Pathway Health (TSX-V:PHC)’s recently announced partnership and acquisition will be crucial in driving activities to increase its topline, according to analysts at Leede Jones Gable
During third quarter 2022, the pain clinic operator and medical cannabis education provider announced an agreement with Sunshine Drugs, which will see a two-part roll out of Pathway’s Medical Management System, a system that gives pharmacists access to patient assessment tools and formal medication reviews, the analysts wrote in a report.
The roll out will see the provision of Pathway’s continuing education course that trains pharmacists to assess patient suitability and prescription reviews for medical cannabis, and separately implement Pathway’s MCMS across Sunshine Pharmacy’s 15 locations in southwest Ontario, according to the analysts.
READ: Pathway Health 3Q results show focus on streamlining operations
Separately, Pathway acquired the Victoria, BC-based location of IRP Health from Wellbeing Digital Sciences (NEO:MEDI.AQN, OTCQB:KONEF) for $100,000, giving Pathway have access to IRP’s multidisciplinary pain management and physical therapy programs that are primarily targeted at military veterans, RCMP and first responders, according to the analysts.
Pathway is also eligible for a profit-sharing scenario with Wellbeing if a licensing agreement is entered before April 25, 2023 with specific clinics, according to the Leede Jones Gable analysts.
While Leede Jones Gable does not formally cover the company, its interest in Pathway pertains to medical cannabis space, the analysts wrote.
Pathway reported third quarter results on November 24, showing an adjusted EBITDA loss improvement by 20% to C$1.3 million during the third quarter of 2022, from $1.7 million in the previous quarter.
“Revenue in the quarter was impacted by a reduction in marketing fees from licensed producers (due to clinics transitioning to a telemedicine platform), and also reflective of a broader downward trend in the Canadian medical cannabis market (which had consequential impact on cannabis education revenue as well),” they wrote.
Pathway’s low cash balance is an important near-term consideration, the analysts said. The company exited the quarter with $0.3 million in cash and debt of $1.9 million.
Most of the debt is predominantly attributed to a credit facility with $1.8 million outstanding, while a government loan valued at $0.08 million represents a minor proportion of that debt, they wrote, adding the outstanding principal balance of the credit facility has grown to $2.8 million as of November.
Contact the author at susie@proactiveinvestors.com