Shares in ECS Botanics (ASX: ECS) rose by more than 22 per cent this morning after the Victorian medicinal cannabis grower and manufacturer announced its third supply contract win in just over three months, taking the total value of agreements reached since late June to $35.9 million.
The company has secured a binding offtake agreement to supply an estimated $24 million worth of medicinal cannabis dried flower over the next five years to Perth-based MediCann Health, with the first volumes set to commence in January 2024.
The contract is worth roughly double the two offtake agreements secured on 26 June with Melbourne-based Entoura and Precision Pharmaceuticals in Sydney, valued at a combined $11.9 million. The bulk of that sum will come from Entoura under a three-year contract, but the $1.7 million deal with Precision Pharmaceuticals will be reviewed annually and could end up higher over time.
Today's news is hot on the heels of a record revenue result for ECS Botanics of $15.6 million for FY23, up 117 per cent year-on-year, outpacing production growth of 51 per cent to 4.2 tonnes. The group also notched its first ever net profit before tax from continuing operations for the year, and reported earnings of $1.6 million.
ECS Botanics highlights these three offtake agreements underscore its strong business-to-business (B2B) presence and positive outcomes from recent enhancements to capacity and production.
New protective cropping enclosures and production enhancements have been aimed at bolstering crop yields across additional outdoor fields and extending growing seasons through improvements to protective cropping enclosures.
"We are excited to announce the expansion of our partnership with MediCann through this newly extended, long-term supply agreement," says ECS managing director Nan-Maree Schoerie.
"MediCann's dedication to putting patients at the forefront of their business aligns perfectly with our own commitment to delivering top-tier medicinal cannabis.
"Our expertise in cultivating and manufacturing cannabis, combined with our shared focus on patient wellbeing, inspires us to continue to provide outstanding medicine to companies such as MediCann."
Schoerie says the deal not only reinforces ECS Botanics' dedication to meeting the growing demand for affordable, accessible, and effective medicinal cannabis products but also marks another milestone after the two June agreements.
"These partnerships highlight the strong local demand for our GMP certified, pharmaceutical-grade cannabis and provide ECS with a solid foundation to continue to deliver profitable growth," she says.
MediCann founder and CEO Matt Shales says it has been highly rewarding to work closely with ECS over many years.
"We are delighted to strengthen our partnership even further as we secure an exclusive long-term supply agreement with ECS Botanics for its high-quality Australian grown flowers," he says.
"We look forward to continuing our mission to improve the quality of life of people in need of these products and to continue to build on our partnership with ECS Botanics for the long term."
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