Thank you for standing by, and welcome to the MediPharm Labs Conference Call to discuss its 2025 full- year and fourth quarter results. Our speaker on today's call is Greg Hunter, Chief Financial Officer and Interim Chief Executive Officer. As a reminder, all participants are in listen-only mode and the conference is being recorded. After management's presentation, we will take questions from the analyst community on the telephone and then take written questions through the Q&A feature on the webcast. The information during this call should be considered together with the more detailed information disclosure, financial data, and statements available on the company's website and on its SEDAR+ profile at sedarplus.ca. As set out on the webcast slide, I would like to note that remarks during this earnings call may contain forward-looking information and forward-looking statements within the meaning of applicable securities laws.
This includes, without limitation, statements about MediPharm Labs and its current and future plans, expectations, intentions, financial results, operations, levels of activity, performance, goals or achievements and other future events, trends, probability, business growth, or developments. All statements other than statements of historical fact are forward-looking statements. The statements made are based on the company's current expectations, estimates, and beliefs as of today's date. The company's remarks may also contain reference to non-IFRS financial measures, including Adjusted EBITDA. These measures do not have any standardized meaning according to International Financial Reporting Standards or IFRS, and therefore may not be comparable or similar measures presented by other companies. Please review the company's most recent disclosure materials filed on SEDAR+ for the risks associated with forward-looking information and the use of non-IFRS financial measures, including the section titled "Reconciliation of Non-IFRS Measures" in the company's most recent MD&A available on SEDAR+.
Please note that all dollar amounts mentioned on today's call are in Canadian dollars unless otherwise noted. Now, I would like to turn the call over to Mr. Greg Hunter. Please go ahead.
Thank you, operator, and good morning, everyone. This morning, I'll provide context on the CEO transition, cover the fourth quarter and full- year 2025 results, spend time on what differentiates MediPharm Labs, and how that was executed during 2025, and then walk through the financial performance and our 2026 priorities. As announced earlier this year, David Pidduck stepped down from the CEO role, and I've assumed the role of Interim CEO while continuing as CFO. Our board of directors is actively engaged in determining the next CEO for MediPharm Labs, and we will keep you informed once a decision has been made. I want to sincerely thank Dave for his contributions to MediPharm over the past several years. Under his leadership, the company strengthened its international footprint, improved financial discipline, and built the regulatory and operational foundation that supports the business today.
Dave remains on the MediPharm Labs board of directors, providing continuity of governance, institutional knowledge, and strategic alignment. In 2025, MediPharm generated full-year revenue of CAD 45 million, representing 8% growth year-over-year, despite a Canadian market that remained under sustained pressure from pricing, competition, and shifting reimbursement dynamics. The growth was driven primarily by our international medical cannabis business, which grew 43% year-over-year and accounted for the majority of our revenue mix. This international medical mix did not happen because of a single contract, a one-time shipment, or a short-term market opportunity. It reflects years of investment in regulatory capability, quality systems, international partnerships, and pharmaceutical-grade manufacturing. At the same time, we were very deliberate about what not to do in 2025.
In Canada, where pricing pressure and competitive behavior remain aggressive, we chose not to chase volume at the expense of margin, cash, or long-term viability. Instead, we focused on discipline, simplification, and capital preservation. As a result, we exited 2025 with a more resilient and diversified revenue mix, a simplified operating footprint, a balance sheet that remains stronger than many of our peers in the sector, and no material debt, and a cash position of over CAD 10 million. Let me take a moment to remind you what differentiates MediPharm Labs. MediPharm is not a single-market, single-product cannabis company. We operate across four distinct verticals supported by a regulatory and licensing foundation that is difficult, time-consuming, and expensive to replicate.
From a regulatory standpoint, MediPharm Labs holds a unique combination of licenses, including a Health Canada Drug Establishment License, EU GMP certification, Anvisa GMP certification from Brazil, TGA compliance in Australia, an FDA-inspected facility with prior shipments of pharmaceutical-grade APIs into the United States for research and use in clinical studies, and we maintain licenses and registrations that support natural health product development should that pathway evolve in Canada. These are not nice-to-have credentials. They are operational enablers that determine where you can sell, what you can sell, and who you can partner with. As a result, MediPharm Labs is often selected because we are a trusted, compliant, and dependable partner, not because we are the lowest cost option. In regulated medical and pharmaceutical channels, that distinction matters, and it underpins both our commercial relationships and our long-term strategy. Strategically, MediPharm competes across four verticals.
