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Aleafia Health Announces Record $43.1 Million Net Revenue in 2022 15-Month Fiscal Year, Strong $8 Million Branded Cannabis Net Revenue in Q5

Jun 29, 2022 • 7:09 AM EDT
16 MIN READ  •  By Michael Berger
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Aleafia Health Inc. (TSX: AH, OTCQX: ALEAF) is pleased to report its financial results for the three and 15 months ended March 31, 2022. The Company’s fiscal year 2022 audited, consolidated financial statements and management discussion and analysis for the fifth quarter and 15-month periods, due to changing the year end to March 31, will be available in the Investors section of the Company’s website at and will be filed on SEDAR and available at

Branded cannabis net revenue increases 151%: Aleafia Health’s branded cannabis net revenue increased 151% to $36.8 million in fiscal year 2022, from $14.6 million in the prior year. Total branded cannabis revenue for the period was $47.5 million.3 Branded cannabis net revenue rose 55% to $8.0 million in the three months ended March 31, 2022, compared to $5.2 million in the three months ended March 31, 2021.

“For the fiscal year ended March 31, 2022, the Aleafia Health team once again demonstrated its relentless drive toward steadily increasing market share in branded adult-use and medical cannabis along with strong international sales growth,” said Aleafia Health CEO Tricia Symmes. “We continued our decisive quarter over quarter upward sales trajectory from Q4 to Q5 with adult-use market share rankings rising an additional two positions from 15th to 13th. The Company is now positioned to become a Top 10 Licensed Producer. Aleafia Health had exceptionally strong growth year over year in retail adult-use market share, as part of a successful end to a transformative fiscal year. The Company delivered a top 3 market share rank increase among the 20 largest Canadian Licensed Producers, from 28th in Q1 2021 when the Company launched the Sunday Market House of Brands, to 13th in the most recently completed quarter.”

Transformation towards higher margin cannabis: The Company completed a dramatic shift to become a branded cannabis producer in fiscal year 2022, from a largely wholesale business-to-business supplier in fiscal year 2020. This move resulted in an increase in average net realized price per gram and an improvement in the branded cannabis gross profit margin. Branded cannabis represented 85% of total net revenue in the fiscal year ending March 31, 2022, compared to only 40% in the prior fiscal year. The quality of the Company’s revenue base increased significantly driven by the growth in sticky, highly recurring medical sales, adult-use market share capture which drives continued end user demand for the Company’s branded consumer products, and the continued build-out of its international sales platform.

Medical cannabis leadership: The Company is also maintaining leadership in the medical cannabis market, with 7.0% market share4. “While others have declined in the current business climate, we are not only holding our own but expanding,” Symmes said. “Currently in the medical segment, our run-rate net revenue is a strong $10 million5 as we are increasing our presence in key high value markets like Quebec, and providing enhanced wellness to veterans while third-party channel revenue was up 20% in revenue in Q5.”

International sales a strategic focus for the company: “International sales, a strategic focus for the company, grew 168% over the prior year, with a run rate of approximately $1.0 million6 and growing,” Symmes said. “Starting with only one country in fiscal year 2020, the Company’s cannabis in fiscal year 2022 was successfully exported into three: Germany, the U.K., and Australia. We have established strong distribution partners in each of these countries with significant upside potential,” said Symmes. “Contracted strain specific sales are expected to drive sustainable higher margin business.”

“We continue to see the international markets as strategically important as they can potentially enhance Aleafia Health’s margins and provide increased visibility into near and long-term revenue and cash flows,” said Aleafia Health CFO Matt Sale.

Closing of Debenture Amendments: “During the current quarter the Company successfully negotiated a major breakthrough that will enhance our financial future,” commented Sale. “On May 12, 2022 an agreement in principle was announced to amend the $37.35 million 8.5% convertible debentures due June 27, 2022. The Debenture Amendments improve the Company’s balance sheet tremendously as they facilitate over $11.6 million of additional potential liquidity through the equity financing and full-access to our receivables revolving facility, improve our cash flow dynamic with no mandatory cash interest payments for at least 24 months, and balance our refinancing profile with staggered maturities over 2, 4 and 6 years. We expect the Debenture Amendments to close this week.”

