Aphria Announces Third Quarter Fiscal 2019 Financial Results
Provides update regarding Green Growth Brands bid
Appoints
Net revenue of
Current annualized production capacity of 115,000 kilograms
"I am proud of the efforts of our over 1,000 employees worldwide as we continue to position
Non-Cash Impairment Charge on LATAM Assets
Key Operating Highlights
- Net revenue of
$73.6 million up 240% from prior quarter and 617% from prior year - Ended quarter with strong balance sheet and liquidity, including
$107.5 million of cash and$27.2 million of liquid marketable securities, to fund planned Canadian and International growth - Special Committee concluded review and found that the acquisition of LATAM assets was within an acceptable range, albeit near the top of the range of observable valuation metrics; the Company's investment in LATAM assets is approximately
$225 million , after recording the aforementioned non-cash impairment charge, which is approximately$30 million more than the original agreed purchase price of approximately$195 million - Announced early termination and liquidation of interests in Liberty Health Sciences, Inc., in line with the Company's commitment to enhanced corporate governance practices and strategic priorities, while at the same time generating cash without dilution to shareholders
- Signed license agreement with Manna Molecular Science to develop state-of-the-art cannabis transdermal patches
- Signed an exclusive agreement with
Toronto -basedUNOapp Inc. to collaborate on the development of technology and analytics solutions forCanada 's adult-use cannabis industry - Signed an exclusive agreement with the
Colombian Medical Federation , a national guild that oversees the ethical exercise of the medical profession inColombia , in order to jointly develop an academic curriculum on the medicinal use of cannabis - Signed LOI for exclusive supply agreement with
Insumos Medicos, S.A. , a Paraguayan pharmaceutical manufacturing, import and distribution company, to provide medical cannabis inParaguay - Signed LOI with the Argentinian state-owned Cannabis Avatãra Sociedad del Estado to enter into a co-operation agreement regarding the cultivation of cannabis that will expand the Company's strategic Argentinian operations, subject to the issuance of a cultivation license
- Announced the first transfer of plant cuttings from four of the Company's cannabis strains to
Denmark -based Schroll Medical as part of the Company's previously announced strategic partnership - Closed the acquisition of
CC Pharma GmbH ("CC Pharma"), a leading distributor of pharmaceutical products, including medical cannabis, to more than 13,000 pharmacies throughoutGermany andEurope
Subsequent Events
- Aphria One received
Health Canada approval for Part IV and V expansions, bringing the total annualized production capacity at Aphria One to 110,000 kilograms and total Company capacity to 115,000 kilograms - Introduced CannRelief, a CBD-Based nutraceutical and cosmetics product line, for the German market distributed by the Company's subsidiary, CC Pharma
- Awarded provisional approval in
Germany for cannabis cultivation license, including five lots each with a minimum annual capacity of 200 kilograms
Green Growth Brands Update
In a separate release issued today, the Company also announced that it has entered into a series of transactions that will accelerate the expiry date of the unsolicited offer launched by Green Growth Brands Inc. and will provide up to an additional
Board of Directors Appointments
The Board appointed two new independent directors, effective today. Walter Robb and
Key Financial Highlights
Three months ended |
Three months ended |
|
|
|
|
Net revenue |
|
|
Gross profit |
|
|
Adjusted gross profit 1 |
|
|
Adjusted gross margin 1 |
18.2% |
77.1% |
Net income (loss) |
( |
|
Adjusted EBITDA 1 |
( |
|
Q3-2019 |
Q2-2019 |
|
Net revenue |
|
|
Kilograms (or kilogram equivalents) sold 1 |
2,636.5 |
3,408.9 |
Cash cost to produce dried cannabis / gram 1 |
|
|
"All-in" cost of goods sold / gram 1 |
|
|
Adjusted EBITDA from Canadian Cannabis Operations 1 |
( |
( |
Cash and cash equivalents & marketable securities |
|
|
Working capital |
|
|
Capital and intangible asset expenditures - wholly-owned subsidiaries 1 |
|
|
Net revenue for the three months ended
The average retail selling price of medical cannabis (exclusive of wholesale), before excise tax, increased to
Adjusted gross profit for the third quarter was
Selling, general and administrative costs in the quarter rose to
Net loss for the third quarter of 2019 was
Adjusted EBITDA loss from Canadian cannabis operations for the third quarter was
In this press release, reference is made to adjusted gross profit, adjusted gross margin, adjusted net loss, adjusted EBITDA loss from Canadian cannabis operations, adjusted EBITDA loss from
Conference Call
There will also be a simultaneous, live webcast available on the Investors section of
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About
For more information, visit: aphria.ca
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: Certain information in this news release constitutes forward-looking statements under applicable securities laws. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Forward looking statements are often identified by terms such as "may", "should", "anticipate", "expect", "potential", "believe", "intend" or the negative of these terms and similar expressions. Forward-looking statements in this news release include, but are not limited to, statements with respect to internal expectations, estimated margins, expectations with respect to actual production volumes, expectations for future growing capacity and costs, the completion of any capital project or expansions, and expectations with respect to future production costs. Forward-looking statements necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; marketing costs; loss of markets; future legislative and regulatory developments involving cannabis; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favorable terms; the cannabis industry in
Readers are cautioned that the foregoing list is not exhaustive and should consider as other factors discussed under the heading "Risk Factors" in
The forward-looking statements included in this news release are made as of the date of this news release and the Company does not undertake an obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless required by applicable securities laws.
Forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss |
|||||||
(In Canadian dollars) |
|||||||
(Unaudited) |
|||||||
For the three months ended |
For the nine months ended |
||||||
2019 |
2018 |
2019 |
2018 |
||||
Revenue from cannabis produced |
$ 17,862 |
$ 10,267 |
$ 52,816 |
$ 24,891 |
|||
Distribution revenue |
57,599 |
-- |
58,745 |
-- |
|||
Other revenue |
545 |
-- |
2,261 |
-- |
|||
Excise taxes |
(2,424) |
-- |
(5,280) |
-- |
|||
Net revenue |
73,582 |
10,267 |
108,542 |
24,891 |
|||
Production costs |
10,175 |
2,355 |
24,477 |
6,447 |
|||
Cost of goods purchased |
49,745 |
-- |
50,856 |
-- |
|||
Other costs of sales |
296 |
-- |
1,228 |
-- |
|||
Gross profit before fair value adjustments |
13,366 |
7,912 |
31,981 |
18,444 |
|||
Fair value adjustment on sale of inventory |
5,542 |
3,443 |
18,075 |
7,250 |
|||
Fair value adjustment on growth of biological assets |
(9,471) |
(4,101) |
(23,136) |
(11,481) |
|||
Gross profit |
17,295 |
8,570 |
37,042 |
22,675 |
|||
Operating expenses: |
|||||||
General and administrative |
22,434 |
2,794 |
43,561 |
6,502 |
|||
Share-based compensation |
14,300 |
5,959 |
22,996 |
10,668 |
|||
Selling, marketing and promotion |
6,948 |
2,991 |
20,025 |
7,758 |
|||
Amortization |
3,665 |
755 |
9,556 |
1,270 |
|||
Research and development |
223 |
110 |
1,097 |
280 |
|||
Impairment |
58,039 |
-- |
58,039 |
-- |
|||
Transaction costs |
942 |
4,253 |
2,930 |
4,253 |
|||
106,551 |
16,862 |
158,204 |
30,731 |
||||
Operating income (loss) |
(89,256) |
(8,292) |
(121,162) |
(8,056) |
|||
Non-operating income (loss) |
(30,416) |
25,308 |
89,304 |
50,635 |
|||
Income (loss) before income taxes (recovery) |
(119,672) |
17,016 |
(31,858) |
42,579 |
|||
Income taxes (recovery) |
(11,463) |
4,072 |
401 |
8,139 |
|||
Net income (loss) |
(108,209) |
12,944 |
(32,259) |
34,440 |
|||
Other comprehensive gain (loss) |
|||||||
Other comprehensive gain (loss) |
(61) |
-- |
(61) |
(801) |
|||
Net comprehensive income (loss) |
$ (108,270) |
$ 12,944 |
$ (32,320) |
$ 33,639 |
|||
Total comprehensive income (loss) is attributable to: |
|||||||
Shareholders of |
(107,886) |
12,945 |
(31,529) |
33,640 |
|||
Non-controlling interest |
(384) |
(1) |
(791) |
(1) |
|||
$ (108,270) |
$ 12,944 |
$ (32,320) |
$ 33,639 |
||||
Weighted average number of common shares - basic |
250,149,598 |
161,120,698 |
240,106,147 |
147,274,372 |
|||
Weighted average number of common shares - diluted |
250,149,598 |
167,494,603 |
240,106,147 |
153,189,773 |
|||
Earnings (loss) per share - basic |
|
$ 0.08 |
|
$ 0.23 |
|||
Earnings (loss) per share - diluted |
|
$ 0.08 |
|
$ 0.22 |
Condensed Interim Consolidated Statements of Financial Position |
|||||
(In Canadian dollars) |
|||||
|
|
||||
Assets |
|||||
Current assets |
|||||
Cash and cash equivalents |
$ 107,502 |
$ 59,737 |
|||
Marketable securities |
27,234 |
45,062 |
|||
Accounts receivable |
44,142 |
3,386 |
|||
