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Aphria Inc (CVE:APH) (OTCMKTS:APHQF) Delivers With Q2 Results

Aphria Inc (CVE:APH) (OTCMKTS:APHQF) Delivers With Q2 Results
Written by
Alex Carlson
Published on
January 12, 2017
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Aphria Inc (CVE:APH) (OTCMKTS:APHQF) just reported its Q2 results and we like what we saw. Aphria remains a company that continues to be on the fast track with a series of big moves made over the last few months. We continue to believe the company is on the verge of some major developments in terms of production and M&A activities. As we take a closer look at Q2 results, there's a lot to like about Aphria.First up, a little background on the company. Aphria Inc., one of Canada’s lowest cost producers, produces, supplies and sells medical cannabis. Located in Leamington, Ontario, the greenhouse capital of Canada, Aphria is truly powered by sunlight, allowing for the most natural growing conditions available. The company is committed to providing pharma-grade medical cannabis, superior patient care while balancing patient economics and returns to shareholders.Aphria is the first public licensed producer to report positive cash flow from operations and the first to report positive earnings in consecutive quarters. The stock trades in Canada under the symbol APH, in the US under APHQF, and in Germany under 10E.Aphria reported 19% growth in quarterly revenues and delivered its fourth consecutive quarter of profitability. In Q2, Aphria reported C$945,678 in net income, or C$0.01 per share. Profits rose due to strong growth in the average selling price per kilogram (or kilogram equivalent) and very strong new patient registrations in the quarter. Revenue for the three months ended November 30, 2016 was C$5,226,589, representing a 19.5% increased over the prior quarter's revenue of C$4,375,512. The gross margin for Q2 was 77.4%. CEO Vic Neufeld said:

"I am most proud of the best-in-class and sustainable successes delivered by Aphria. First public LP to report consecutive positive quarterly operating results. First public LP to report consecutive quarters with net profits. First public LP to licence its cultivation intellectual property. Diversification with non-cultivation assets. Low cost producer status. The best customer service, as determined by Lift. Health Canada approval process for Part II expansion under way. Significant progression on Part III expansion. Cash on hand to pay for Part II & Part III expansions. Oil sales growing to over 10% of revenue. 100 employees and growing. Diversification into Arizona and the United States. Our primary focus continues to be building a strong, diversified and profitable market leader for our shareholders. Clearly, Aphria continues to outperform."

Going forward, 2017 is going to be a big year for Aphria. Last month, we saw the Canadian Federal Task Force issue its recommendations on how to legalize recreational marijuana use. The proposals include a minimum purchase age of 18, federal oversight on production, provincial governments charged with retail distribution and maintaining criminal offenses for illicit production and trafficking. The Task Force was lead by Canada’s former attorney general and offered more than 80 recommendations on how Canada could become the largest developed-world country to legalize marijuana.The Canadian government’s goal is to root out the criminal elements that have trafficked in marijuana and made a fortune doing so. Getting marijuana out from the black market and into a regulated environment would make Canada the first developed country to do so and provide a model for other governments worldwide. The Task Force’s report estimates the Canadian black market for marijuana to be worth C$7 billion annually. This potential is what makes Canadian cannabis players like Aphria Inc so exciting for investors.Currently trading with a market cap of C$604 million, Aphria Inc remains one of the best positioned companies in Canada with a war chest of C$88 million. Considering its cash hoard, expansion plans, and strategic investments, Aphria Inc remains one of the best-run cannabis plays in Canada and a must-own for pot stock investors. We will be updating our subscribers with the latest on Aphria and other cannabis names. For complete coverage, sign up below!Disclosure: We have no position in Aphria Inc and have not been compensated for this article.

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