International medical cannabis, now our largest revenue stream, supplying both branded and white label products in key regulated markets such as Germany, Australia, the United Kingdom, and other global jurisdictions, including France. Canadian medical cannabis, including direct-to-patient platforms and clinic infrastructure, where continuity of care and product reliability are critical to our patients. Pharmaceutical and B2B, including APIs, clinical trial materials, contract manufacturing, and advanced delivery technologies, areas where regulatory capability and consistency are non-negotiable. Adult use and wellness, where we remain disciplined and margin-focused rather than competing in loss-leading volume segments. Very few companies in this sector have the licensing depth, manufacturing quality, balance sheet, and operational discipline to compete meaningfully across all four at the same time. That diversification is intentional. It gives us optionality, resilience, and the ability to allocate capital where returns are most attractive.
In 2025, international medical cannabis represented greater than 50% of total revenue through Q1 to Q3, and this trend continued in Q4, with it representing 55% of total revenue. The execution was evident throughout the year. In Q1, Q2, and Q3, we reported double-digit year-over-year revenue growth. This performance was driven by repeat demand from existing partners and new market entries rather than one-off transactions. Importantly, this growth was supported by disciplined operating decisions, continued development of key partnerships, and sustainable pricing, not chasing volume at the expense of profitability. In Q2, we completed the CAD 4.5 million sale of our non-core Hope, British Columbia facility to strengthen our balance sheet and reduce expenses. We invested capital into our EU GMP Napanee facility to expand growth capacity by roughly 30%, which is now operational.
Internationally, we executed on new market pathways, completing first commercial shipments into France, delivered first purchase orders in Brazil under sanitary authorization with an Anvisa licensed pharmaceutical partner, and securing approvals with a partner in New Zealand, positioning entry into another tightly regulated medical market. These market entries were complemented by continued validation from partners and regulators. During the year, we strengthened our position as a reliable pharmaceutical grade supplier by consistently meeting quality, delivery, and regulatory requirements across multiple jurisdictions, a factor that continues to differentiate MediPharm Labs in highly regulated medical markets. Globally, regulatory standards continue to rise, particularly in Europe and Australia. This environment tends to favor companies with established pharmaceutical grade systems and licenses, and we believe MediPharm is well-positioned as those standards continue to tighten.
On the product side, we continue to commercialize differentiated pharmaceutical grade formats, including the expansion of our metered dose inhaler platform globally and the launch of a CBN THC nighttime inhaler in Canada, responding directly to demand for smoke-free, precisely dosed delivery formats. During Q4, we expanded our Australian product portfolio with the launch of four metered dose inhaler products and introduced a high CBD inhalation cartridge designed to provide a non-THC alternative for patients. These were not isolated announcements. They reflect steady, repeatable execution aligned with our regulatory and operational strengths. I also want to briefly acknowledge the upcoming changes to Veterans Affairs Canada's Reimbursement Policy for cannabis for Medical Purposes. Effective April first, 2026, Veterans Affairs Canada will reduce the maximum reimbursable price for medical cannabis from CAD 8.50 /g to CAD 6 /g .
We were made aware of these changes as part of the 2025 federal budget and have incorporated them into our planning and operating assumptions. Our focus remains on continuity of care and supporting patients with a particular focus on veterans within the framework established by regulators and payers. We expect this change to negatively impact direct-to-patient revenue beginning in the second quarter of 2026. However, we do not view this change as altering our overall strategy. It may also create opportunities for further consolidation within the direct-to-patient channel. We will continue to work constructively with all stakeholders while remaining focused on disciplined revenue growth and profitability while maintaining the highest level of patient care. Turning to the P&L performance for the fourth quarter.
Revenue for Q4 was CAD 11.1 million compared to CAD 12 million in Q4 2024, reflecting timing and mix differences largely in the international medical business. International medical cannabis revenue was CAD 6.1 million and represented 55% of total revenue in the quarter. Canadian medical cannabis revenue was CAD 3.2 million for the quarter and increased 8% sequentially versus Q3 2025. Canadian adult use and wellness revenue was CAD 1.4 million for the quarter. Gross profit for the quarter was CAD 3.9 million, or 35%, which increased from Q4 2024 gross profit of CAD 3.6 million, or 30%, driven by product mix and cost reductions. We remain focused on optimizing product mix and production efficiency to improve margins.
