Press Release

Aleafia Health Announces $6.4M Positive Adjusted EBITDA, $14.6M net revenue in Q1 2020

  • $13.7M cannabis net revenue, 183% increase over previous quarter, and 2,486% increase over prior year’s quarter
  • Positive cash flow from operations
  • 85% gross margin on cannabis net revenue
  • 3% increase SG&A expenses over previous quarter
  • $35M in cash, cash equivalents and marketable securities
  • Total liabilities decline by $7.9 million over Q4 2019
  • Fifth consecutive quarter reporting record revenue, second consecutive quarter of positive adjusted EBITDA
  • Adjusted EBITDA margin of 44%
  • Cash cost to produce per gram of $0.31

TORONTO, May 13, 2020 – Aleafia Health Inc. (TSX: ALEF, OTC: ALEAF, FRA: ARAH) (“Aleafia Health” or the “Company”), is pleased to report its financial results for the three months ended March 31, 2020 (“Q1 2020”).


“Our disciplined, sustainable growth has resulted in a breakthrough quarter for Aleafia Health. Our patient-centric approach remains at the core of our business as we build our cannabis health and wellness ecosystem,” said Aleafia Health CEO Geoffrey Benic.

“The prudent allocation of capital instituted over the course of 2019 is reflected in streamlined expenses, a fifth consecutive quarter of solid revenue growth, and industry-leading gross margin among North American cannabis industry reporting issuers. With a fully licensed infrastructure now in place, we look forward to leveraging our lean, integrated production ecosystem for operational and financial success. In the second half of 2020 we look forward to introducing  an exciting roster of new Cannabis 2.0 product formats tailored to health and wellness consumers while further expanding the reach of our existing product portfolio.”


($,000s) Three months ended
Mar 31, 2020 Dec 31, 2019 Mar 31, 2019
Net revenue 14,596 6,028 1,525
Net cannabis revenue(1) 13,726 4,852 531
Consolidated cost of sales 2,521 1,527 1,787
Gross profit (loss) before fair value (“FV”) adjustments on net revenue 12,075 4,501 (262)
Gross margin before FV adjustments on net revenue(1) 83% 75% -17%
Selling, general & administrative expenses (“SG&A”) 6,104 5,924 11,566
Adjusted EBITDA(1)(2) 6,379 207 (10,921)
Adjusted EBITDA margin(1)(2) 44% 3% -716%
Changes in fair value of inventory sold 6,179 1,323
Unrealized gain on fair value of biological assets (38) 2,364 205
Gross profit 5,857 5,542 (58)
Net (loss) income (6,156) (9,759) (20,230)
1. See “Cautionary Statements Regarding Certain non-IFRS Measures” section of the associated MD&A for term definition.
2. Adjusted EBITDA is calculated as operating income (loss), excluding (i) amortization and depreciation, (ii) changes in fair value of inventory sold, (iii) unrealized gain on fair value biological assets, (iv) share-based payments and (v) one-time business transaction fees. 


For the three months ended March 31, 2020 (“Q1 2020”) net revenue was $14.6 million, an increase of 143% over the previous quarter. The increase was primarily derived from a $8.9 million increase in cannabis net revenue. Compared to the three months ended March 31, 2019 (“Q1 2019”), net revenue increased by 859%.

Net loss was $6.2 million, compared to a loss of $9.8 million in the previous quarter. The net loss was primarily due to non-cash items including: i) changes in fair value of inventory sold, expense of $6.2 million, ii) amortization and depreciation expense of $2.0 million, and iii) deferred income tax expense of $1.7 million.


Mar 31, 2020 Dec 31, 2019 Mar 31, 2019
Active, registered patients 10,983 10,249 7,030
Average net selling price of medical cannabis(1) $8.04 $9.80 $8.00
Average net selling price of adult-use cannabis(1) $6.88 $6.14 $6.48
Average net selling price of bulk wholesale cannabis(1) $2.47 $2.50 $2.98
Kilograms sold 4,992 1,398 142
1. See “Cautionary Statements Regarding Certain non-IFRS Measures” section of the associated MD&A for term definition for term definition.


