Vancouver, British Columbia–(Newsfile Corp. – September 1, 2020) – Emerald Health Therapeutics, Inc. (TSXV: EMH) (OTCQX: EMHTF) (“Emerald”) reported financial results for the three and six months ended June 30, 2020. Full versions of the Company’s unaudited condensed interim consolidated financial statements and MD&A can be found on SEDAR at www.sedar.com.
“The second quarter was a very solid quarter in all aspects of our business. It marked a fundamental and notable shift in our financial performance; significant progress in all aspects of our operations; the launch of new brands and new products; and, importantly, substantial progress on delineating our go-forward strategy and vision,” said Riaz Bandali, President & Chief Executive Officer of Emerald. “The fact that we were able to deliver so well on all of these objectives during these unprecedented times is a testament to the tremendous effort of our team and the systematic discipline that we have placed on improving every aspect of our operational and financial performance, which has been our focus since I joined the company 13 months ago.
“In the second quarter, we started to realize the impact of our considerable cost restructuring actions over the last three quarters, which when coupled to the significant efficiencies achieved in our operations, had a very positive impact on our operating results, gross margin and EBITDA. In addition, our 41.3% owned joint venture, Pure Sunfarms, continues to achieve leading market share in Ontario and strong growth in other provinces like Alberta. Pure Sunfarms recently made its first shipment of vapes and oil tinctures to the BC liquor board, and with the shipment of its Cannabis 2.0 products into other provinces, it continues to entrench its competitive position across Canada. We are very optimistic about the value of our assets going forward.”
The following table summarizes selected quarterly financial information for the Company, which was derived from the audited annual financial statements prepared in accordance with IFRS or the condensed interim consolidated financial statements prepared in accordance with IFRS applicable to the preparation of interim financial statements, IAS 34, Interim Financial Reporting:
* Share of the net income from Pure Sunfarms adjusted for transactions with EMH and for fair value changes, and adjusted EBITDA from Pure Sunfarms are reflected in EMH net loss and adjusted EBITDA respectively.
EMH adjusted EBITDA is calculated by subtracting interest income, gain on changes in fair value of biological assets, share of income from joint venture and deferred income tax recovery, and adding back depreciation, share-based payments, other expenses, loss from fair value changes in financial assets, inventories written down due to fair value changes, non-recurring items and share of Pure Sunfarms adjusted EBITDA from EMH net loss and comprehensive loss.
The Company’s unaudited condensed interim consolidated financial statements and MD&A for the three and six months ended June 30, 2020, together with other information related to the Company, including the Company’s most recent Annual Information Form (“AIF”), can be found on SEDAR. Additional information related to the Company is available on its website at www.emeraldhealth.ca
In 2Q20 and subsequent to the quarter, Emerald raised capital and issued shares with the following transactions. Full details are available in prior press releases and in various filings on SEDAR.com.
April 9, 2020: raised $1.1M in gross proceeds from the exercise of 6,250,000 warrants at $0.17 per warrant. The warrants were originally issued in 2019 with an exercise price of $2.00 per common share, in connection with a convertible debenture. The terms of the 6,250,000 warrants were amended in April 2020 and the exercise price of the warrants was changed to $0.17 per common share. June 2, 2020: raised $2.1M in gross proceeds through a prospectus offering, issuing 11,351,351 units at $0.185 per unit. Each unit consisted of one common share and one common share purchase warrant.August 13, 2020: established an at-the-market offering (ATM) to issue shares from treasury for up to $3.25M to the public, from time to time, at the discretion of Emerald. Emerald has not accessed any proceeds from the ATM at the date of this release. The ATM is effective until the earlier of April 13, 2021 or completion of the sale of the maximum amount of shares thereunder.
Emerald entered into a share purchase agreement with Quinto Resources Inc. on July 30, 2020, in respect of the sale of Emerald’s wholly-owned subsidiaries, Verdélite Sciences and Verdélite Holdings. The subsidiaries own and operate the 88,000 square foot craft cannabis production indoor facility in St. Eustache, Quebec. Pursuant to the agreement, Quinto will purchase all issued and outstanding shares of the subsidiaries for a cash purchase price of $21.0M, subject to a 90-day working capital adjustment. Upon closing, Emerald will continue to sell its own products in Quebec, subject to certain restrictions over 75 days, and will retain exclusive rights to its Souvenir™ brand. Completion of the transaction is subject to various conditions, including obtaining applicable consents and approval of the purchaser’s shareholders. The proceeds of this transaction will be used in a targeted and well-defined manner to improve the Company’s working capital position, including eliminating the deferred payment in its entirety and reducing accounts payable, as well as reducing the long-term debt. Although, we expect this transaction to close in 4Q20, we cannot guarantee its closing.
On August 31, 2020, Emerald announced the launch of its Fast Action SYNC™ Nano cannabis spray products in the adult-recreational market. These products are based on nanoemulsion technology to provide rapid onset and shorter duration of effects to provide consumers with greater predictability and control of their cannabis experience. Saskatchewan and Alberta have received initial shipments of SYNC™ 15 Nano THC Fast Action Spray. SYNC™ 15 Nano CBD Fast Action Spray is planned for distribution in the coming months. Additionally, Emerald successfully launched its SYNCMED Nano CBD Fast Action Spray into the medical market in July.
Emerald Health Therapeutics will host a conference call on Tuesday, September 1, 2020 at 10:30 a.m. ET.
To access the audio broadcast, please dial (866) 652-5200, or via the Internet at: https://services.choruscall.com/links/emhtf200619.html.
An archived version of the presentation will be available for 90 days on the “Investors” section of Emerald’s website: https://dev.emeraldhealth.ca/investors/events-and-presentations/
Emerald Health Therapeutics, Inc. is committed to creating new consumer experiences with distinct recreational, medical and wellness-oriented cannabis and non-cannabis products, with an emphasis on life science-based innovation and production excellence. Emerald’s three distinct operating assets are designed to uniquely serve the Canadian marketplace and international opportunities. These assets, all in full production, include: its Metro Vancouver, BC-based greenhouse operation (78,000 square feet) capable of producing organic-certified product; Verdélite, its premium craft cannabis production indoor facility in St. Eustache, Québec (88,000 square feet); and Pure Sunfarms, its 41.3%-owned joint venture in Delta, BC, producing high quality, affordably priced products (1.1 M square feet).
Please visit www.emeraldhealth.ca for more information or contact:
This press release contains references to EBITDA. This financial measure is not a measure that has any standardized meaning prescribed by IFRS and is therefore referred to as “non-GAAP measures”. Non-GAAP measures used by the Company may not be comparable to similar measures used by other companies. EBITDA is defined as “income (loss) before interest expenses, taxes, depreciation and amortization. Refer to the table above for information on the calculation of EBITDA used in this press release.
The Company uses these non-GAAP measures because they provide additional information regarding performance of the Company’s overall business that are not otherwise reflected under IFRS.
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