A key part of this strategy is the introduction of innovative products such as our metered dose inhalers, which represent a novel pharmaceutical-grade delivery technology that offers patients a precise smoke-free option. Total operating expenses, which include G&A, marketing and selling, and R&D, was CAD 5.4 million in Q4 and increased CAD 0.3 million versus prior year. Q4 2025 included a severance expense of approximately CAD 1 million. When adjusting for severance and other discrete items, Q4 operating expenses were CAD 4.2 million and declined CAD 0.3 million, or 8% versus prior year. Management continues to focus on further expense reduction opportunities. Adjusted EBITDA loss of CAD 0.1 million improved CAD 0.9 million versus Q3 2025, driven by improved gross margin from product mix. Net loss for the quarter was CAD 2 million versus CAD 1.7 million from prior year.
As previously discussed, Q4 2025 includes a CAD 1 million severance expense. For the full- year 2025, revenue was CAD 45.1 million, which increased 8% versus prior year, largely driven by a 42% growth in international medical. Gross profit for 2025 was CAD 14 million, representing a 31% margin, an increase versus 2024 gross profit of CAD 12.8 million, or 31%. Gross profit margin improvement was driven by product mix and expense reductions. Total operating expenses for 2025 was CAD 20.9 million and decreased CAD 0.7 million versus prior year. When adjusting for severance, costs related to the proxy contest and other discrete items, year-to-date operating expenses were CAD 16.8 million, which decreased CAD 2.7 million, or 14% versus prior year. Adjusted EBITDA loss for 2025 improved to CAD 1.6 million from CAD 1.9 million in 2024.
Net loss for 2025 was CAD 8.3 million versus CAD 10.7 million in 2024. 2025 was impacted by CAD 2.5 million in expense related to the proxy contest and CAD 1.3 million in severance expense. Turning to our balance sheet and liquidity. We ended the year with CAD 10.8 million in cash, up CAD 0.2 million from Q3 2025. Trade and other receivables were CAD 7.5 million, with 85% aged 60 days or less. Trade and other payables were CAD 9.2 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 owns two production facilities with an appraised value exceeding CAD 15 million. Before concluding, I want to briefly summarize the key financial takeaways for the year.
First, we delivered full-year revenue of CAD 45 million, the highest in 5 years, despite a challenging market with international medical now representing over 50% of our business. Second, we maintained a 31% gross margin, even as our mix shifted further toward regulated international medical markets, reflecting product quality and operating discipline. Third, we continued to make progress on profitability. Adjusted EBITDA improved year over year to a loss of CAD 1.6 million, and net loss narrowed to CAD 8.3 million, driven by revenue growth and meaningful cost reductions. Finally, we exited the year with a strong balance sheet, including CAD 10.8 million in cash, virtually no debt, and being current on excise taxes, sales taxes, and trade payables. With a strong balance sheet and improved operating discipline, we continue to evaluate opportunities that would enhance our platform.
Any such opportunities would be approached selectively with a clear focus on strategic fit, regulatory alignment, and shareholder value. It is also important to highlight that these results were achieved without sacrificing balance sheet integrity. During 2025, we monetized non-core assets, reduced operating complexity, and continued to fund growth internally, reinforcing the sustainability of our financial model. Taken together, these results reflect a business that is more focused, more resilient, and better positioned than it was a year ago. Looking ahead, while we don't provide formal guidance, our priorities for 2026 are clear. We will continue to grow international medical revenue in markets such as Germany, the United Kingdom, New Zealand, Brazil, France, and Australia.
Build our brands internationally to accelerate organic growth, expand pharmaceutical and B2B opportunities where returns justify the investment, maintain strict cost discipline while protecting quality, compliance, and reliability, and drive disciplined execution and financial performance to enhance long-term shareholder value. Our focus remains on profitable, sustainable revenue, prudent capital allocation, and preserving optionality as the industry continues to mature. In closing, 2025 was a year of steady, deliberate progress for MediPharm Labs. We strengthened our international footprint, executed on key commercial milestones, improved profitability metrics, and maintained a balance sheet that provides flexibility in a volatile industry. I'd like to thank our employees for their continued commitment and our shareholders for their ongoing support. Operator, we'll now open the line for questions.
Thank you. Our first question comes from the line of Aaron Grey with Alliance Global Partners. Please go ahead.
Hi, good morning. This is John on for Aaron Grey. Thank you for the questions. On the gross margin improvement, could you provide more detail on the specific mix of products that help drive the expansion, and how you expect the gross margin to trend going forward?
