Monday, 17 June, 2019

Aphria CEO Vic Neufeld to step down, as company posts quarterly earnings

Pot Producer Aphria’s CEO to Step Down Following Short Seller AllegationsMore Pot Producer Aphria’s CEO to Step Down Following Short Seller AllegationsMore
Ginger Lawrence | 13 January, 2019, 23:30

One of the largest cannabis companies in Canada, Aphria's stock was hammered a few months ago by allegations from short sellers that the company bought numerous assets in the Caribbean and Latin America at grossly inflated prices, created to enrich insiders.

Both Neufeld and company co-founder Cole Cacciavillani are exiting their executive roles with Aphria after some eyebrow-raising allegations about the company recently emerged in the business press. "But to be brutally honest the journey has also taken a toll on health, family and personal priorities", Neufeld said.

Neufeld and Cacciavillani will remain on Aphria's board. Shares in the company plunged in the wake of the report by Quintessential Capital Management and Hindenburg Research. Aphria's stock tumbled more than 50 percent on the December 3 report was made public, but it has since rebounded, recouping much of that, including a 6.2 percent gain to C$9.25 at 11:15 Toronto, reports Bloomberg on Friday.

The company reported mixed quarterly results Friday morning.

Aphria is the target of a proposed hostile takeover bid by Green Growth Brands Inc., which has also raised questions about connections between the two companies. They will work with Irwin Simon, Aphria's recently appointed independent chair, and president Jakob Ripshtein (formerly of Diageo), to find replacements in order to "complete a smooth and responsible transition to a globally minded executive leadership team".

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In fact, due to its significant shelf life, Costco has listed the product under "all emergency foods" on the store's website. Plus, the container is a heavy-duty six-gallon bucket with lid that customers can easily transport and stack.

Irwin Simon, the company's newly-appointed chairman, also spoke during the conference call, noting that he sees many similarities between the cannabis industry and the natural organic sector that he first worked in almost three decades ago.

Quintessential previously said Aphria's stock was worth zero, accusing the company of being a "shell game with a cannabis business on the side". On behalf of the entire Aphria team, I want to express my gratitude to both.

Aphria reported a 63-percent year-over-year jump in net revenues to CAD$21.7 million ($16.4 million), thanks to adult-use sales following the approval of recreational marijuana in Canada. That's well ahead of the $8.5 million the company earned in the same period a year earlier, but less than the $37.9 that a consensus of analysts polled by Reuters were expecting. The company said that the higher revenue in the quarter was driven by a 92% increase in kilogram equivalents of cannabis sold and an additional C$1.6 million of non-cannabis worldwide sales.

The company's gross margin decline to 47 per cent of net revenue from 64 per cent was attributed to lower selling prices in the Canadian recreational cannabis market, lower grow yields and higher production costs. The average selling price fell to $6.54 per gram, from $7.12 per gram in the prior quarter.