- Net revenue of $21.7 million up 63% from prior quarter on initial sales to Canadian adult-use market; adjusted gross profit of $10.2 million
- To accelerate the production ramp-up post-Health Canada approvals, yields were lowered to build stockpiles for expanded facilities and to implement highly automated cultivation and harvesting
- Licence applications submitted for facilities expansions; annualized harvest expected to increase to 255,000 kilograms by the end of calendar 2019
- Successfully advanced international growth strategy with significant strategic alliances and investments in Europe and Latin American
- Co-founder Cole Cacciavillani and CEO Vic Neufeld will transition out of roles over the coming months, currently working with Aphria independent Chair Irwin D. Simon and President Jakob Ripshtein to plan succession and ensure orderly transition
Key Operating Highlights
- 92% increase in kilogram equivalents1 sold, reflecting partial period sales from the opening of the Canadian adult-use market, as well as continued sales of medical cannabis to existing and new patients
- Adjusted gross margins of 47% of net revenue, compared to 64% in prior quarter, as expected, due to lower effective selling prices in adult-use market, as well as temporarily lowered yields and higher production costs related to facilities expansion and implementation of automation
- Part IV and V expansions of Aphria One awaiting Health Canada approval; application for cultivation licence at Aphria Diamond submitted and also awaiting Health Canada pre-cultivation inspection
- Announced and closed subsequent to quarter-end of the acquisition of CC Pharma, a leading distributor to pharmacies in Germany
- Closed acquisition of key operations and licenses in strategic Latin America and Caribbean jurisdictions; subsequently established additional strategic alliances in the region to expand the Company's medical cannabis operations and distribution
- Listed on the NYSE, providing shareholders greater liquidity
- Appointed new independent Chair of Board of Directors, Irwin D. Simon, subsequent to quarter-end
- Ended quarter with strong balance sheet and liquidity, including $152.1 million of cash and $32.7 million of liquid marketable securities, to fund announced Canadian and International growth and facilities expansion
Aphria Chief Executive Officer Vic Neufeld, and Co-founder Cole Cacciavillani, are both nearing the end of their five-year journey with the Company and will transition out of their executive roles over the coming months but remain on the Board. Working closely with Irwin D. Simon, Aphria's recently appointed independent Chair, and President Jakob Ripshtein, Mr. Neufeld and Mr. Cacciavillani intend to complete a smooth and responsible transition to a globally-minded executive leadership team for the long-term benefit of the Company's patients, shareholders, customers, and employees.
Aphria Chair Irwin D. Simon commented, "Vic and Cole are consummate entrepreneurs. Thanks to their vision, energy and passion, Aphria has become a global player in an industry that didn't even exist five years ago. On behalf of the entire Aphria team, I want to express my gratitude to both. I look forward to working with them to further build Aphria's leadership team and continue driving long-term value for our patients, customers and employees into the future."
"When the Canadian medical cannabis market opened up five years ago, Cole was growing millions of potted flowers in Leamington, and he understood that cannabis was a natural product extension for the founding team's decades of experience as greenhouse growers in Leamington," said Mr. Neufeld. "Now with legalization and globalization, including a huge market opportunity with positive developments in the U.S., Aphria's next generation of leadership may take the reins. Building and leading a Company like Aphria, which exploded from an idea in late 2013 to our many successes to-date, has been an incredible journey, despite the toll it has taken on health, family and personal priorities."
"Vic and I have worked tirelessly for decades, building great businesses, but now in our sixties, it is time for both of us to step back from the demands of leading a world-class organization. Endless meetings, travel, deadlines, talent search - the list of executive responsibilities will only continue to grow," said Mr. Cacciavillani.
"Succession is the plan. Cole and I have informed the Board, and they have agreed, that we will begin the transition process immediately, and at the appropriate time, we will both step down from executive positions at Aphria. We continue to have the greatest pride in what Aphria has achieved, and its future has never looked brighter. From continued technology advancements, to continued support of scientific developments, to amazing adult-use brands, to globalization strategies, and most of all, the hundreds of dedicated passionate team members that have joined Aphria, we are well positioned to be a dominant player," concluded Mr. Neufeld.
The Board has requested that, following the transition, Mr. Neufeld and Mr. Cacciavillani continue to apply their knowledge and expertise as special advisors to both the Chair and the President, ensuring a smooth transition of institutional experience and strategic advice until a new CEO is appointed.
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