Aphria Inc.’s medical cannabis business and German operations pushed the company to report a $5.1-million loss in its latest quarter, compared with a $16.4-million profit in the same period a year ago.
The Leamington, Ont-based cannabis company said Thursday that the loss amounted to two cents per share for the quarter ended Aug. 3, compared with a profit of seven cents per share a year ago.
Revenue in what was the company’s first quarter of its financial year totalled $145.7 million, up from $126.1 million a year earlier.
On average, analysts had expected a loss of four cents per share and nearly $159.7 million in revenue, according to financial data firm Refinitiv.
Chief financial officer Carl Merton blamed the loss on challenges the cannabis industry has faced in the medical market since the COVID-19 pandemic reached Canada and encouraged people to increasingly stay home and put off visits to health care professionals.
“The portions of our business reliant on in-person visits, whether they be to doctor offices, hospitals, pharmacies or cannabis clinics, continue to be negatively impacted,” Merton told analysts on a call.
“The volume of these visits were noticeably down during the quarter.”
To offset the medical cannabis troubles, the company focused heavily on two new brands it introduced.
B!ngo is meant to offer products at cheaper price points and with potencies so low the company compares them to “a nice cold beer on a summer’s day.”
Aphria said B!ngo provided 6,340.4 kilograms and more than $18,700 in additional sales during the quarter.
It also launched P’tite Pof, a Quebec-inspired brand that uses flourishes borrowed from convenience stores and fast-food outlets.
Chief executive Irwin Simon said both generated strong initial demand and he believes they will complement Aphria’s other brands including Solei, Broken Coast Cannabis, RIFF and Good Supply.
He also revealed that Aphria sold 20,882 kilograms or kilogram equivalents of cannabis in the quarter, up from 12,557 a year ago
The company’s cannabis revenue grew to $62.5 million compared with $53.1 million a year ago, while distribution revenue fell to $82.2 million compared with $99.1 million in the same period last year.
The results pushed Aphria’s stock down by 12.71 per cent to reach $6.73 in morning trading.
Executives said that some of their decreases came from the German market, which proved to be difficult this quarter because Europeans are travelling less and elective surgeries are down.
“It’s slow, but it’s coming and it’s not like it’s coming to a halt,” said Simon. “Unfortunately, COVID has not helped at all.”
Simon predicted Germany will be the first country in the EU that will legalize recreational cannabis, but for now, he cautioned that troubles remain.
This isn’t the first period of trouble Aphria has stumbled upon in 2020 in relation to overseas operations.
The company reported a $98.8 million net loss and non-cash asset impairment expenses worth $64 million in its fourth quarter of its last fiscal year.
The impairment expenses stemmed from operations in Colombia, Jamaica and Lesotho, where Aphria was hit hard by COVID-19 border closures.
Tara Deschamps, The Canadian Press
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