• Ultra low-cost production at $0.08 cost per gram at outdoor facility
• Average net revenue per gram equivalent of $15.11 for medical cannabis sales
• Medical cannabis sales up 43% Q/Q, adult-use cannabis sales up 53% Q/Q
• Active, registered medical cannabis patients increase 48% Q/Q
• $57M in cash/marketable securities, $83M in working capital
• Total expenses decrease 30% Q/Q
• Net income improves to $1.9M, from $11.5M loss Q/Q
• Adjusted EBITDA improves 44% Q/Q

TORONTO, Nov. 12, 2019 (GLOBE NEWSWIRE) — Aleafia Health Inc. (TSX: ALEF, OTC: ALEAF, FRA: ARAH) (“Aleafia Health” or the “Company”) is pleased to report its financial results for the period ended September 30, 2019.

MANAGEMENT COMMENTARY

“Aleafia Health has now reached the next phase in our development as we report our first profitable quarter. It saw us realize substantial improvements in all critical financial metrics, as we scale our cannabis health and wellness ecosystem in Canada and globally. Over the last year, we have overseen major cannabis facility build-outs, all of which are now substantially complete. During this industry transition period, our prudent allocation of capital and focus on sustainable growth sets us apart,” said Aleafia Health CEO Geoffrey Benic.

“Today, we believe that with our outdoor grow facility, we are among the lowest-cost Canadian producers, while realizing a strong average revenue per gram sold. These results demonstrate the executional capabilities of our management team, with a clear path towards continued profitability for our young company.”

THIRD QUARTER CONDENSED INCOME STATEMENT

1. Combined research and consultation revenue
2. These terms and non-IFRS measures are defined or reconciled in Aleafia Health’s Q3 2019 MD&A

Revenue Growth: A robust increase in cannabis sales drove record revenue in the quarter. During the reporting period, revenues from the sale of packaged consumer products represented 94 per cent of net cannabis revenue.

Ultra low-cost production: As previously announced and subsequent to the reporting period, the all-in cash cost per gram to harvest at our Outdoor Grow facility was $0.10, including capital costs amortized over a five-year period. The Company now boasts among the industry’s lowest cost production and, during the reporting period, maintaining among the highest average net selling price per gram of its peers. 

• Average net selling price per gram (medical): $15.11
• Average net selling price per gram (adult-use): $6.40
• Average net selling price per gram (bulk wholesale): $6.00

Balance Sheet: Strengthened balance sheet during the reporting period, as total expenses declined substantially for the second consecutive quarter, despite significantly increasing the scale of the business.

The Company believes that its current cash position is more than adequate to fund all operating and capital activities.

Growth in Medical Patients: Growth in active, registered medical patients increased by 48 per cent over the preceding period.

The Company has served over 70,000 clinic patients to date through its national network of medical cannabis clinics and education centres. The Company believes it is well positioned to capture increased medical cannabis sales market share due to its unique, integrated health and wellness ecosystem including clinics.

FACILITY AND PRODUCTION UPDATE

In the last year, Aleafia Health has overseen three major construction projects. The Port Perry Outdoor Grow facility, the Niagara Greenhouse, and the Paris Phase II Expansion are now substantially complete, while construction is ongoing at the Phase II expansion of the Outdoor Grow facility. At an annualized run-rate basis, cultivation capacity is anticipated to reach 129,500 kg across the Company’s completed wholly owned facilities, upon receipt of regulatory approval for the Niagara Greenhouse and expanded outdoor grow. The current licensed and operational capacity is 32,600 kg.

Port Perry Outdoor Grow: Subsequent to the reporting period, the 2019 Outdoor Harvest was completed at our 1.1 million sq. ft. (26 acre) outdoor grow facility. Despite commencing planting in the middle of the growing season, following regulatory approval, the inaugural harvest yielded approximately 10,300 kg of dried flower, with an all-in cash cost per gram to harvest of $0.10. Critical quality control tests conducted to date have been successful.

