Supply Constraints and Regulatory Delays Pose Risks Despite LGP’s Strong Growth
Little Green Pharma reports a robust 75% revenue increase to $9.5 million for December quarter, driven by strong European market growth and strategic product launches.
- Revenue up 75% to $9.5 million in December quarter
- Cash receipts rise 90% to $10 million
- New 2tpa grow room opened in Denmark to meet demand
- Launch of Lush Labs craft flower brand and new oil and vaporiser products
- Health House acquisition due diligence completed, SPA negotiations underway
Strong Quarterly Performance
Little Green Pharma Ltd (ASX: LGP) has delivered a standout quarterly performance for the period ending December 31, 2024, reporting a 75% increase in revenue to $9.5 million, alongside a 90% surge in cash receipts to $10 million. This growth marks a significant step up from the prior corresponding period and underscores the company’s expanding footprint in the medicinal cannabis sector.
Year-to-date revenue for FY25 Q3 has already reached $27 million, surpassing the entire prior fiscal year’s revenue of $25.6 million, signaling accelerating momentum.
European Market Expansion
Key to this growth has been Little Green Pharma’s strong performance in European markets, particularly Germany and the UK. December alone saw $1 million in German flower sales, complemented by $6 million in binding purchase orders for the next two quarters across Germany and the UK. Despite regulatory delays that temporarily suspended Australian flower shipments into Germany, European sales increased 20%, driven by both flower and oil products.
The company’s Danish production facility, the largest medicinal cannabis site in Europe, has expanded with an additional 2 tonnes per annum grow room to meet rising demand. This expansion positions LGP well to capitalize on the rapidly evolving German cannabis reform and the burgeoning UK market, which is experiencing a tripling in size driven by patient demand and private clinic growth.
Product Innovation and Brand Development
December also marked the launch of Lush Labs, a new craft flower brand developed in partnership with Canadian cultivator JR Strain. Early feedback from prescribers and patients has been positive, completing LGP’s House of Brands strategy with offerings across value, premium, and craft flower categories.
In addition to Lush Labs, the company introduced three new oil products and a vaporiser product, expanding its portfolio to meet diverse patient needs. While flower sales declined 5% due to supply constraints and regulatory issues, vaporiser sales grew 15%, and oil sales increased in France by 20%, offsetting some declines in Australian sales.
Strategic Acquisition and Financial Position
Little Green Pharma has completed due diligence on the Health House distribution business and is currently negotiating the Sale and Purchase Agreement, signaling a strategic move to strengthen its distribution capabilities.
Financially, the company reported net operating cash outflows of $0.4 million, attributed to working capital and inventory build to support record sales. Cash in bank stood at $3.7 million at quarter-end, down from $4.8 million, with minimal long-term debt of $3.2 million. The company maintains a strong balance sheet with net tangible assets significantly above enterprise value.
Outlook and Market Dynamics
Regulatory reforms in Germany, including the delisting of narcotics and pilot projects for commercial supply chains, are expected to further stimulate demand. The UK market’s rapid growth and high per-patient consumption rates also present a lucrative opportunity. Meanwhile, LGP continues to prepare for market authorisations in France and Spain, where legislative frameworks are evolving.
With a diversified product range, expanding production capacity, and strategic acquisitions in progress, Little Green Pharma is well positioned to capitalize on the accelerating global medicinal cannabis market.
Bottom Line?
LGP’s strong quarter and strategic moves set the stage for continued growth amid evolving European cannabis markets.
Questions in the middle?
- How will the Health House acquisition impact LGP’s distribution and revenue streams?
- Can LGP resolve supply constraints to sustain flower sales growth?
- What are the implications of regulatory changes in Spain and France for LGP’s market expansion?