$5.6 Million Equity Financing Completed: “On June 24, 2022 we closed our $5.6 million equity financing that we announced earlier in May. The net proceeds from this Private Placement will be used to fund working capital, capital expenditures and general corporate purposes. The net proceeds from this financing will provide liquidity to pursue immediately accretive growth initiatives that accelerate top-line revenue, improve our margin profile, and enhance our cash flow generation,” said Sale.

Cost rationalizations and contaminant initiatives: “The Company underwent a complete top-to-bottom organizational realignment which saw a 30% reduction in the workforce, integrated the medical business to deliver a cohesive and consistent patient experience, turned around its Grimsby greenhouse to focus on high-potency usable flower, and wound down many of the legacy consultants, contracts and non-recurring costs related to the Sunday Market House of Brand build-out,” said Aleafia Health CFO, Matt Sale. “With significant cost rationalizations enacted over the fiscal year, and continued cost containment initiatives underway, the Company is on track towards Adjusted EBITDA7 profitability in the second half of fiscal year 2023.

Reaffirm net revenue guidance for fiscal year 2023: “Our current annual run-rate net revenue of approximately $43 million is primarily underpinned by $288 million in adult-use branded cannabis and $119 million in medical and international revenue. In the current quarter, I am pleased to announce that we have significantly increased our sales generation sequentially, as the Company has $11.0 million in purchase orders from its four provincial authorities to which it supplies cannabis products, an increase of 22% or $2.0 million over the quarter ended March 31, 2022. In the year ahead one of our goals is to add to our provincial supply relationships and deepen our product lines within our existing store partners which are expected to increase overall net revenue and total gross profits. With our strategic growth projects underway we remain confident we can deliver on our previously issued guidance of between $53 and $63 million in total net revenue in fiscal year 2023.10

Portfolio optimization: “In Q5, the Company completed a detailed portfolio optimization exercise which resulted in focusing on flower, vapes and pre-rolls, the largest flower categories with the highest overall gross profit potential where we are best-positioned to continue winning consumer traction and share of purchases,” Symmes said. “In 2021, the Company launched five adult-use brands, and 37 new SKUs across multiple markets – from the everyday Divvy brand, consistently among the top searched brands at the Ontario Cannabis Store since its launch – to the Company’s CBD-forward wellness brand Noon & Night.”

Other Fiscal Year 2022 and Q5 highlights included:

Record breaking outdoor harvest: The 2021 outdoor harvest produced record-breaking results with THC levels reaching 21-27% and an unprecedented 2.7% to 5.7% terpene profile. The harvest’s high potency flower has been and will be primarily used in the adult-use sales channel, delivering significantly higher net margin per gram than the wholesale sales channel where it was previously utilized. In Ontario, Divvy vapes have reached the Top 10th percentile while Divvy oils have become top 20 SKUs in the same province, reflecting the strong upward trend of the Company’s innovative product development,” said Symmes.

Among the Top 6 for during FY2022 for retail sales growth11the Company reported:

  • During the fiscal year total retail sell through grew an average of 55% quarterly in our core markets (all participating categories).
  • Dried Flower retail sell through exceeded 115% quarterly growth, while market share was able to achieve 110% average growth rate every quarter over the same period.
  • Pre Rolled was Aleafia’s best performing category by retail sales dollar growth, posting a 116% average quarterly growth rate over the fiscal and an average market share quarterly growth topping 88%.
  • Vape retail sell through achieved an average quarterly growth rate of 42% through the fiscal year, and market share exceeded 32% growth every quarter during the fifteen-month period.
  • Aleafia Health’s market share grew from under 0.5% in key markets from Jan 2021 to 2.2% at the end of the fiscal year and continues to grow.