OUTDOOR GROW 2019 PHOTOS

• 2.6M sq. ft. Phase II Expansion: On September 4, 2019, the Company announced that it had acquired the farmland directly adjacent to its Port Perry facility for a cash purchase price of $1.2 million. The expansion adds an additional 2.6 million sq. ft. (60 acres) of cultivation area, for a total of 3.7 million sq. ft (86 acres). Fencing and the security infrastructure at the expanded site has been largely completed and the Company expects to formally submit its Licence Amendment application and Site Evidence Package to Health Canada during Q4 2019.

  OUTDOOR PHASE II EXPANSION PHOTO

Paris Processing Facility Phase II Expansion: The Company has secured full occupancy for the new building, which is a 30,000 sq. ft. facility entirely dedicated to the extraction, production, packaging and distribution of high-margin, value-added cannabis health and wellness products. Its 115,000 kg of dried flower equivalent extraction capacity, once licensed and fully operational, can process all dried flower grown at the Company’s cultivation facilities.

Niagara Greenhouse: Material capital improvements of the Niagara Greenhouse are now complete and the facility can be operationalized within two weeks of securing its Health Canada Cultivation Licence. The modern 160,000 sq. ft. greenhouse features the most advanced automation and a moving container bench system that allows for a perpetual, year-round harvest.

NIAGARA GREENHOUSE PHOTOS

CONFERENCE CALL & WEBCAST

Date:   November 12, 2019
Time:   8:30 a.m. EST
USA/Canada Toll-Free Participant Call-in: (866) 679-9046; Passcode: 7778885
International Toll-Free Participant Call-in: (409) 217-8323; Passcode: 7778885

WEBCAST LINK HERE

This conference call will be webcast live over the internet and can be accessed through the link provided.  Audio of the call will be available to participants through both the conference call line and webcast; however, the presentation may only be viewed via the webcast. Participants who miss the live call can view a replay at any time via the link provided.

For Investor and Media Relations, please contact:

Nicholas Bergamini, VP Investor Relations

1-833-TSX-ALEF (879-2533)

[email protected]

LEARN MORE: www.AleafiaHealth.com

About Aleafia Health:

Aleafia Health is a leading, vertically integrated cannabis health and wellness company with four primary business units: Cannabis Cultivation & Products, Health & Wellness Clinics, Cannabis Education, and Consumer Experience with ecommerce, retail distribution and provincial supply agreements.

Aleafia Health owns three major cannabis product & cultivation facilities, two of which are licensed and operational, including the first large-scale, operational outdoor cultivation facility in Canadian history. The Company produces a diverse portfolio of commercially proven, high-margin derivative products including oils, capsules and sprays. Aleafia Health operates the largest national network of medical cannabis clinics and education centres staffed by MDs, nurse practitioners and educators and operates internationally in three continents.

Innovation, the heart of Aleafia Health’s competitive advantage, has led to the Company maintaining a medical cannabis dataset with over 10 million data points to inform proprietary illness-specific product development and its highly differentiated education platform FoliEdge Academy. The Company is committed to creating sustainable shareholder value; the TSX Venture Exchange named Aleafia the 2019 top performing company prior to its graduation to the TSX.

Forward Looking Information

This news release contains forward-looking information within the meaning of applicable Canadian and United States securities laws. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes” or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained in this news release. Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information, including risks contained in the Company’s annual information form filed with Canadian securities regulators available on the Company’s SEDAR profile at www.sedar.com. Although the Company believes that the assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information and no assurance can be given that such events will occur in the disclosed time frames or at all. The forward-looking information included in this news release is current as of the date of this news release and the Company does not undertake any obligation to publicly update such forward-looking information to reflect new information, subsequent events or otherwise unless required by applicable securities legislation.

This press release includes certain measures which have not been prepared in accordance with International Financial Reporting Standards (“IFRS”) such as Adjusted EBITDA. Adjusted EBITDA does not measure performance under IFRS and should not be considered in isolation or as a substitute for net and comprehensive income or loss prepared in accordance with IFRS or as a measure of operating performance or profitability. We believe these non-IFRS measures provide useful information to both management and investors in measuring our financial performance and condition and highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. Definitions and reconciliations of non-IFRS measures to the relevant reported measures can be found in our Management’s Discussion & Analysis which is available on SEDAR profile at www.sedar.com.