It’s the tale of the Canadian public cannabis operator. Aleafia Health (TSX: AH) this morning reported its first quarter financial results, and quite frankly, they aren’t pretty. The company saw revenues decline 53.5% on a quarter over quarter basis, with revenues falling to $7.1 million for the first quarter of 2021.
The company saw revenues decline on both a quarter over quarter and year over year basis. Revenues of $7.1 million compare to the record $15.2 million reported in Q4 2020, and the $14.6 million reported in Q1 2020. Gross profits before fair value adjustments meanwhile amounted to $3.3 million, while operating expenses came in at $11.3 million, leaving investors to question what the path forward is for the company.
Most notably however, these results follow comments by the company on February 2, wherein they stated, “In the first month of 2021, adult-use purchase orders have nearly surpassed the total order value in Q4 2020,” leaving investors expecting a strong quarter.
Operating expenses consisted of $4.6 million in general and administrative expenses, followed by $2.3 million in wages and benefits and $1.5 million in business transaction costs. The company posted an overall operating loss of $8.9 million. This was pushed deeper in the red by interest expenses of $2.2 million, resulting in a net loss of $11.2 million for the company for the quarter.
Commentary from the firms CEO is the corresponding news release also did little to clear up why the company saw its revenues slashed in half for the quarter. Instead, CEO Geoffrey Benic acted if things were normal, stating, “This quarter saw us achieve important executional breakthroughs as we realized the exponential increase of our cannabis product portfolio. Likewise, as we benefit from greater scale, we are demonstrating substantial improvements in the profitability of our core adult-use and medical cannabis product sales.”
It’s unclear what profitability Benic is referring to specifically, as the company posted a negative operating activity cash flow of $8.8 million for the three month period, with the firms cash position overall declined from $30.5 million to $17.7 million – after the company closed a $22.7 million bought deal offering.
Aleafia Health last traded at $0.50 on the TSX.
Information for this briefing was found via Sedar and Aleafia Health. The author has no affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.