Four Core Strategic Objectives to Drive Aleafia to Profitability

  1. Achieving top 10 adult-use market position with innovative products
  2. Leadership in medical via Aleafia’s integrated medical clinic platform
  3. Strong position in international distribution
  4. Breakeven Adjusted EBITDA profitability in the second half of fiscal year 2023

“There are four strategic objectives that, once accomplished, we believe will drive Aleafia Health forward to a successful future,” said Symmes. “Portfolio optimization has improved adult-use margins. We are leveraging our outdoor grow facility, one of the largest and most successful in Canada, and two indoor facilities, to build a consistent and growing supply of high-quality usable flower. This diverse grow supply and nimble, agile team can redirect flower to the highest margin sales channel, whether that be adult-use, medical or international, sets us apart from our peers.”

“We have also reallocated headcount strategically to optimize talent, maximize revenue velocity and operational efficiency,” said Sale. “One factor that held the company back this year was it continuously sold out all its usable flower from its Grimsby greenhouse. We lost out on approximately $3 million in flower sales in the quarter ended March 31, 2022, based on turning down potential purchase orders with the four provincial buyers to which we distribute adult-use branded product,” said Sale. “Moreover, the greenhouse underwent a significant operational turnaround in Q5, incurring $2.0 million in non-recurring costs related to improving the growing environment. We didn’t stop there, investing in a vastly improved irrigation system and making other strategic capital expenditures to improve the Grimsby greenhouse in the more challenging summer growing months and year round,” added Sale. “Despite these challenges, which we faced head-on, we are leveraging our ability to react nimbly to market forces and continue driving towards breakeven Adjusted EBITDA profitability in this fiscal year.”

“Aleafia Health today continues its rise to a position of industry leadership, with higher market share, increased retail penetration, innovative and higher potency new products, continued growth in its medical business market share and an upward trajectory in its international business,” said Symmes. “Couple those positive factors with a great, multi-faceted, devoted operations team, cost containment, a revamped balance sheet and new equity financing and what you have is one terrific growth company firmly in the highest margin market segments. We are very proud of what we have accomplished.”


($,000s)Three months endedFifteen
Operating Results  
Kilograms Sold – Dried Flower4,2903,14220,71327,54817,57125,698
Avg Net Realized Price1.642.252.081.322.051.12
Adult-Use Market Share %122.16%0.48%1.32%0.56%1.48%0.46%
Adult-Use Market Share Ranking133017291529
Medical Use Orders17,04819,09394,13758,13575,04465,614
Medical Use Avg Order Value$152$141$144$145$145$145
Financial Results
Branded Cannabis Net Revenue8,0475,20036,76714,62731,56716,884
Net revenue137,0397,06643,12236,27536,05628,745
Branded cannabis net revenue %100%74%85%40%88%59%
Adjusted gross profit before fair value (“FV”) adj’s14
Branded Cannabis profit $2,8512,13513,8895,11610,1795,722
Branded Cannabis profit %35%41%38%35%32%34%
Bulk Wholesale profit $(1,918)1,151(4,732)15,587(5,882)6,191
Bulk Wholesale profit %62%-74%72%-131%52%
Total Gross profit $


Total Gross profit %13%47%21%57%12%41%
Adjusted EBITDA15,16(4,412)(3,033)(22,011)5,115(18,978)(5,881)
Net Cash used in Operating Activities(3,555)(8,764)(36,218)(7,629)(32,663)(16,539)


($,000s)Three months endedFifteen and Twelve
months ended
Mar 31,
Mar 31,
Mar 31,
Dec 31,
Mar 31,
Mar 31,
Business transaction costs6961,4545,0264,1463,5725,090
Wage Subsidies, severance1,1421,4588603,613(598)5,097
Medical Clinic Supply Services5572,0592,059
Adjusted SG&A7,2829,80842,07231,79932,26435,529

The Company has aggressively contained and rationalized its Adjusted SG&A cost profile, resulting in a 26% decline to $7.3 million in the three months ended March 31, 2022, compared to $9.8 million in the prior year. This was achieved despite branded cannabis net revenue increasing 155% over the same period.


