Aleafia Health Inc. (OTCQX: ALEAF) reported its financial results for the three months ended March 31, 2021. Revenue fell 55% from last year’s $13.7 million to this year’s $6.2 million. most of the decline was due to an 84% drop in bulk wholesale cannabis sales. Aleafia also reported that its net losses increased from last year’s $6.1 million to this year’s $11.2 million.
“This quarter saw us achieve important executional breakthroughs as we realized the exponential increase of our cannabis product portfolio. Likewise, as we benefit from greater scale, we are demonstrating substantial improvements in the profitability of our core adult-use and medical cannabis product sales, contrasting with the broader industry trend of price and margin compression,” said Aleafia Health CEO Geoffrey Benic.
“To further leverage product portfolio expansion, we have only just begun the deployment of our highly differentiated medical cannabis ecosystem through the trailblazing exclusive agreement with Unifor, Canada’s largest private sector union. The ability to service a captive audience of union members who receive insurance coverage for medical cannabis is an important catalyst. We believe that this sets the table for a strong 2021, driven by repeatable, profitable sales in the medical, adult-use and international markets.”
The company had warned investors that its wholesale business would decline and while its other cannabis increased, the numbers aren’t quite as large as the wholesale figures.
Medical cannabis net revenue increased 95% to $2.7 million, in line with the previous quarter, and the company’s best Canadian medical cannabis revenue reported to date. Active registered patients increased to 17,637, an increase of 61% over the prior year’s quarter. Medical cannabis adjusted gross margin before FV adjustments improved for the second consecutive quarter to 53%. Revenue per gram equivalent sold improved for the fourth consecutive quarter to $8.46
Adult-use cannabis net revenue rose 22% to $1.7 million and 143% over the previous quarter and prior year’s quarter respectively. Adult-use cannabis adjusted gross margin before FV adjustments improved substantially to 56%, from 31% and 30% in the previous quarter and prior year’s quarter respectively. Adult-use cannabis revenue in the first 41 days of the second has surpassed total adult-use cannabis revenue for the first quarter of 2021.