Aphria: A Company Overview and a Look at 2020

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Aphria (APHA) produces and sells medical and recreational cannabis in Canada via award-winning brands. The company strives to be the world’s best cannabis company through its commitment to customers, product quality, and innovation.

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Aphria’s origins

Cole Cacciavillani and John Cervini founded Aphria in 2014. The company’s headquarters are in Leamington, Ontario. Though Cacciavillani stepped down from his executive position due to short seller accusations at the start of the year, he remains a special advisor for the company. Cervini also stepped down as a director earlier this year and is continuing in a nonexecutive operational role.

The company’s goal is to become the world’s best-performing cannabis company and provide investors with growing cannabis opportunities. It’s currently trading on two stock exchanges, the TSE and NYSE, under the ticker APHA. Its current management consists of interim CEO Irwin D. Simon and CFO Carl Merton.

Products and brands

Aphria products focus more on quality to provide an optimal customer experience. The company offers its products in a wide range of categories, such as capsules, oral solutions, syringes, vaporizers, pre-rolls, softgels, CBD oils, dried buds, and accessories. The company is currently working on adding more products to the Cannabis 2.0 market.

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Medical brands

  • Aphria: The Aphria brand is the company’s core brand. It provides safe, pharmaceutical-grade medical marijuana. As every medical situation is different, the brand provides personalized care to fit the needs of each patient.
  • Broken Coast: Broken Coast is Aphria’s flagship premium brand. It provides natural, safe, user-friendly premium products to enhance patients’ health. Broken Coast provides a range of core strains to select from. The brand also offers a rotating selection of different strains to enhance the customer experience.

Recreational brands

  • Solei: The country’s first adult-use brand, Solei provides a collection of curated strains. The brand has a wide range of sun-grown products.
  • Riff: Riff is an unconventional cannabis brand. This brand is especially for consumers with unique tastes. This brand is co-created by an association of artists to provide unique and high-quality cannabis products.
  • Good Supply: Good Supply products aim to celebrate everyday moments. It’s created to be the ideal brand for users who view cannabis as a part of their lifestyle. Further, Good Supply encourages users to experience cannabis products in their own way. The brand provides its products at a fair price.
  • Broken Coast: These products focus on premium quality. Broken Coast’s cannabis is also produced in small batches near the shores of the Salish Sea. These cannabis flowers are hand-trimmed and slowly cured to ensure the best product experience for customers.
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Major partnerships and expansions

Aphria started 2018 with significant strategic partnerships. The company started a joint venture called GrowCo with Double Diamond Farms. It owns 51% of the joint venture. This partnership provides additional annual cannabis production of 120,000 kgs. At the same time, Aphria acquired Broken Coast Cannabis. This transaction added a famous premium cannabis brand to its portfolio. Broken Coast has an annual capacity of 10,500 kg per year.

In addition to this, Aphria acquired Nuuvera for $425 million. Nuuvera has international relationships with countries such as Germany, Italy, and Israel. The deal received attention from the media due to its size. In May 2018, Aphria and Southern Glazer’s Wine & Spirits entered into a deal. This deal helped Aphria enter into the beverage market. Further, Southern Glazer’s will distribute adult-use cannabis products in Canada. Aphria also acquired LATAM Holdings in September 2018. LATAM has key licenses in some countries such as Colombia, Jamaica, and Argentina.

Aphria EMEA consists of the company’s subsidiaries operating throughout Europe, the Middle East, and Africa. The majority of these international operations relate to medical cannabis distribution. The company also has production facilities in Germany and Lesotho.

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Geographical footprint

Currently, the company’s Aphria One facility of 1,100,000 square feet is fully licensed and planted. The facility approximately yields 600,000 plants. The new Aphria Diamond Facility is fully operational and received its license from Health Canada on November 1, 2019. After getting the necessary licenses, the company’s total production capacity stands at 255,000 kgs per year from all its facilities in Canada.

Aphria’s operation is spread across a few nations. The company has cultivation licenses in the US, Canada, South Africa, the Carribean, Europe, and Oceania. In addition to this, the company has its distribution channels in Europe, South Africa, the US, and Canada. However, its research centers are in Canada only.

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Aphria’s recent financial highlights

Aphria reported its fiscal 2020 first-quarter earnings results on October 15. The company reported 126.1 million Canadian dollars in net revenue for the quarter. Even though it missed revenue estimates, its revenue implied a year-over-year rise of 849%. The company also recorded 0.07 Canadian dollars in net income per share, a significant improvement from analysts’ estimate of 0.02 Canadian dollars.

Aphria also reported 1.0 million Canadian dollars’ worth of adjusted EBITDA and 16.4 million Canadian dollars in net profits in the quarter. It’s reported positive adjusted EBITDA and net profits for the last two consecutive quarters. Unlike most other cannabis companies, Aphria reported a profit in its latest quarter.

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2020 outlook

Aphria has reconfirmed its fiscal 2020 guidance. The company expects to report net revenue of around 650 million Canadian dollars to 700 million Canadian dollars. It also expects to report adjusted EBITDA of around 88 million Canadian dollars to 95 million Canadian dollars.

Aphria recently launched a program called “Aphria Educates.” This program aims to educate cannabis users in Canada about the safe use of cannabis products that are legally available in the market.

The failure of Aphria’s international expansion strategy might negatively affect its business, operations, and financials. This may result in a supply shortage by the company when it comes to meeting future demands. Its expansion strategy is also subject to getting licenses, regulatory compliances, and other business risks. Going forward, these factors may also affect the company’s ability to expand into other countries and have adverse effects on its operations.

Correction: An earlier version of this article misreported Aphria’s projected 2020 revenue and EBITDA numbers. We have also updated this post to reflect that the company received its license from Health Canada.

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