Aleafia Health Inc. (OTC: ALEAF) reported its financial results for the quarter ending September 30, 2020, with net revenue of $4.9 million and revenues were flat from the quarter ending in 2019. The company delivered a net loss of $19.7 million versus a positive net income of $1.9 million and a loss of $29.8 million, in the same periods in the prior year. The net loss was attributed to a non-cash $14.3 million adjustment of saleable inventory to net realizable value during the quarter, to reflect a significant decline in cannabis wholesale prices.
“We expect to have our strongest quarter to date in Q4 2020 as we progress towards significant sequential growth in medical, adult-use, wholesale and international cannabis sales. The strategic path we’ve executed upon, from building out facilities, to receiving three major licenses in 2020, to formulating new products, is now bearing fruit. With the introduction of vape cartridges, sublingual strips, and with many more launches to come, the commercialization of our business at scale is truly in full swing,” said Aleafia Health CEO Geoffrey Benic.
The company was more intent on telling investors that the revenue was set to improve. Aleafia said it had contracted sales that would generate net revenue of $16 million. It said it is expected that the majority of the domestic wholesale shipments will be completed in the three months ended December 31, 2020, with the remainder shipping to customers early in the first quarter of 2021. In addition to the $16 million in cannabis sales Aleafia said it also expects to see significant growth in the adult-use and medical channels. With incremental revenue generated by new product launches, and a 32% sequential increase in active, registered patients during the third quarter, the company said it expects to report record medical cannabis net revenue during the fourth quarter, along with strong growth in adult-use revenue.
Benic added, “With respect to the most recent quarter, the successful sale of our entire 2019 outdoor crop was completed earlier in the year, which led to a significant sequential decline in cannabis revenue, due to lack of available product. This was coupled with a number of significant product launches that only began generating revenue following the end of the reporting period.”