Emerald Health Therapeutics, Inc. (TSXV: EMH) (OTCQX: EMHTF) delivered fourth quarter and 2018 results along with an update of its first-quarter sales. The revenue in the fourth quarter was $1.1 million versus last year’s $279 thousand for the same time period. The net loss in the fourth quarter was $13.9 million, higher than the third quarter’s losses of $6.4 million.
The company reported total sales of $2.1 million for the full year 2018 and total net losses of $30.9 million. Emerald has had losses of $52 million since inception.
“In the past year, we have worked closely with our 50/50 venture partner to bring into full production one of the single largest cannabis growing assets in the world. Pure Sunfarms’ 1.1 million square foot facility is now rapidly increasing production and sales. By leveraging our own technical expertise and infrastructure with strong partners in 2018, we solidified key building blocks with respect to production/supply, distribution, processing in the form of large-scale extraction, softgel encapsulation, and product innovation,” said Avtar Dhillon, MD, President and Executive Chairman of Emerald.
The company said that its first-quarter sales were $2.6 million. With regards to its BC-based Pure Sunfarms joint venture, Emerald noted that the fourth quarter 2018 sales were $4.9 million and the first quarter sales were expected to exceed $14 million. The company was able to records $1.4 million in the fourth quarter as a share of income from Pure Sunfarms. Emerald entered into supply agreements with Pure Sunfarms to purchase 40% of production in 2018 and 2019 as well as 25% of total production in 2020 through 2022.
Verdalite Sciences Acquisition
Emerald Health also stated that Verdélite Sciences and Verdélite Property Holdings agreed to take $7.5 million of the $22.5 million they were to receive as the final payment for their shares of Verdélite in shares of Emerald in a five-day weighted average price less 10%. Emerald is to pay the remaining $15 million of the purchase price to the Verdelite on or before May 30, 2019.
On May 2, 2018, Emerald acquired 100% of Verdélite and the shareholder loans payable by Verdélite, for a total consideration of $90 million, payable 50% in cash and 50% in shares. The company paid $22.5 million in cash upon closing and $45 million was satisfied by the issuance of 9,911,894 common shares of which 4,955,947 Common Shares will be held in escrow until May 1, 2019 pursuant to an escrow agreement.
“By further building upon our intellectual property and strategic partnerships, as well as our own internal expertise, we are working hard to increase market penetration through the development of new and differentiated ingestible and non-combustible products if, as expected, they become allowable before the end of 2019. This will coincide with the ongoing and substantial expansion of the adult-use retail system – creating significant opportunity for the Company in 2019 and what we anticipate to be a year of extraordinary sales growth for Emerald.”
On March 13, Emerald filed a final short form base shelf prospectus for the issuance and secondary sale of up to $150,000,000 of common shares.