Emerald Health Therapeutics, Inc. (OTCQX: EMHTF) reported financial results for the quarter and year ending December 31, 2019. Net sales were $20.3 million in 2019 versus $1.9M in 2018. The company reported a staggering net loss of $111.9 million in 2019, which it said was impacted by a non-cash impairment charge of $65 million related to the Verdélite production facility in Quebec. The stock fell over 6% on the news.
In addition to that charge, $14 million non-cash loss related to the settlement of outstanding issues related to the Pure Sunfarms joint venture, and a $6 million inventory write-down.
Net sales for the fourth quarter were $4.3 million, an increase of 340% from the same period in 2018. The net loss for the quarter was $90 million
“In the second half of 2019 and through the beginning of 2020, our focus has been to cut costs, scale-up commercial production in our two wholly-owned cultivation facilities, and continue our progress toward positive cash flow and profitability,” said Riaz Bandali, President and Chief Executive Officer of Emerald. “We have four distinct assets encompassing cultivation, post-harvest processing, and product development based on science and unique intellectual property.”
The company has restructured its commitments and relationship with its joint venture, Pure Sunfarms, and its joint venture partner, Village Farms, resulting in the termination of all supply agreements and related obligations. Emerald retains 41.3% ownership and 3 of 6 board seats in Pure Sunfarms. Emerald recognized $19.6 million in a net gain as its share of the joint venture’s net earnings for 2019.
The net sales for Pure Sunfarms consisted entirely of dried cannabis, for the year and fourth quarter of 2019 were $82.8M and $12.1M, respectively, compared to $4.9M and $4.7M in 2018. The gross revenue for Pure Sunfarms fell by 45% sequentially to $13.5 million in the fourth quarter from $24.8 million in the third quarter.
In the fourth quarter, Emerald fulfilled its first shipment of premium cannabis products to the Nova Scotia Liquor Corporation for the adult-use market. This first shipment consisted of Emerald’s high potency SYNC 25 CBD oil and dry cannabis flower, bringing distribution to 10 provinces and territories.
Medical sales continued to grow quarter over quarter, with our patient base almost doubling to 5000 since the beginning of the year. Sales grew 85% from the previous year.