Gross profit before fair value adjustments for cannabis net revenue was $11.7 million in Q1 2020, an increase of 203% over the previous quarter. Gross margin on cannabis net revenue for Q1 2020 was 85%, compared to 80% in Q3 2019. Gross margin by market type in Q1 2020 was:

(i)   Medical cannabis: 67%

(ii)  Adult-use cannabis: 30%

(iii) Wholesale bulk cannabis: 91%

Active registered patients increased by 7% during the reporting period to 10,983 and subsequently increased to over 12,000 as at May 12, 2020.


($,000s) Three months ended
Mar 31, 2020 Dec 31, 2019 Mar 31, 2019
Operating (loss) income (3,330) (3,511) (20,452)
Amortization and depreciation 2,014 2,200 868
EBITDA (1,316) (1,311) (19,584)
Changes in FV of inventory sold 6,179 1,323
Unrealized gain on FV of biological assets 38 (2,364) (205)
Share-based payments 966 929 7,961
One-time business transaction fees 510 1,630 907
Adjusted EBITDA 6,379 207 (10,921)


The Company has reported its second consecutive quarterly positive adjusted EBITDA, of $6.4 million, an increase of 2,979% over the previous quarter. Due to a disciplined cost structure and a fifth consecutive quarter of strong revenue growth, the Company has realized substantial, sequential adjusted EBITDA improvements. The increase in adjusted EBITDA was primarily due to significant increases in cannabis net revenue, improved gross margins along with holding SG&A expenses to an increase of 3%.


($,000s) Mar 31, 2020 Dec 31, 2019 Mar 31, 2019
Cannabis inventory & biological assets 29,518 35,086 5,564
Cash, cash equivalents and marketable securities 34,978 42,699 43,527
Other current assets 38,121 39,993 11,919
Accounts payable 10,722 20,267 9,554
Working capital 67,686 96,903 51,267
Property, plant & equipment 71,345 64,338 61,352
Total assets 449,449 462,493 420,774
Total liabilities 70,125 77,978 33,216


Cannabis-Infused Sublingual Strips

On January 15, 2020, Emblem entered into a definitive licensing agreement with Kinstate Inc., to bring their award-winning, cannabis-infused sublingual strips brand and underlying technology to the Canadian market. The agreement provides the Company with the exclusive Canadian rights to manufacture, market and sell the Kin Slips brand along with rights to use the associated proprietary formulations and manufacturing methodology.

Natura Naturals Supply Agreement

On January 29, 2020, Emblem entered into a final termination and mutual release agreement with Tilray, Inc. (“Tilray”) and its affiliate High Park Gardens Inc. to terminate the supply agreement previously entered into between Tilray’s subsidiary Natura Naturals Holdings Inc. (a predecessor to High Park Gardens Inc.) and Emblem.

Niagara Facility Licence

On March 13, 2020, Aleafia Farms secured a Health Canada Cultivation Licence for the Niagara Facility.  The Licence authorizes cannabis cultivation, propagation, harvesting and sales in Building 1. Building 1 includes 50,000 sq. ft. of greenhouse area and 20,000 sq. ft. for post-cultivation operations, including drying, storage and shipping and will also be used to support outdoor cultivation.

Direct-to-Door Medical Cannabis Delivery

On March 26, 2020, the Company announced that it was launching a direct-to-door medical cannabis delivery service for registered patients. By delivering directly to patients’ homes, the service provides safe, contactless delivery, eliminating the need for customers to pick-up products at post offices and post boxes. It also mitigates the risk to the Company of any disruption of postal and third-party parcel delivery services during the COVID-19 pandemic. Operating as AssureHome Delivery, the first deliveries were completed on April 21, 2020 in Toronto.


COVID-19 and Business Operations

On April 17, 2020, the Company provided a comprehensive corporate update on business operations, including changes in operations due to the COVID-19 pandemic. The most significant change in operations to date has been the temporary closure of the physical offices of the Company’s national network of cannabis clinics and education centres since March 16. All patient consultations are now completed using virtual clinic services with no significant increase or decline in the number of patients seen due to the closure of physical locations.

Changes to Board of Directors

Subsequent to the reporting period, the Company announced that Julian Fantino (Chairman), Raf Souccar and Bill Stewart would resign as directors effective May 15, 2020. On May 1, the Company announced that Rhonda Lawson and Glenn Washer would be appointed to the board, effective May 16. Following these changes, the Aleafia Health board will be composed entirely of independent members, furthering the Company’s goal of enacting strong corporate governance best practices.

