Bears Push Back On APHRIA INC COM NPV (OTCMKTS:APHQF)

Bears Push Back On APHRIA INC COM NPV (OTCMKTS:APHQF)

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APHRIA INC COM NPV (OTCMKTS:APHQF) is seeing a slight slip in price today after echoing a call for greater regulatory compliance standards. APHQF saw a sell-off late Tuesday, but the stock is still up more than 40% for the year.

“We at Aphria and at our joint venture partner, Liberty Health Sciences Inc., believe this approach to disclosure for medical marijuana companies in Canada is truly representative of the existing U.S. legislative, regulatory and political environment,” said Mr. Neufeld.

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. APHQF sells its products through its online store and telephone orders, as well as MMPR licensed producers.

According to press materials, “APHQF is one of Canada’s lowest cost producers, produces, supplies and sells medical cannabis. Located in Leamington, Ontario, the greenhouse capital of Canada. APHQF 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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A key driver of the company’s earnings has been lower costs of operations compared to other players in the sector and APHQF has shown its skill at growing to scale while keeping costs low.

For the first quarter, ended August 31, 2017, APHQF reported an EBITDA of $1.5 million representing a 47% increase. Revenue for the three months came in a $6.1 million representing a 7% increase over the prior’s quarter revenue. Sales on a kilogram basis were up by 15% from 738.3 kg to 852 kg.

The company’s costs of dried cannabis per gram dropped from $1.67 to $1.60 related to economies of scale achieved because of completion of Part II expansion. Costs could drop even further as the company is on course to complete the expansion of some projects which should lead to further improvement in economies of scale.

“Looking ahead, we are on track to meet critical short- and long-term goals: Our fully-funded facility expansion is well underway, and we expect to achieve further economies of scale once the expansion projects are completed in 2018. Additionally, we continue to develop new product innovations and invest in our recreational infrastructure and brand. This will enable us to serve growing demand from medical cannabis patients in the near term and will eventually support Aphria’s position as a leader in Canada’s recreational market, once federal and provincial regulatory frameworks are in place,” said Mr. Neufeld.

Now commanding a market cap of $761.11M, APHQF has a significant war chest ($79.9M) of cash on the books and quarterly revenues are growing at 106%. You can bet we will update this one again as new information comes into view. Keep in mind in the meantime, this is a well-run company with a fortress balance sheet making real money day in, day out.  Sign-up for continuing coverage on shares of $APHQF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $APHQF, either long or short, and we have not been compensated for this article.

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