Today Cronos Group Inc. (CRON) and MediPharm Labs Corp. announced entering into a multi-year contract manufacturing agreement (“CMA”). Pending approval from Health Canada, MediPharm will begin filling and packaging vaporizer devices for Cronos Group’s adult-use brand, COVE?.
The two companies signed a CMA whereby MediPharm will utilize its proprietary expertise and equipment to fill premium formulated concentrate for Cronos Group. MediPharm will also provide labelling and packaging services for Cronos Group (per CRON’s specs and scale). The first term of their agreement is two years with the option for renewal.
“Working with MediPharm Labs gives us the quality and optionality that we are looking for as we introduce our proprietary vape pen formulations. We are committed to continuing to lead the industry responsibly as derivative products are introduced to the expanding Canadian marketplace,” said Mike Gorenstein, CEO of Cronos Group.
This is not the first collaboration between the two companies. Earlier this year, MediPharm Labs entered into a multi-year private label bulk resin supply agreement with Cronos Group, in addition to a cannabis concentrate program agreement.
“By leveraging our specialized expertise, technology and industrial scale vape filling capabilities, we will assist Cronos Group in delivering high quality, purity assured and Health Canada approved, derivative products further advancing their industry leading reputation and enhancing the supply chain in this important new category,” said Pat McCutcheon, CEO of MediPharm Labs.
MediPharm Labs focuses on producing purified pharmaceutical-grade cannabis oil, concentrates and derivative products. The company touts state-of-the-art technology and facilities, with five primary extraction lines capable of processing a total of 300,000 kg annually.
The company formulates, processes, packages and distributes cannabis extracts and cannabinoid products to domestic and international markets by utilizing its wholesale and white label platforms.
MediPharm Labs achieved its first commercial export to Australia in June 2019, and is approaching completion of an Australian extraction facility (due this year) with a 75,000 kg annual processing capacity.
Cronos Group has international production and distribution across five continents. The company’s portfolio includes PEACE NATURALS?, two adult-use brands, COVE? and Spinach?, as well as a global health and wellness platform.
On Wall Street, feelings are mixed when it comes to CRON stock. Eight out of the 14 analysts reviewing the stock give it a hold rating.
The stock hit a new 52-week low in early August, partially due to a mixed earnings report, which revealed better-than-expected sales, but also an increase in operating losses. CRON stock was also down August as part of a greater downtrend in the cannabis sector.
Cronos executives say they anticipate losses will increase during the second half of this year due to sales, marketing and other growth initiatives.
In the most recent trading session, Cronos Group (CRON) closed at $10.38, marking a 5.32% decline from the prior day. This change lagged the S&P 500’s 0.06% increase of the day. Meanwhile, the Dow dropped 0.19%, and the Nasdaq gained 0.067%.
Compared to last month, shares of CRON are down 7.59%. During the same period, the Finance sector gained 5.13%, while the S&P 500 gained 4.17%.
Investors will be looking for a show of strength from CRON as the company’s next earnings release approaches. Cronos Group is expected to report EPS of -$0.03, the same as the prior-year quarter. Analysts are estimating a revenue of $10.44 million, up 262.57% from the prior-year quarter.
Cronos Group Inc. (CRON) rose $0.02 (+0.20%) in after-hours trading Thursday. Year-to-date, CRON has gained 32.36%, versus a 13.28% rise in the benchmark S&P 500 index during the same period.
About the Author: Eric Bowler
Eric Bowler is an accomplished journalist providing in-depth insights for more than two decades. Over the past several years his focus has been on the marijuana industry, with a special interest in cannabis growth stocks. His daily coverage of the industry keeps him on top of the key trends with the goal of helping investors make well-informed decisions.