Paris Facility Phase II Expansion Licence

On May 4, 2020, the Company announced that Emblem had secured a Health Canada Licence Amendment for the Phase II expansion of its Paris Facility. The amendment was granted on May 1, 2020, expires on July 26th, 2022, and authorizes cannabis production in the entire expanded building.

EU-GMP Application

On May 4, 2020, Aleafia Health’s subsidiary, Aleafia Health Germany GmbH (“Aleafia Germany”), formally submitted its application to German regulators for EU-GMP certification. The Company’s newly licensed Paris Facility has been purpose built to meet EU-GMP certification requirements, pharmaceutical-grade production’s highest standard, and as a result, provides wide access to global markets. The application, if successful, would allow the Company’s Paris Facility to produce and export EU-GMP-certified cannabis products to the European Union.

Cannabis 2.0 Formats

The Company believes that maintaining a diverse portfolio of high-quality, differentiated product formats is an important element in the long-term success of the Company. Leveraging the Company’s substantial investments in its Paris Facility, the Company intends to produce a wide variety of new Cannabis 2.0 formats in-house, for sale in the Canadian adult-use and medical markets, and globally where legally permitted.

Later this year, the Company intends to commence sales of vapes, cannabis-infused sublingual strips, candies, and additional derivative formats. To reduce lead times and research and development costs, the Company is leveraging the expertise, formulations and intellectual property of strategic partners.

$13 Million Bought Deal Offering

On May 11, 2020, the Company announced that it entered into an agreement with Eight Capital, lead underwriter and sole bookrunner, on behalf of a syndicate of underwriters (together, the “Underwriters”), pursuant to which the Underwriters have agreed to purchase 20,000,000 units of the Company (the “Units”), on a “bought deal” basis pursuant to a short form prospectus offering, subject to all required regulatory approvals, at a price per Unit of $0.65 for gross proceeds of $13,000,000.

Port Perry Outdoor Expansion Licence

On May 12, 2020, the Company’s wholly owned subsidiary, Aleafia Farms Inc., has secured a Health Canada Licence Amendment for its Port Perry Facility’s outdoor cultivation expansion. The expansion adds an additional 60 acres of outdoor cultivation area, bringing the total to 86 acres (3.7 million sq. ft.) The amendment was granted on May 12, 2020, expires on October 13, 2020 and authorizes cannabis cultivation in “Outdoor Grow Area 5.


Date:   May 13, 2020

Time:   8:30 a.m. EST

USA/Canada Toll-Free Participant Call-in: (866) 679-9046; Passcode: 5378454

International Toll-Free Participant Call-in: (409) 217-8323; Passcode: 5378454


This conference call will be webcast live over the Internet and can be accessed through the link provided.  Audio of the call will be available to participants through both the conference call line and webcast; however, the presentation may only be viewed via the webcast. Participants who miss the live call can view a replay at any time via the link provided.

For Investor & Media Relations:

Nicholas Bergamini, VP Investor Relations

1-833-TSX-ALEF (879-2533)


About Aleafia Health:

Aleafia Health is an industry leading, vertically integrated and federally licensed Canadian cannabis company offering cannabis health and wellness services and products in Canada and in international markets. The Company operates medical clinics, education centres and production facilities for the production and sale of cannabis.

Aleafia Health owns three significant licensed cannabis production facilities, including the first large-scale, legal outdoor cultivation facility in Canadian history. 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 and operates internationally in three continents.

Innovation, the heart of Aleafia Health’s competitive advantage, has led to the Company maintaining a medical cannabis dataset with over 10 million data points to inform proprietary illness-specific product development and its highly differentiated education platform FoliEdge Academy. The Company is committed to creating sustainable shareholder value; the TSX Venture Exchange named Aleafia the 2019 top performing company prior to its graduation to the TSX.

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 the Company 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. 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 form filed with Canadian securities regulators available on the Company’s SEDAR profile at 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 any obligation to publicly update such forward-looking information to reflect new information, subsequent events or otherwise unless required by applicable securities legislation.

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