Yeah. Hey, John. Thanks for the question. I think you're probably referring to the sequential improvement of our gross margin from, as I indicated in Q3, I think I termed it as the low watermark. We saw significant improvement in Q4, and there's a couple reasons for that. One is we talked about in Q3. We did have our traditional summer shutdown in Q3, which impacts margin. From a product mix perspective, there are a couple things that helped our margin in Q4. One is with international oils where we enjoy higher margin. Two, with our inhalers, our metered dose inhalers that we've talked about a fair bit, that we enjoy higher margin with.
We saw some mix shift where we had a little bit, we've exited some lower flower segments in international and picked up some tolling business. The combination of those different items helped with the margin. Again, we expect to continue to focus on margin improvement as we go forward here.
Okay, great. How should we think about the ability to position yourself to capitalize on the international growth trends? Do you feel the company has the right pieces and partnerships in place today?
On the international front, you know, we feel quite good about it. I mean, as I talked about in the prepared remarks with, you know, the suite of licenses that we have, whether you talk about our Drug Establishment Licence, EU GMP, Brazilian Anvisa. The suite of licenses, I think, is one that separates us. I think as well, you know, we have strong foothold in Germany with key partners such as STADA. Obviously as well Australia, a key market for us, we're one of the top brands with our Beacon brand.
As I talked about in the prepared remarks, you know, as we look to expand into markets like France, which is a very large market and in the early stages, where we expect some additional shipments here in 2026. With our new entry into New Zealand, although New Zealand being a smaller market, still expansion opportunities where in fact we did ship product into Q1, and that will be available to patients starting in Q2 and expect to do some more. Finally, you know, as well with Brazil, where, you know, we're expecting more shipments into Brazil this year with two of our pharmaceutical partners. I think expand Germany and Australia as well. Within those markets, we're also launching or have launched our own branded products.
As I said in Australia, we had the Beacon brand, but we're also value segment. Then in Germany, we're also launching some branded products. I think the combination of all those additional markets, additional products will help continue to strengthen our international presence.
Great. Finally, you know, in anticipation of the potential rescheduling of cannabis to a Schedule III drug, are there any steps or conversations that you could be taking to ensure your position for opportunities that could open up as an API provider or otherwise?
Yeah. I think the Schedule III is still obviously early days. I mean, the biggest impact there is obviously the tax relief, which doesn't impact MediPharm. That's for the MSOs. You know, the biggest impact for us is really around the ability for expanded research access, whether it be universities and pharma companies accelerating clinical research, and drug development. As I was formerly adding cannabis accepted as medical use and as in 11 clinical trials today. That's really the opportunity for MediPharm in the near term is additional participation in clinical studies.
Okay, great. Thanks for the questions. I'll jump back in the queue.
Thanks, John. I appreciate it.
Your next question comes from the website. It is from Troy Larson, and he asks, "We've seen more Canadian and international cannabis companies move into the regulated medical and pharma-adjacent space. How has increased competition in medical cannabis, including EU GMP and clinical trial supply, changing the market landscape? And what durable advantages does MediPharm have to defend or expand its position in that environment?
Yeah, great. Thanks for the question, Troy. I think I touched on some of that with John, but let me elaborate a little bit. You know, in Germany, we are certainly seeing increased competition. That is resulting in some pricing compression that we are seeing. As I touched on, you know, some of the things that we're doing is launching our branded products with our Beacon brand and our Wildlife brand. You know, the other pieces with our flagship partners as I've talked about with STADA. The other piece that we're seeing in Germany, regulatory changes where, you know, they're looking at moving to less dependence on telehealth and mandatory in-person physician consults and restriction on mail order.
That can benefit MediPharm because of the partners that we have, like STADA, which rely on our traditional brick-and-mortar pharmacy. I think that ultimately benefits MediPharm in the long term as well. Again, you know, with the suite of licenses. You know, the other market as well where we're seeing changes is in Australia as well, where we are seeing some pricing compression and the development of a value segment, which as I touched on earlier, we're launching products into the value segment as well.
There is some tighter regulatory enforcement being looked at in Australia as well, which is creating some price compression, as I mentioned, on the value segment, as well as looking for more oversight of products coming into Australia, which again, our view is that ultimately benefits providers like MediPharm with a suite of licenses, and GMP compliance, and pharmaceutical operators like ourselves. We think all these regulatory changes will also benefit MediPharm.
That concludes our question and answer session. I will now turn the call back over to Greg Hunter for closing remarks.
Great. Thank you. Thank you, everybody, for joining the call today, and we look forward to seeing you again at our Q1 earnings calls. We'll talk then. Thank you.
Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.