Aphria has been one of the more entertaining companies to watch in the cannabis industry of late – with both bumpy coverage/allegations in the business press, plus speculation regarding a potential deal with Green Growth Brands.
Today (January 11) Aphria revealed its quarterly results for its second quarter, covering the three months to end of November 2018.
Aphria posted net revenue of C$21.7m in the period, up 63% from the prior quarter – growth it largely put down to initial saes on the now-legal adult use market in Canada. This figure was also up 155% on the C$8.5m revenue posted in the same period of the prior year.
The firm’s adjusted gross profit in the quarter was C$10.2m, while its net income stood at C$54.8 million, compared to C$21.2 million in the previous quarter, and $6.5 million for the same period last year.
Aphria, which temporarily finds itself without a CEO following the departure of Vic Neufeld from the role, saw its medical cannabis sales decline marginally from 1,466.2 kilogram equivalents sold in the previous period to 1,443.6 kilogram equivalents sold in the second quarter.
Cannabis oil sales, as a percentage of volume, decreased to 19% of overall sales from 39% in the prior quarter, reflecting the higher percent of dry bud sold in the adult-use market.
“In our second quarter, Aphria continued strengthening its position as a premier supplier of medical- and adult-use cannabis to the Canadian market, building long-term competitive advantage and developing key global opportunities,” said Neufeld.
“This is the first quarter to partially include adult-use sales, helping to drive 63% quarter-over-quarter net revenue growth, as did continued strength in sales to the medical-use market. As expected, gross margins declined, reflecting lower effective selling prices in the adult-use market, as well as temporarily lower yields and higher production costs in the quarter as we moved aggressively to build out production facilities and implement new automation processes.
“A top priority for Aphria is expanding production and automation to secure our long-term cost and scale advantages. The Part IV and V expansions of Aphria One are now complete and awaiting Health Canada approval, while an application for a cultivation licence at Aphria Diamond has been submitted and is awaiting pre-cultivation inspection. Based on this, we now expect to generate first sales from these new facilities later in the calendar year, pending Health Canada approvals, with our annualized harvest reaching 255,000 kilograms, compared to 35,000 kilograms currently, by the end of calendar 2019.”
“We finished the quarter with a strong balance sheet and sufficient capital to fund our previously announced plans internationally.”
Vic Neufeld, Aphria
He added: “In the second quarter we also positioned the Company for long-term growth in key global markets with strategic alliances, targeted investments and disciplined acquisitions.
“We’re excited to have just closed the previously announced acquisition of CC Pharma, based in Germany, which distributes pharmaceuticals and medical cannabis to over 13,000 pharmacies. This transaction positions Aphria to be a leading player in the European medical cannabis market. We’re equally optimistic about our recently announced alliances and acquisitions of highly strategic licenses and operations in Latin America and the Caribbean’s most attractive emerging cannabis markets, including Colombia, Argentina, Paraguay and Jamaica.
“A strong foundation is critical to sustaining Aphria’s leadership in the global cannabis market and delivering long-term profitable growth. To that end, we finished the quarter with a strong balance sheet and sufficient capital to fund our previously announced plans internationally.”Cannabis Business Worldwide