Q2 2021 Quarterly Update

Epsilon Healthcare Limited (ASX:EPN) (the Company or Epsilon) reports on its activities and provides its Appendix 4C for the quarter ended 30 June 2021.

The Company’s capital conservation strategy as led by the Group CEO and COO has delivered another strong result in Q2 2021, with net cash used in operating activities reduced by 50% in Q2  2021 over Q1 2021, resulting in the Company having $3.1 million cash in bank at the end of Q2 2021.

Key Points

• Further significant reduction in net cash used in operating activities of 50% over Q1 2021 following receipt of 2020 R&D tax incentive;
• Divisional Manager of Cannabis Operations appointed in Q2 2021 – ex Project Lead for Valens Australia Project for Cannvalate and General Manager of Canopy Farms (Australia);
• Southport Facility capabilities continue to be improved, with further investment in filtration and other additional process steps to enhance capabilities;
• Tetra Health continues to outperform, with 48% increase in products dispensed compared to Q1 2021, and record unaudited half year revenue of over $785k;
• Strong closing cash position at end of quarter of $3.1 million notwithstanding material debt repayments of $477k during the quarter;

Medicinal Cannabis Operations

During the quarter, the Company has invested further in the Southport Facility to add new production capabilities, including improved filtration technologies and has now commenced dried flower packaging for customers under a licence received from the TGA earlier this year.

Tetra Health Continues to Expand Market Presence

Tetra Health, the Company’s clinic network, has continued to report strong growth, with record revenues for the half year to 30 June 2021. Unaudited revenue for the Tetra business exceeded $750,000 for the half year and is a record 6 month run rate.

New Zealand Update

The Company refers to its announcement in June 2020 with respect to a production agreement with Medleaf Therapeutics which provided for an initial order of 2,250 bottles of full spectrum CBD medicines. As disclosed in the Q3 2020 Quarterly Update (ASX Release: 30 October 2020), the Company’s fulfilment of this order within the original delivery timeframes was frustrated as a result of delays in securing the required approvals from the New Zealand government for the supply, as well as associated product stability testing required by the New Zealand government.

Debt Repayment and Debt Facility Update

The Company notes that it has a debt facility due for repayment on or before 31 October 2021, with a current balance of $3.52 million owing following repayments of $477k during the quarter.

Additional Disclosure

As required by the ASX Listing Rules, the Company notes that payments made to related parties and their associates in Q2 2021 were all related to remuneration for services under existing services agreements, with no non-remuneration related payments made in the quarter.

Read the full announcement here.

Appointment of New Directors

Epsilon Healthcare Limited (ASX:EPN) (the Company or Epsilon) is pleased to announce the appointment of two new directors of Epsilon, effective 1 August 2021. The new appointments bring significant experience to the Company across pharmaceuticals, research and development, operational optimisation, and supply chain logistics as the Company progresses towards being a toll and contract pharmaceutical manufacturer for the medicinal cannabis industry.

Key Points

• Dr Rob Jenny – experienced pharmaceutical executive – appointed an Executive Director under services agreement with Cannvalate
• Mr Simon Rowe – operational transformation and optimisation expert – appointed Non- Executive Director
• Dr Jenny and Mr Rowe join Chairman Steven Xu towards delivering on new corporate initiatives introduced by the Senior Executive Team of Epsilon

Dr Rob Jenny – Executive Director

Dr Rob Jenny is currently an executive at Cannvalate – an Australian medicinal cannabis services company - where he manages their business development activities in the Australian and New Zealand market. Rob has previously held management and research roles including at Ensign Laboratories – one of Australia’s largest contract pharmaceutical manufacturers - Immunoglobal Group, and Monash University.

Mr Simon Rowe – Non-Executive Director

Mr Simon Rowe is currently the Supply Chain Transformation & Operations Leader ANZ at Kimberly-Clark – a Fortune 500 personal care company. Prior to that, Simon has held associate director and senior manager level roles within KPMG and EY advisory specialising in operational transformation and optimisation.

Epsilon’s Chairman, Steven Xu

“I’m pleased to have both Dr Rob Jenny and Mr Simon Rowe join the Epsilon board bringing their combined wealth of relevant experience across pharmaceutical manufacturing, research and development, and operational transformation and optimisation as we look to significantly scale up Epsilon’s core pharmaceutical contract and toll manufacturing operation at the Southport Facility in the near term.”

Steven Xu, Epsilon’s Chairman

Read the full announcement here.

Directors' Interest Notices

Appendix 3X: Initial Director’s Interest Notice

We (the entity) give ASX the following information under listing rule 3.19A.1 and as agent for the director for the purposes of section 205G of the Corporations Act.

Appendix 3X: Initial Director’s Interest Notice

We (the entity) give ASX the following information under listing rule 3.19A.1 and as agent for the director for the purposes of section 205G of the Corporations Act.

Appendix 3Z: Initial Director’s Interest Notice

We (the entity) give ASX the following information under listing rule 3.19A.3 and as agent for the director for the purposes of section 205G of the Corporations Act.

Read the full announcement here.

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