Medicine Man Technologies Inc. (OTCMKTS:MDCL) Hits Buy Zone After Revenue And Net Income Beat

Record revenues representing a 168% year-over-year increase explain why Medicine Man Technologies Inc. (OTCMKTS:MDCL) shares are flying high. The confirmation that the acquisition of MedPharm Holdings and Medicine Man Denver will take the company’s annual run rate to over $40 million is another development that continues to ramp up the stock’s market sentiments.

Medicine Man Technologies Price Analysis

Just as was the case in the first quarter, Medicine Man Technologies has continued to edge higher as investors sentiments continue to inch higher. The stock is already up by more than 150% for the year after succumbing to bearish pressure in 2018.

A spike to two-year highs has reaffirmed the stock’s breakout credentials as it continues to outperform the overall cannabis market. A minor correction from the $4 a share handle to the $3 a share level appears to have paved the way for the stock to edge higher as a pullback play.

Standing in the way of the stock registering a new higher high is the $4 a share resistance level. Failure to breach the resistance level could see the stock resorting to trading sideways in a $3 to $4 trading range.

Conversely, a sell-off followed by a close below the $3 a share mark could result in the acceleration of the sell-off back to the $2.30 support level.

What Does Medicine Man Technologies Do?

Medicine Man Technologies casts itself as an integrated operator in the cannabis sector. The company offers consulting cultivation supplies and equipment to licensed cannabis producers, processors, and retailers.

Why is Medicine Man Technologies Surging?

Medicine Man Technologies is flying high after delivering an impressive financial export for FY2018. Revenues for the 12-month ended December 31, 2018, increased 168% to $3.5 million. The company attributes the increase to an increase in new clients as well as expansion into new states that adopted cannabis legalization initiatives.

Gross profit for the year increased 208% to $6.9 million from $2.2 million reported a year earlier. Net income, on the other hand, skyrocketed to $2.2 million compared to a net loss of $5.2 million reported in 2017.

According to Chief Executive Officer, Andy Williams, 2019 is a pivotal year as they work on the next phase of growth.

“Our focus now is to leverage the entire management and leadership experience as we continue to further develop our growth strategies with the two pending acquisitions of Medicine Man Denver and MedPharm Holdings, LLC, expected to close in late 2019 or Q1 2020, in which post-acquisition is expected to generate a minimum of a $40+ million-a-year run rate,” explained Mr.  Williams.

MedPharm and Medicine Man Denver Acquisition

The MedPharm acquisition is a big achievement as the company comes with a cannabis research license that will allow Medicine Man Technologies to come up with pharmaceutical grade products.  In addition, the company’s two licensees MX LLC and MedPharm Iowa should help strengthen Medicine Man Technologies’ brand.

With the acquisition of Medicine Man Denver, Medicine Man Technologies will gain access to 4 Colorado retail locations as well as a 40,000 sq. ft.  cultivation operation. The acquisition is poised to add $25 million of annual revenue.

Medicine Man Denver acquisition would expose the parent company to industry-best harvesting operation and expertise that currently stands at 650 grams per square foot.

“These acquisitions will greatly benefit from our existing relationships in 18 states and seven countries. They will also position us to drive revenue through traditional partnerships only reserved for pharmaceutical companies as the only cannabis company with a federal research license,” explained Mr. Williams.

Separately Medicine Man Technologies has confirmed that one of its investors, Tigran Muradyan has joined the management team as a director of products. Under the role, the new director will work with the executive management team on the development and execution of an array of products and services in the effort of furthering the company’s revenue growth.

Muradyan has since invested $1 million into the company, on the purchase of 600,000 shares previously owned by Joshua Haupt.

What Next For Medicine Man Technologies

Medicine Man Technologies remains well positioned to continue edging higher as investors react to a string of positive developments that underscore underlying growth. After a minor correction, the stock is likely to power through the immediate resistance level, on its way to registering higher highs.

For early movers, the stock should be an exciting pull back play once it powers through the $4 resistance level.

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Disclosure: We have no position in MDCL and have not been compensated for this article.