients in 18 states and seven countries. Our focus now is to leverage the entire management and leadership experience as we continue to further develop our growth strategies with the two pending acquisitions of Medicine Man Denver and MedPharm Holdings, LLC, expected to close in late 2019 or Q1 2020, in which post-acquisition is expected to generate a minimum of a $40+ million-a-year run rate.”
Currently trading with a market cap of $103 million, MDCL is an exciting play for cannabis investors. With the company on track to generate $40 million in revenues next year, MDCL remains deeply undervalued. Most cannabis companies are trading at 10x revenue multiple. If the same numbers are applied to MDCL, we are looking at a stock price much, much higher. As a result, we expect MDCL to continue outperforming other cannabis stocks.
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Disclosure: We have no position in. MDCL and have not been compensated for this article.
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