Aleafia Health Inc. (TSX: ALEF, OTC: ALEAF, FRA: ARAH)
(“
Aleafia Health” or the
“
Company”) is pleased to provide a corporate
update and report its financial results for the year-ended December
31, 2018. Aleafia Health has filed today its audited consolidated
financial statements and related management’s discussion and
analysis, both of which are available on Aleafia Health’s profile
at www.SEDAR.com. All financial information in this press
release is reported in Canadian dollars, unless otherwise
indicated.
“2018 saw Aleafia Health build the foundation for a breakthrough
2019 and beyond. We believe that our strategically placed assets,
strong management team and distribution channels will allow us to
scale our global mission of growing, processing and selling
high-margin, value-added cannabis health and wellness products,”
said Aleafia Health CEO Geoffrey Benic. “It is a testament to the
executional capabilities and commitment of our team that Aleafia
Health has grown from a pre-revenue business to one of the largest
licensed producers in under one year.”
Added Benic, “Leveraging our global distribution platform,
brands and data-driven production expertise, requires a significant
increase in cannabis supply and extraction capacity. This has been
the strategy we have executed on since day one and 2019 will see
this objective become reality. With the buildout of three
production facilities nearing completion and major supply
agreements coming online, we now have the assets in place to scale
our cannabis health and wellness vision globally.”
Expenses and Revenues
Aleafia Health 2018 total revenue was $3.3 million (with three
reporting quarters), compared to $nil in 2017. Pro-forma combined
Aleafia Health and Emblem revenues in 2018 were $11.3 million,
compared to combined Aleafia Health and Emblem 2017 revenues of
$2.7 million, a year-over-year increase of 327 per cent. The
Company experienced a net loss from operations in 2018, excluding
share-based compensation, of $9.7 million. Aleafia Health gross
profit in 2018 was $1.6 million. Emblem experienced a net loss from
operations of $24.3 million. The Company maintains a strong balance
sheet for continued investments and the completion of its three
facility buildouts. Aleafia Health and Emblem had combined cash on
hand of $63.2 million at December 31, 2018. All references to
Emblem financials are taken from the Emblem 2018 audited
consolidated financial statements.
2019 Outlook & Catalysts
Following the anticipated expansion of the three Aleafia Health
production facilities, together with confirmed supply agreements,
the Company expects to reach an annual production capacity of
138,000 kg of dried flower, and extraction capacity of 50,000
kg.
160,000 sq. ft. Niagara Greenhouse: The
Company’s modern, automated Niagara Greenhouse is now in a
plant-ready state, with complete construction and retrofitting of
the facility expected to be completed in May 2019. The Company is
also allocating space at its operational Port Perry and Paris
indoor growing facilities for clone propagation, to ensure adequate
starter plant materials to begin cultivation at Niagara immediately
upon receipt of regulatory approval.
60,000 kg Port Perry Outdoor Grow: In 2018, the
Company received local zoning approval for a 26-acre low-cost
outdoor grow (the “Outdoor Grow”) on prime
agricultural farmland adjacent to its operational Port Perry
facility. The Company expects to bring the Outdoor Grow to a
plant-ready state in the next week, with perimeter fencing and
other required security measures now nearing completion. The
Company expects to produce 60,000 kg annually, following a full
growing season.
50,000 kg Extraction Capacity with Phase II Paris
Expansion: The Phase II expansion of Aleafia Health’s
licensed and operational Paris processing facility will see the
Company exponentially scale its current high-margin value-added
cannabis production capacity under the Emblem medical and Symbl
adult-use brands. Construction of the Phase II expansion is
expected to be completed in June 2019, with all necessary equipment
in place to begin production by mid-Q3 2019. Additionally, the
Company will offer tolling and white label services to other
licensed producers looking to leverage the Company’s extraction and
packaging capabilities.
