GOODBODY Health last week announced plans to delist from the Canadian Securities Exchange (CSE), and become the second company in a week to redomicile in the Channel Islands.
The move has seen the company’s share price on both the CSE and the UK’s Aquis market fall to near all-time lows, despite the company recently reporting its highest ever quarterly profits in Q1 of 2022.
According to the company’s Founder and Executive Chairman Geremy Thomas, this discrepancy between stock price and real-world performance is a core part of the its decision.
He told BusinessCann that ‘the small exchanges both here and in Canada in a bear market with a war raging in Europe, they’re just not a great place to be. There’s not the liquidity or the appetite for risky small stocks and I can’t see that situation changing anytime soon.’
De-listing from CSE
The RTO, originally announced in April that year, saw the newly combined entity’s stock return to trading after a four month hiatus at $0.070, seeing the company’s market cap sit at around $20m CAD.
Days later, Goodbody launched a second listing on the Aquis stock exchange, in a bid to enable both North American investors from a more mature cannabis market, and European investors with closer proximity to the company’s core operations access its shares.
After hitting highs of $0.12 on the CSE in April 2021, the company’s share price has dropped gradually ever since and now sits at $0.02, seeing millions wiped off its market cap.
According to Mr Thomas, this dual listing strategy is no longer in the best interests of the company, and the decision to delist is both a reaction to the lack of opportunities in the Canadian market, and a drive to cut costs.
“I’ve spent some time recently in Vancouver, trying to find out what our opportunities are there going forward in terms of promotion of stock and bringing on new shareholders. I’ve come to the conclusion that the best thing to do is to come out of that market.”
He explained that while the CSE has ‘proved to be very popular with retail investors in a bull market… with cannabis stocks’, the small growth exchanges provide far less opportunities in a bear market.
Furthermore, he said the costs of being listed on two separate junior exchanges was no longer worth the extra market exposure, especially since the company will continue to be listed on the North American OTCQB.
“There’s a lot of cost repetition with two independent exchanges, two sets of advisors, two sets of lawyers, two sets of auditors.
“I think that the cost of running public companies, small businesses that are on junior exchanges, is too high anyway. And for us, we were replicating that twofold.
“So the decision was really taken on the basis of could we make a go of it Canada? And my answer to that was no. Would it be more prudent to cut back on the monies that we’re spending on running these public company entities? And the answer is certainly yes.”
Its decision to delist is still subject to shareholder approval, which will be put to a vote at the company’s annual general meeting in August 2022.
It has assured shareholders that the re-domiciliation will see them retain the ‘exact number of shares’ they currently hold in Goodbody Health, and their shareholding will be unchanged.
Strong Financial Position
The falling share price and lack of liquidity, an issue which has been hampering cannabis companies throughout the globe over the past few months, comes despite Goodbody reporting consistently solid financial performances.
In the first quarter of 2021, Goodbody posted record revenues of £1.37m, up by £1.02m year-on-year, while gross profit and adjusted EBITDA were up 234% and 50% respectively.
This growth was largely maintained throughout the pandemic thanks to its operation of over 30 Covid testing sites, and diversification into blood tests as people started travelling again.
In its recently published FY results, Goodbody reported revenues for the 12 months to December 31 2021 up 755% year-on-year to £17m, marking its highest year of revenues since its inception, ‘driven by its clinic testing business’.
This was reflected in its gross profits which jumped 695%, and its EBITDA, which grew from a loss of £3.27m to a positive of £0.48.
While the pandemic has left the headlines, the company’s growth has continued into 2022, seeing Goodbody report its highest ever quarterly profit in Q1, while revenues continued to grow 276%.
As Mr Thomas points out, Goodbody is ‘trading with our market cap now significantly less than the cash that we have in the bank.’
“It’s not realistic at all. If we looked at our colleagues in the same sector, they’ve all taken pastes. And most of those businesses are not in the strong position we are because we’ve just had a very good run on testing, taking our cash resources at the end of last year from £1m to £6m.
“So it’s not a very rosy picture, and it certainly doesn’t justify the costs involved in running these private company structures.”