APHRIA INC (OTCMKTS:APHQFF) has been enjoying a significant rally in their share price since June 2017 with the price coming from a mere $3.5 to highs of over $7 early this month.With such a price surge comes closer monitoring of the entity by market participants who want to evaluate the reason behind such trends.In this case, we have also taken an interest in the same trend and have chosen to look into the company and evaluate how the horizon looks for them.The share price action, as can be seen below began long back, however, given that they have maintained it means that they are doing something that’s impacting them positively over the short and long term. The market seems to be rewarding them for a decision well-made or job well-done. APHQF Daily ChartWe have chosen to evaluate the notion that the entity has a lot of value addition capacity going forward and that their management has their financial situation well under control.Let us assess this notion.Before then, however, let’s find out what exactly entails Aphria Inc.Aphria Inc: Under the MicroscopeFounded in 2011, Aphria Inc is one of Canada's lowest cost producers, produces, supplies and sells medical cannabis. The company which is situated in Leamington, Ontario, the greenhouse capital of Canada prides itself in being committed to providing pharma-grade medical cannabis, superior patient care while balancing patient economics and returns to shareholders. They are engaged in the production, supply and sale of medical cannabis.Moreover, they were the first listed producer to report positive earnings and cash flows.Currently, the $912 million company with over 140 employees is edging towards being a top cannabis industry player both within Canada and globally, however, with an incline towards the medical space. They have invested significantly in this and are currently working towards coming up with a drug that can aid in cancer treatment.Given the nature of the above, it will form our next section.Recent DevelopmentsThe company began the quarter with some great news: they had just closed a product acquisition deal with Namaste. APHQF, according to the deal, is meant to supply medical cannabis through Namaste’s Cannmart facility in Ontario, Canada.This comes at a period when Namaste is working towards increasing their product offering therefore looking for a provider of quality cannabis; the biggest beneficiary being APHQF.That was just but the beginning.During the period, the company completed its first cannabis oil shipment to Australia-based Medlab.Now, let’s add some perspective to this.Medlab Clinical is an Australian based medical life science company, developing therapeutic pathways for diagnosed chronic diseases. With the company growing its patent portfolio, cannabis-based drugs have become a significant part of their research and development. They are currently Medlab at the human trial to test management of intractable pain in oncology patients.Against this backdrop, the drugs that have been shipped are meant to ensure that this trial rounds are conducted using the highest quality of cannabis, with APHQF offering nothing less.The partnership which brings the world one step closer to the mitigation or overall alleviation of pain brought about by cancer is a majorly progressive step for us all and especially for APHQF. The drug, NanaBis™, which will be a major solution upon approval by the licensing body will also be a significant revenue generator for the company long into the future.Medlab expects to manufacture 3,500 units of NanaBis™ sufficiently covering the trial cohort.These sentiments are underscored by their CEO, Vic Neufeld, who says:
"The first shipment of medical cannabis to Medlab is part of our global expansion strategy to take the Aphria story to other regulated countries like Australia and create additional revenue streams… We are proud to be a part of this important research, and we look forward to continuing to provide high-quality, safe and pure medical cannabis products to support Medlab's clinical research and help patients effectively manage their pain."
Source:Over time, APHQF is bound to make some progress with this drug. Such will be the time of the company’s shareholders lives.Finally, they just closed a deal financing having issued over 12 million shares at $7.25 totaling $92 million. The entity holds that the balances from the issue will go to finance the company’s future investments as well as the working capital needs of the company with excess balances being held as cash and cash equivalents. Such speaks only to the market’s belief in the company’s ability to generate ample returns from their money as well as manage their finances amicably.Going forward, our initial proposal stands, APHQF is on an upward trajectory and little will stop it.Financial StateThe financial period ended May 2017 has been the best period yet in the financial history of APHQF, accentuating the premise brought forth in the company summary on being the first company to report positive earnings and cash flows.During this period, their financials nearly all grew in a positive manner. Let us explain.Their revenues, as compared to those for the period ended March 2016, stood at $20.4 million, a 142% jump from the initial $8.4 million. Such a leap was described by many other market players as being one of a kind for an already huge company. This was tied to the profit of $397,961 made this year as compared to the loss of $4.1 million made in the previous period.With management stating that they had their foot on the financials, the above only speaks to the strides management has taken to keep the costs down and profits flowing.Such has also been the case with their cash position.Their operating cash flows rose from $988,134 in cash outflows to a cash inflow of $5.3 million in this quarter while their investing cash flows went to $202 million in outflows, up from $5.9 million.With such an impeccable performance, one can only believe that their investing cash flows have been well appropriated and that their return supersedes the current period’s return which stood at $3.5 million in gains on long term investments. Such an outlook only makes this company more desirable to investors and this is further seen in their current shareholder values.The latter has grown to $273.8 million, up from $35 million in the period ending March 2016 leading to a working capital figure of $169 million in the current quarter, the highest such figure recorded for the company.The latter alludes a futuristic approach given that their working capital base will finance their current and recurrent operations. The company seems to be at the right place financially at the right time as they work towards ensuring that they can take advantage of the continued legalization of marijuana throughout Canada as well as globally. The financials above have proved their strong financial base, as such, there is no doubt that the company can indeed finance its growth.ConclusionAPHQF represents one of the success stories in the market. Their strong portfolio coupled with their financial management speaks to the company’s strengths and management’s focus. Investment in the company entails only one thing: success. After Canopy Growth Corp (OTCMKTS:TWMJF) secured a C$190 million investment from Constellation Brands Inc (NYSE:STZ), the next most logical investment target for another Fortune 500 company is Aphria. The question is not if a deal will happen, but when.We will be updating our subscribers as soon as we know more. For the latest updates on APHQF, sign up below!Disclosure: We have no position in APHQF and have not been compensated for this article.
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