 Three months ended
Fifteen and Twelve months ended
($,000s)March 31,
March 31,
March 31,
December 31,
March 31,
March 31,
Net loss(4,152)(11,248)(169,867)(255,505)(158,619)(254,087)
Add back:
Depreciation and amortization192,1492,37712,42710,16610,0507,843
Interest expense, net2,6262,23810,78711,6368,54911,226
Income tax expense (recovery)(2,854)(2,540)(2,854)(2,040)
Inventory write down19,64824,92219,648
FV changes in biological assets and changes in inventory sold9069211,45310,72153230,385
Share-based payments685792,8992,6902,3202,303
Bad debt expense(8,088)5581,8681,8921,3102,346
Business transaction costs6961,4545,0264,1463,5725,090
Gain on sale of assets(12,092)(1,181)(12,092)(6,344)
Fair value through profit and loss adjustments1,12015,505(943)15,505(1,843)
Impairment of intangible assets53,09322,11653,09322,116
Impairment of goodwill11,314177,47611,314177,476
Impairment of property, plant & equipment28,80028,800
Non-operating expense (income)26388(18)(481)(106)(352)
Adjusted EBITDA20(4,412)(3,033)(22,011)5,115(18,978)(5,881)

Adjusted EBITDA for the three months ended March 31, 2022 was a loss of $4.4 million, compared to a loss of $3.0 million in the prior year comparative quarter. The decrease over the prior year quarter was primarily due to a nonrecurring operational issue at our Grimsby Facility amounting to approximately $2.0 million which has since been rectified and $1.9 million negative margin on bulk wholesale cannabis sales, partially offset by cost containment, and cost rationalization initiatives. There were certain marketing, consultant, brand development and product formulation costs related to the launch of new product formats, most of which are non-recurring in nature. In conjunction with the Company’s focused cost containment and rationalizations, this has delivered a dramatically improved SG&A expense profile.

Restatement of 2020 Financial Year

The Company has restated its consolidated statements of financial position as at December 31, 2020 and its consolidated statements of loss and comprehensive loss, consolidated statement of changes in shareholders’ equity and consolidated statements of cash flows for the year ended December 31, 2020. In the course of preparing the Company’s consolidated financial statements for the year ended March 31, 2022, a misinterpretation was discovered involving two non-recurring transactions in the bulk wholesale sales channel recorded in the quarters ended June 30, 2020 and September 30, 2020.

In the periods ended June 30 and September 30, 2020, the Company recorded net revenue of $6,163 and $2,104, respectively. Both of these non-recurring transactions in the bulk wholesale sales channel were to one customer. These transactions provided the wholesale customer with extended payment terms which were initiated upon shipment to the customer. Some products which were shipped to the customer were later returned to the Company. No payment to date has been received by the Company for either of these two non-recurring transactions.

Tables presenting the impact of the restatement adjustments on the Company’s previously reported consolidated financial statements as at and for the year ended December 31, 2020 are set out on in Note 23 of the Company’s consolidated financial statements for the fiscal year ended March 31, 2022. The December 31, 2021 and March 31, 2022 consolidated statements of financial position are not impacted by this restatement.

For Investor & Media Relations:

Matthew Sale, CFO

About Aleafia Health:

Aleafia Health, a vertically integrated and federally licensed Canadian cannabis company, owns three licensed cannabis production facilities, including the first large-scale, legal outdoor cultivation facility in Canadian history, and operates a strategically located distribution centre, all in the province of Ontario. The Company produces a diverse portfolio of cannabis derivative products including oils, capsules, edibles, sublingual strips, and vapes, for sale in Canada in the adult-use and medical markets and is pursuing opportunities in select international jurisdictions. The Company owns and operates a virtual network of medical cannabis clinics staffed by physicians and nurse practitioners.

