Aphria Second Quarter Revenues Decline 4%, Slashes Guidance
Aphria Inc (TSX: APHA) (NYSE: APHA) posted its second quarter fiscal 2020 financial results this morning, revealing overall declining revenues of 4% on a quarter over quarter basis. Total net revenues came in at $120.6 million for the quarter, compared to $126.1 million in the first quarter of the fiscal year.
Furthermore, the company has also slashed guidance in light of the current performance of its distribution business as well as its cannabis operations. Whereas the company was previously expecting fiscal year revenues of $650 to $700 million, this figure has been reduced dramatically to full fiscal year revenues of $575 to $625 million. Adjusted EBITDA estimates shrank from $88 million to $95 million for the full fiscal year to a figure between $35 million and $42 million.
The good news for cannabis sector followers, is that net cannabis revenues were up on a quarter over quarter basis, if only slightly. The company posted net cannabis revenues of $33.7 million for the period, as compared to $30.7 million in the prior period, a marginal increase of 9% on a quarter over quarter. Distribution revenue was the largest impact to the company’s overall net revenue figures, with sales in that segment falling from $95.3 million to $86.4 million.
In terms of cannabis sold, the overall quantity sold increased to 7,062 kilograms in the second quarter, versus 5,969 kilograms in the previous quarter. The growth was largely seen in adult use markets, with adult use consumption increasing from 3,317 kilogram equivalents to 5,567 kilogram equivalents, or 79.9%. Medical sales were down on a quarter over quarter basis, from 1,354 kilogram equivalents to 1,237 kilogram equivalents, or -8.6%.
The firm managed to increase its medical price per gram from $7.56 per gram to $8.16 per gram in the quarter, despite declining sales. Adult use sales however saw pricing go in the other direction, with the average price per gram falling from $6.02 to $5.22 before excise taxes. The company was also forced to purchase wholesale product from other licensed producers due to supply shortfalls. This is despite inventory levels increasing from $112.9 million to $152.1 million, or 34.7% on a quarterly basis.
Expenses were also up for the quarter, from $41.4 million to $49.2 million, an increase of 18.8% on a quarter over quarter basis. The company attributed the increase to a share based compensation expense of $2.6 million, and an additional $4.4 million in selling, general, and administrative due to increased sales – despite posting overall declining sales on a quarter over quarter basis.
Overall, the company posted a net loss of $7.9 million for the period, but managed a positive adjusted EBITDA of $1.9 million.
Full financial filings were not available at the time of writing.
Aphria Inc last traded at $5.45 on the NYSE.
Information for this briefing was found via Sedar, Health Canada and Aphria Inc. 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.