APHRIA INC COM NPV (OTCMKTS:APHQF) is a penny play that has grabbed hold of the attention of traders during the stock’s recent bounce. The main recent catalyst is the company’s announcement last week that it entered into a major wholesale supply agreement with HydRx Farms, Ltd. (o/a Scientus Pharma). Under the terms of the Agreement, Aphria is committing to supply over 25,000 fully grown medical cannabis plants over the next 12 months to Scientus Pharma. The first delivery, under the agreement will occur in the middle of Aphria’s second quarter of 2018.
According to the release, Aphria expects to generate over $1.2 million of revenue from the wholesale supply agreement in each full quarter of shipments, with gross margins consistent with previously executed wholesale agreements. “Scientus Pharma, a vertically-integrated biopharmaceutical company, is raising the bar of cannabinoid products from medical-grade to pharmaceutical-grade. Leveraging its proprietary, patent-pending formulation and processing technologies, Scientus Pharma is committed to leading the medical cannabis market towards pharmaceutical standards in manufacturing, formulations and dosing.”
APHRIA INC COM NPV (OTCMKTS:APHQF) bills itself as a company that produces, supplies, and sells medical cannabis in Canada. Its cannabis products include dried flowers and cannabis oils.
The company sells its products through its online store and telephone orders, as well as MMPR licensed producers. Aphria Inc. is headquartered in Leamington, Canada.
According to company press materials, “Aphria Inc., one of Canada’s lowest cost producers, produces, supplies and sells medical cannabis. Located in Leamington, Ontario, the greenhouse capital of Canada. Aphria Inc is truly powered by sunlight, allowing for the most natural growing conditions available. We are committed to providing pharma-grade medical cannabis, superior patient care while balancing patient economics and returns to shareholders. We are the first public licensed producer to report positive cash flow from operations and the first to report positive earnings in consecutive quarters.”
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APHQF shares have corrected sharply from their April highs over $6/share. However, we have recently started to see a strong bounce that may be augmented by the company’s recent operational moves. Management’s move, as noted above, could generate over $1.2 million of revenue from the wholesale supply agreement in each full quarter of shipments, with gross margins consistent with previously executed wholesale agreements. That would be a strong addition to expectations for financial performance for this Canadian cannabis name.
“Scientus Pharma shares our vision for providing high-quality products to medical cannabis patients, which is enabled by our 509-step Seed-to Sale quality assurance program,” said Vic Neufeld, Chief Executive Officer of Aphria. “Through this agreement, Scientus Pharma will get access to clean and safe cannabis, which is necessary in the biopharmaceutical cannabis industry. In return, Aphria will benefit from guaranteed product distribution advancing Aphria’s growth strategy.”
“Scientus Pharma intends to leverage this key raw material supply contract to help it lead the evolution of cannabinoid products from medical-grade to pharmaceutical-grade,” said Trevor Folk, Chief Executive Officer of Scientus Pharma. “Our proprietary extraction technology platform has solved the resin consistency issue that has here-to-for prevented that scientific advancement, and it is the foundation for Scientus Pharma’s pipeline of novel products.”
Traders will note 4% tacked on to share pricing for the company in the past month. Market participants may want to pay attention to this stock. APHQF is a stock who’s past is littered with sudden rips. Moreover, the stock has registered increased average transaction volume recently, with the past month seeing 10% beyond its prior sustained average level.
Currently trading at a market capitalization of $560.8M, APHQF has a significant war chest ($84.4M) of cash on the books, which is balanced by about $1.6M in total current liabilities. One should also note that debt has been growing over recent quarters. APHQF is pulling in trailing 12-month revenues of $17.5M. In addition, the company is seeing major top line growth, with y/y quarterly revenues growing at 91%. We will update the story again soon as developments transpire. For continuing coverage on shares of $APHQF stock, as well as our other breakout stock picks, sign up for our free newsletter today and get our next hot stock pick!
Disclosure: we hold no position in $APHQF, either long or short, and we have not been compensated for this article.