175,000 kg, Five-Year Supply Agreement: The
Company intends to leverage the benefit of preferred wholesale
pricing under existing multi-year supply agreements, anticipating
our first shipment of dried flower and crude resin from Aphria Inc.
in mid-2019 as part of the largest ever supply agreement between
licensed producers. Aleafia Health will also leverage the
three-year, 9,000 kg supply agreement with Natura Naturals Holdings
Inc., a wholly-owned subsidiary of Tilray Inc.
Aleafia Health 2018
Highlights
Strengthened Management Team: On June 28, 2018,
seasoned logistics entrepreneur and former UPS executive Geoffrey
Benic was appointed as Aleafia Health CEO. The Aleafia Health
management team has since been augmented with critical hires made
from the ranks of investment banking, cannabis cultivation, IT and
eCommerce, medicine and clinic operations among other disciplines.
CFO Benjamin Ferdinand, appointed on August 2, 2018, is an
investment banking executive formerly with JP Morgan, Moelis and
BMO. Most recently, Ferdinand led Finance, Strategy and Corporate
Development for TMX Group, the parent company of the Toronto Stock
Exchange. Chief Marketing & Technology Officer Trevor Newell,
appointed on August 14, 2018, was the co-founder of Shop.ca, the
precursor to Amazon in Canada with over 15 million products listed.
SVP of Production Lucas Escott, appointed on April 12, 2018, has
overseen and operated five cannabis cultivation facilities and was
the co-founder of Licensed Producer Mettrum, which was sold to
Canopy Growth for $430 million. Chief Medical Officer Dr. Michael
Verbora, appointed on April 24, 2018, is a foremost global expert
on cannabinoid therapy and has undertaken over 5,000 medical
patient cannabinoid therapy encounters to date.
Enhanced Corporate Governance: The Company has
prioritized strengthening corporate
governance practices under the leadership of
its Board of Directors and Chairman Julian Fantino in order to
address certain best practices suggested by North
American securities regulators and senior stock exchanges. In 2018,
the Board formed three new
important governance related Board committees; (i) the
Audit Committee, currently comprised of Lea
Ray (Chair), Daniel Milliard and Mark Sandler; (ii) the
Governance Committee, currently comprised of Loreto
Grimaldi, Raf Souccar, Lea Ray and Mark Sandler (Chair); and
(iii) the Human Resources and Compensation Committee, comprised of
Loreto Grimaldi (Chair), Raf Souccar and Bill Stewart.
National Clinic & Education Centre Network:
On March 26, 2018 Aleafia Health closed its business combination
with Canabo Medical Clinics for $30.2 million. Subsequent to the
2018 year-end, Aleafia Health acquired Emblem’s GrowWise Health
clinics and education centres. Together, Canabo and GrowWise have
processed 60,000 individual patients to date. As our supply
increases, the Company will prioritize securing medical products
for GrowWise and Canabo patients and increasing its base of
registered patients who purchase medical products. This will see
the Company's clinics and education centres realize their full
potential as a consistent patient acquisition source.
National Distribution Platform: In 2018, Emblem
began supplying provincial government cannabis wholesalers in
provinces representing two-thirds of the Canadian population and
fulfilled 100 per cent of its order commitments, following the
launch of its adult-use brand Symbl. Through our wholly-owned
subsidiaries, we maintain a robust adult-use retail dispensary
presence via three strategic relationships (i) Compass Cannabis
Clinics (“Compass”) for Starbuds Canada, in addition to our
ownership interest in Compass; (ii) an equity stake with leading
cannabis retailer Fire & Flower; (iii) a 10 per cent interest
in One Plant (Retail) Corp., a cannabis retail joint-venture with
Serruya Private Equity. Additionally, the Company has a supply
agreement to sell branded Emblem medical cannabis products to
Shoppers Drug Mart, Canada’s largest pharmacy chain.
International Expansion: Our Paris Phase II
Expansion includes a 5,000 sq. ft. lab designed and currently being
built to GMP standards, enabling access to export value added
products to the EU market. Additionally, on November 2, 2018,
Aleafia Health expanded its international footprint with a
commitment to invest in Australian licensed cannabis cultivator
CannaPacific Pty. Limited (“CannaPacific”), which
closed subsequent to the 2018 fiscal year end. Subsequent to the
reporting period, the Company closed the transaction, and
subsequently made an increased investment in CannaPacific
immediately following the closing of its acquisition of a 108,000
sq. ft. greenhouse for cannabis cultivation in New South Wales,
Australia.
