Emerald Health Therapeutics, Inc. (CSE: EMH) (OTCQX: EMHTF) announced that it is leaving the cannabis industry and pivoting to a pharmaceutical development focus. Emerald said it is looking for buyers for its cannabis assets to further strengthen its already strong capital position. The company also said that it plans significant cost cuts to decrease its monthly net burn. In addition to that, Emerald Health reported that its President and CEO Riaz Bandali was leaving the company at the end of December. The company had begun to see an increase in revenues, but the net losses continued to outweigh the progress made on that front.
“Our management team and staff have shown exemplary commitment and effort in advancing Emerald’s cannabis business, but in a market with a very large number of cannabis operating licenses, increasing competition, and declining retail prices, the path to achieving profitability and increasing shareholder value has been very challenging,” said Jim Heppell, Chairman of Emerald’s Board of Directors. “Instead of committing additional capital and effort to focus on this very challenging and saturated market, the Board has decided that Emerald shareholders would be better served by the company exiting the recreational and medical cannabis business and pivoting into pharmaceutical development. We will now set out on a new business path that we believe has much greater potential to increase shareholder value.”
Emerald will file its third-quarter financial results on Monday, November 29. Emerald said it plans to maximize its cash position and seek business opportunities in pharmaceutical development where the Board of Emerald has significant expertise. Any such acquisitions or dispositions are subject to regulatory approval and may be subject to shareholder approval.
“Riaz originally committed to take Emerald through a restructuring to achieve financial stability, and over the past two years he has been successful in repositioning Emerald, restructuring its balance sheet, and maximizing its cash position. Having reached a logical point with that effort, he has been planning to pursue new opportunities. We appreciate what Riaz has done for Emerald, thank him for his commitment, skills and effort, and wish him well,” added Mr. Heppell. “A successor to Riaz will be named prior to year-end.”
The company has agreed to retain Vantage Point Advisors to assist it in identifying potential acquisition/merger candidates involved in pharmaceutical development and to carry out due diligence on selected candidates. Vantage Point Advisors is an independent, arm’s-length business valuation firm with offices in New York, Los Angeles, San Diego, Portland, Seattle, and Dallas-Fort Worth.