Liberty Health Sciences Inc: Medical Cannabis Stock Down but Has 285% Upside

 Liberty Health Sciences Inc Has 285% Upside
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Liberty Health Sciences Inc Poised to Rebound

You can’t really say the cannabis bubble has burst. At best, it’s been a leaky balloon that has been gentle, albeit frustratingly, letting investors down since May.

Unfortunately, investor fatigue and frustration has resulted in some collateral damage. Case in point: Liberty Health Sciences Inc (OTCMKTS:LHSIF, CNSX:LHS) stock has lost more than 56% of its value in 2019.

That’s a staggering drop for a company that reported record first-quarter financial results, is opening new dispensaries in Florida and Ohio, has licenses in Massachusetts, is increasing its growing capacity, is expanding its delivery capabilities, and announced new partnerships.

Currently trading for $0.40 per share, LHSIF stock is, in the truest sense, a penny stock. And if the $10.00 level is your definition of a penny stock, Liberty Health Sciences will remain a penny stock for quite some time.

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But there is a lot of room for growth.

Once saner investing comes back to the cannabis stock market, Liberty Health Sciences stock could return to its pre-sell-off level of at least $1.15 per share. That would represent an increase of about 187% from its current price.

LHSIF Stock Overview

Liberty Health Sciences is headquartered in Toronto, Ontario, Canada, but its operations are focused exclusively on the U.S. medical marijuana market.

Through DFMMJ Investments, LLC, its wholly-owned subsidiary, Liberty Health is licensed to produce and sell medical marijuana in Florida. (Source: “Investors,” Liberty Health Sciences Inc, last accessed October 17, 2019.)

In March, Florida passed a bill making it legal to smoke medical marijuana. The Sunshine state, however, is still in its infancy in terms of providing medical marijuana access to the six million qualified patients. (Source: “Investor Presentation April 2019,” Liberty Health Sciences Inc, last accessed October 17, 2019.)

In Canada, there are approximately 245,000 people per license, whereas in Florida, there are 1.5 million people per license.

To meet this segment of the population, Liberty Health Sciences recently completed a retrofit of its 400-acre “Liberty 360° Innovation Campus,” bringing a state total of 230,000 square feet of greenhouses online.

The annual growing capacity at its Florida locations totals 14,200 kilograms (31,305 pounds). That number is expected to climb significantly in fiscal 2020.

To date, Liberty Health Sciences has opened 17 dispensaries in Florida, with more planned to open this year. The company has lease agreements in place for another six locations and is in the negotiation process for another six.

Alas, not everyone can get to an actual dispensary. To better reach that under-served population, Liberty is expanding its delivery capabilities in Florida, providing free door-to-door service statewide.  (Source: “Investors,” Liberty Health Sciences Inc, op. cit.)

Liberty Health Sciences Inc is also forging ahead with plans to expand its operations throughout the United States.

The company was recently awarded various cannabis licenses in Ohio and it opened a dispensary there under the name “Mad River Remedies” in June. Liberty Health also holds licenses in Massachusetts, where it is looking at real estate opportunities.

LHSIF Stock Information

Market Cap $101.7 Million
52-Week High $1.22
52-Week Low $0.25
Shares Outstanding 345.3 Million
Float 281.5 Million
50-Day Moving Average $0.32
200-Day Moving Average $0.46

(Source: “Liberty Health Sciences Inc. (LHSIF),” Yahoo! Finance, last accessed October 17, 2019.)

Record First-Quarter 2020 Results

On July 31, Liberty Health Sciences announced that revenue for its first quarter of fiscal 2020 (ended May 31, 2019) increased 384% year-over-year to $5.5 million. (Source: “Liberty Health Sciences Reports Record First Quarter 2020 Results,” Cision, July 31, 2019.)

Gross profit was $5.0 million, up significantly from the $606,178 in the first quarter of fiscal 2019 (ended May 31, 2018).

Liberty Health Sciences Inc reported a net loss of $3.4 million ($0.01 per share), compared with a first-quarter 2019 net loss of $3.2 million (also $0.01 per share).

Liberty ended the first quarter of fiscal 2020 with cash and term deposits of $5.0 million, compared with $13.3 million at the end of February.

During the first quarter of fiscal 2020, Liberty Health Sciences also did the following:

  • Opened 16 new dispensaries in Florida
  • Announced partnerships with Papa’s Herb and Lemon and Grass to offer new products
  • Completed the cultivation portion of its Liberty 360° retrofit, bringing 190,000 square feet of greenhouses online

Analyst Take

Liberty Health Sciences Inc is a great U.S.-focused marijuana penny stock that has seen its share price held back by broader investor fatigue.

The company has been doing everything it needs to do in order to prove itself to investors: increasing its patient count, expanding its portfolio of products, building out its growing capacity, opening new dispensaries, announcing partnerships, and reporting record financial results.

It’s only a matter of time before the rest of the stock market wakes up to what Liberty Health Sciences has been doing.