Other current assets |
24,615 |
14,384 |
|||
Inventory |
86,227 |
22,150 |
|||
Biological assets |
7,261 |
7,331 |
|||
Assets held for sale |
-- |
40,620 |
|||
Current portion of convertible notes receivable |
11,500 |
1,942 |
|||
308,481 |
194,612 |
||||
Capital assets |
466,349 |
303,151 |
|||
Intangible assets |
388,125 |
226,444 |
|||
Convertible notes receivable |
18,542 |
16,129 |
|||
Interest in equity investees |
9,604 |
4,966 |
|||
Long-term investments |
125,325 |
46,028 |
|||
Promissory notes receivable |
61,809 |
-- |
|||
|
674,412 |
522,762 |
|||
$ 2,052,647 |
$ 1,314,092 |
||||
Liabilities |
|||||
Current liabilities |
|||||
Accounts payable and accrued liabilities |
$ 125,598 |
$ 31,517 |
|||
Income taxes payable |
1,568 |
3,584 |
|||
Deferred revenue |
28,171 |
2,607 |
|||
Current portion of promissory note payable |
489 |
610 |
|||
Current portion of long-term debt |
14,612 |
2,140 |
|||
Current portion of option payment liability |
6,765 |
-- |
|||
Current portion of derivative liability |
-- |
3,396 |
|||
177,203 |
43,854 |
||||
Long-term liabilities |
|||||
Long-term debt |
62,279 |
28,337 |
|||
Option payment liability |
14,277 |
-- |
|||
Derivative liability |
-- |
9,055 |
|||
Deferred tax liability |
86,452 |
59,253 |
|||
340,211 |
140,499 |
||||
Shareholders' equity |
|||||
Share capital |
1,653,191 |
1,113,981 |
|||
Warrants |
1,336 |
1,375 |
|||
Share-based payment reserve |
33,218 |
22,006 |
|||
Accumulated other comprehensive loss |
(61) |
(801) |
|||
Non-controlling interest |
29,569 |
9,580 |
|||
Retained earnings (deficit) |
(4,817) |
27,452 |
|||
1,712,436 |
1,173,593 |
||||
$ 2,052,647 |
$ 1,314,092 |
For the three months |
For the nine months ended |
||||
2019 |
2018 |
2019 |
2018 |
||
Net income (loss) |
$ (108,209) |
$ 12,944 |
$ (32,259) |
$ 34,440 |
|
Income taxes (recovery) |
(11,463) |
4,072 |
401 |
8,139 |
|
Non-operating (income) loss |
30,416 |
(25,308) |
(89,304) |
(50,635) |
|
Amortization |
5,469 |
1,465 |
14,329 |
2,869 |
|
Share-based compensation |
14,300 |
5,959 |
22,996 |
10,668 |
|
Fair value adjustment on sale of inventory |
5,542 |
3,443 |
18,075 |
7,250 |
|
Fair value adjustment on growth of biological assets |
(9,471) |
(4,101) |
(23,136) |
(11,481) |
|
Impairment |
58,039 |
-- |
58,039 |
-- |
|
Transaction costs |
942 |
4,253 |
2,930 |
4,253 |
|
Adjusted EBITDA from |
631 |
-- |
7,224 |
-- |
|
Adjusted EBITDA from Canadian cannabis |
|||||
operations |
$ (13,804) |
$ 2,727 |
$ (20,705) |
$ 5,503 |
For the three months ended |
For the nine months ended |
|||
2019 |
2018 |
2019 |
2018 |
|
Adjusted EBITDA from Canadian cannabis operations |
$ (13,804) |
$ 2,727 |
$ (20,705) |
$ 5,503 |
Adjusted EBITDA from |
(631) |
-- |
(7,224) |
-- |
Adjusted EBITDA |
$ (14,435) |
$ 2,727 |
$ (27,929) |
$ 5,503 |
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SOURCE
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