Aphria shares slip on Q3 loss

Aphria Inc.’s first full quarter of sales since the legalization of recreational cannabis fell short of investor expectations after the company posted a steep quarterly loss, a $50-million impairment charge related to its Latin America operations and announced that Green Growth Brands had dropped its hostile takeover offer.

Although the Leamington, Ont.-based pot producer saw net revenue soar by 600 per cent to $73.8 million during its third quarter ended Feb. 28, it posted a net loss of $108.2 million. That’s compared with net revenues of $10.3 million and net profits of $12.9 million during the same period a year earlier.

As well, Aphria during the three month-period brought in $7.19-million in non-medical marijuana revenue, down 34.9 per cent from $11.03 million during the previous quarter which only encompassed a month-and-a-half of adult-use sales.

The cannabis producer’s stock closed down $1.91, or 14.24 per cent, at $11.50 on the Toronto Stock Exchange.

Aphria said the quarterly loss was largely due to an increase in general and administrative expenses as it moves to expand its capacity, as well as higher overhead costs related to supply shortages, and a “temporary increase” in packaging and distribution costs for the adult-use market.

Irwin Simon, Aphria’s chairman and interim CEO, said it is working to expand its growing capacity and streamline its processes and is embarking on a 90-day strategic plan.

“We should absolutely, getting into September, have ample product to supply the provinces,” he told analysts on a conference call. “And in regards to cost reduction, in automation, there is a significant plan in place.”

The company said its loss for the quarter amounted to 43 cents per share compared with a profit of $12.9 million or eight cents per share in the same quarter a year earlier. That fell short of the three cents per share profit expected by analysts, according to Thomson Reuters Eikon. Despite the spike in quarterly revenues, Aphria’s latest numbers missed the $85.2 million expected by analysts.