Data Analytics and Product R&D: Aleafia
Health collects millions of data points across patient interaction
with doctors, nurses and educators including diagnosis, treatment,
and monitoring forming the Company’s unique and highly
differentiated 10 million point medical cannabis dataset. Our data
leverages an enterprise-wide proprietary platform data set on
Amazon AWS with market leading data visualization and business
insights tools powered by Google Data Studio. These efforts are
aimed at developing evidence-based, proprietary treatment methods
and products for chronic illnesses including pain, insomnia,
anxiety and eating disorders. Current Aleafia Health research
initiatives include an insomnia study in partnership with Cronos
Group, a cannabinoid pharmacogenetics study with Guided 420
Genetics and U.S.-based AKESOgen, and a recently published study in
the journal Cannabis and Cannabinoid Research on cannabis and
benzodiazepines.
Management Call &
Presentation
Date: April 29,
2019Time: 8:30 a.m.
EDTUSA/Canada Toll-Free Participant Call-in: (866)
679-9046; Passcode: 1947658International Toll-Free
Participant Call-in: (409) 217-8323; Passcode: 1947658
Webcast Link:
https://edge.media-server.com/m6/p/f78u3o68
This conference call will be webcast live over the internet and
can be accessed through the link provided above. Audio of the
call will be available to participants through both the conference
call line and webcast, however questions to management may only be
submitted via the webcast. Participants who miss the live call can
view a replay at any time via the link provided.
For Investor and Media Relations, please
contact:
Nicholas Bergamini, VP, Public
Affairs416-860-5665IR@AleafiaHealth.comLEARN MORE:
www.AleafiaHealth.com
About Aleafia Health:
Aleafia Health is a leading, vertically integrated cannabis
health and wellness company with four primary business units:
Cannabis Cultivation & Products, Health & Wellness Clinics,
Cannabis Education, and Consumer Experience with ecommerce, retail
distribution and provincial supply agreements.
Aleafia Health owns three major cannabis product &
cultivation, two of which are licensed and operational. The Company
produces a diverse portfolio of commercially proven, high-margin
derivative products including oils, capsules and sprays. Aleafia
Health operates the largest national network of medical cannabis
clinics and education centres staffed by MDs, nurse practitioners
and educators.
Aleafia Health maintains a medical cannabis dataset with over 10
million data points to inform proprietary illness specific product
development and treatment best practices. The Company is committed
to creating sustainable shareholder value and has been named the
2019 top performing company of the year by the TSX Venture
Exchange.
Forward Looking Information
This news release contains forward-looking information within
the meaning of applicable Canadian and United States securities
laws. Often, but not always, forward-looking information can be
identified by the use of words such as "plans", "expects" or "does
not expect", "is expected", "estimates", "intends", "anticipates"
or "does not anticipate", or "believes", or variations of such
words and phrases or state that certain actions, events or results
"may", "could", "would", "might" or "will" be taken, occur or be
achieved. Forward-looking information involves known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Aleafia Health or its
subsidiaries to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking information contained in this news release.
Examples of such statements include statements with respect to the
future market share achieved in recreational markets, product
development, clinical trial work, and planned expansion
activities. Risks, uncertainties and other factors involved
with forward-looking information could cause actual events,
results, performance, prospects and opportunities to differ
materially from those expressed or implied by such forward-looking
information, including risks contained in the Company's annual
information filed with Canadian securities regulators available on
the Company's issuer profile on SEDAR at www.sedar.com.
Although the Company believes that the assumptions and factors used
in preparing the forward-looking information in this news release
are reasonable, undue reliance should not be placed on such
information and no assurance can be given that such events will
occur in the disclosed time frames or at all. The forward-looking
information 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 information to
reflect new information, subsequent events or otherwise unless
required by applicable securities legislation.