Will Aleafia Health Inc (OTCMKTS:ALEAF) Shares Respond to the Facts?

Will Aleafia Health Inc (OTCMKTS:ALEAF) Shares Respond to the Facts?


The time for a test of faith is at hand for shareholders in Aleafia Health Inc (OTCMKTS:ALEAF). The company just raised some more capital, and shares have tipped back over to test key technical support. The most important to be made here is this: there is probably no industry on the planet right now with a higher return-on-capital-investment than ALEAF’s current operational focus.

Specifically, the company just announced that its offering, previously announced on June 5, 2019, will be for an offering size of $35,000,000. According to the release, “The Offering will be conducted on an agency basis for the issuance of 35,000 convertible debenture units of the Company at a price of $1,000 per Convertible Debenture Unit. The Offering is being led by Mackie Research Capital Corporation and BMO Capital Markets on behalf of a syndicate of agents including Canaccord Genuity Corp.”

Aleafia Health Inc (OTCMKTS:ALEAF) bills itself as a company that owns and operates a healthcare clinic that provides medical cannabis therapy to achieve optimum recovery and minimize illness and injury’s cumulative effects. The company provides medical cannabis therapy, pain management, physiotherapy, chiropractor, osteopathy, registered massage therapy, laser therapy, orthotics, and custom braces and compression socks. It provides consulting and support services for managing cannabis-sensitive cases.

The company assists rehabilitation professionals, case managers, social workers, life care planners, psychologists, family physicians, physiotherapists, litigators, and third-party insurance companies. Aleafia Inc. is based in Concord, Canada.

According to company materials, “Aleafia is a leading, vertically integrated medical cannabis company with a unique focus on delivering quality patient care from “seed” to “sale.” Aleafia is uniquely positioned with a singular focus on the medical cannabis market. The company operates the largest brick and mortar medicinal cannabis clinic network in Canada under the Canabo Medical Clinic brand, which is staffed by licensed, practicing physicians. Aleafia has obtained over 50,000 unique patients and maintains the largest medical cannabis patient data set in Canada. Aleafia’s state of the art production facilities will allow for the production of high-quality strains at low cost. Aleafia’s production will focus on securing the highest-quality medicinal product for its growing patient base.”

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As noted above, ALEAF just announced that its offering, previously announced on June 5, 2019, will be for an offering size of $35,000,000.

Even in light of this news, ALEAF has had a rough past week of trading action, with shares sinking something like -10% in that time. That said, chart support is nearby and we may be in the process of constructing a nice setup for some movement back the other way. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -20%.

Furthermore, the name has seen a growing influx of trading interest, with the stock’s recent average trading volume running 14% over the long run average.

According to the company’s most recent press release, “the net proceeds received by Aleafia Health from the Offering are intended to be used for working capital requirement and other general corporate purposes. Aleafia Health will use commercially reasonable efforts to obtain the necessary approvals to list the Convertible Debentures, Warrants, and the Common Shares issuable upon conversion of the Convertible Debentures on the TSX.”

Earning a current market cap value of $271.54M, ALEAF has a significant war chest ($22.8M) of cash on the books, which compares with about $1.8M in total current liabilities. ALEAF is pulling in trailing 12-month revenues of $4.2M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 79.5%. As more color becomes clear on the name, we will review the situation and update our take. Sign-up for continuing coverage on shares of $ALEAF 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 $ALEAF, either long or short, and we have not been compensated for this article.

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