Forward Looking Information

Certain statements herein relating to the Company constitute “forward looking information”, within the meaning of applicable securities laws, including without limitation, statements regarding future estimates, business plans and/or objectives, sales programs, forecasts and projections, assumptions, expectations, and/or beliefs of future performance, are “forward-looking information”. Such forward-looking statements involve unknown risks and uncertainties that could cause actual and future events to differ materially from those anticipated in such statements. Forward looking statements include, but are not limited to, statements with respect to our market share, net revenue, branded cannabis net revenue, Adjusted EBITDA, and other financial outlook projections for fiscal year 2023, our commercial operations, including production and / or sales of cannabis, quantities of future cannabis production, anticipated revenue in connection with such sales, and other Information that is based on forecasts of future results, estimates of production not yet determinable, and other key management assumptions. The following material factors or assumptions were used to develop the forward looking information: market size and growth of the Canadian adult-use and medical cannabis markets, retail store penetration, script trends, cultivation and processing capacity, costs of production, gross and net revenue per gram. Actual results may differ materially from those expressed or implied by such forward looking statements and involve risk and uncertainties relating to: future cultivation yield and quality, actual operating performance of facilities, product launches, facility licenses and amendments, average selling prices, cost of goods sold, operating expenses, Adjusted EBITDA, regulatory changes in the Canadian and international markets, and other uninsured risks. The forward looking information was approved by Management as of June 27, 2022. The Company assumes no responsibility to update or revise forward-looking information to reflect new events or circumstances unless required by law. The forward looking information is provided for information purposes only and readers are cautioned that it may not be appropriate for other purposes. This presentation is provided for general information purposes only and does not constitute an offer to sell or solicitation of an offer to buy any security in any jurisdiction.

Non-IFRS Measures

Adult-use Cannabis Net Revenue is net cannabis revenue for Canadian adult-use sales. Cannabis net revenue is sale of cannabis revenue less excise taxes

Branded Cannabis Net Revenue is calculated as Adult-use Cannabis Net Revenue, Medical Cannabis Net Revenue and clinic revenue.

Medical Cannabis Net Revenue is net cannabis revenue for Canadian and international medical sales.

Total Branded Cannabis Revenue is calculated as Adult-use Cannabis Revenue, Medical Cannabis Revenue and clinic revenue.

Adjusted SG&A is widely used by industry participants and analysts to measure company performance. The Company considers Adjusted SG&A an important key metric to measure the Company’s cost structure outside of production and inventory related costs metric as it progresses towards breakeven Adjusted EBITDA profitability. It is generally fixed in nature with some variability depending on sales volume. Adjusted SG&A is defined as SG&A expenses adjusted to exclude non-recurring costs. These non-recurring items may relate to certain transaction costs, one time subsidies, and severances. Medical clinic supply services amounts are included in SG&A. Adjusted SG&A is not recognized or defined under IFRS, and as a result, it may not be comparable to the data presented by competitors

Adjusted EBITDA

Adjusted EBITDA is widely used by industry participants and analysts to measure company performance. The Company considers Adjusted EBITDA a key metric for measuring operating performance and cash flow, to manage working capital, debt repayments and capital expenditures. Adjusted EBITDA is calculated as net income (loss), excluding (i) amortization and depreciation, (ii) fair value changes in biological assets and changes in inventory sold, (iii) share-based payments, (iv) bad debt expense, (v) business transaction costs, (vi) non-operating expenses (income), (vii) taxes, (viii) interest expenses, (ix) one-time sale of assets, and (x) unrealized gain (loss) on marketable securities. Adjusted EBITDA is not recognized or defined under IFRS, and as a result, it may not be comparable to the data presented by competitors.


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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.


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