Brenda O’Farrell
Investing.com – Shares of Medipharm Labs Corp (TSX:LABS) dropped more than 18% in morning trading Monday, hitting $3.05, following news announced last Friday evening that its subsidiary, MediPharm Labs Inc. is suing a licensed producer for non-payment of $9.8 million for private label cannabis oil.
The suit, filed in Ontario Superior Court, against an unnamed licensed producer, claims the producer has been working with MediPharm since last February.
According to a statement released late last Friday, “the claim relates to, among other things, the payment of outstanding amounts of approximately $9.8 million pursuant to the private label cannabis oil sale agreement in MediPharm Labs’ Feb. 11, 2019, news release.”
The original deal struck last year was worth $35 million in the first year. The contract also included an option for an additional $13.5 million in product if needed.
Medipharm’s last financial earnings report issued in November, which covered the three-month period ending Sept. 30, 2019, showed it had $40.87 million in receivables, up substantially from the $6.4 million at the end of December 2018.
Medipharm specializes in the production of purified pharmaceutical quality cannabis oil and concentrates used in a variety of derivative products.