Emerald Well being Therapeutics Reports Second Quarter 2020 Economic Benefits and Offers Corporate Update

Vancouver, British Columbia–(Newsfile Corp. – September 1, 2020) – Emerald Well being Therapeutics, Inc. (TSXV: EMH) (OTCQX: EMHTF) (“Emerald”) reported monetary outcomes for the 3 and six months ended June 30, 2020. Complete versions of the Company’s unaudited condensed interim consolidated monetary statements and MD&ampA can be discovered on SEDAR at www.sedar.com.

“The second quarter was a really strong quarter in all elements of our enterprise. It marked a basic and notable shift in our monetary efficiency considerable progress in all elements of our operations the launch of new brands and new goods and, importantly, substantial progress on delineating our go-forward approach and vision,” mentioned Riaz Bandali, President &amp Chief Executive Officer of Emerald. “The reality that we have been capable to provide so effectively on all of these objectives through these unprecedented instances is a testament to the tremendous work of our group and the systematic discipline that we have placed on enhancing just about every aspect of our operational and monetary efficiency, which has been our concentrate given that I joined the organization 13 months ago.

“In the second quarter, we began to recognize the effect of our considerable expense restructuring actions more than the final 3 quarters, which when coupled to the considerable efficiencies accomplished in our operations, had a really good effect on our operating outcomes, gross margin and EBITDA. In addition, our 41.three% owned joint venture, Pure Sunfarms, continues to reach top industry share in Ontario and sturdy development in other provinces like Alberta. Pure Sunfarms not too long ago produced its 1st shipment of vapes and oil tinctures to the BC liquor board, and with the shipment of its Cannabis two. goods into other provinces, it continues to entrench its competitive position across Canada. We are really optimistic about the worth of our assets going forward.”

Emerald and Pure Sunfarms Joint Venture Summary

Emerald 2Q20 Financials (compared to 2Q2019 and 1Q2020)

  • Optimistic gross margin of $1.0M shows considerable improvement more than a gross margin of adverse $1.3M in 2Q19 and adverse $.9M in 1Q20. Emerald accomplished a good 30% margin of expense of goods sold more than net sales in the existing quarter. The considerable gross margin improvement is due to a bigger proportion of larger margin solution sold that has been cultivated at Emerald’s personal facilities, processing efficiencies, and a decrease expense base of input material as compared to 1Q20.
  • All-in typical expanding expense of $.99 (which includes depreciation excluding trim) per gram from Emerald’s two facilities in St. Eustache, Quebec and in Richmond, BC. Money expanding expense of $.78 (excluding depreciation) per gram. The two Emerald facilities harvested more than three,000 kilograms of cannabis flower and trim through the quarter.
  • Net sales of $two.5M decreased 46% compared to $four.6M in 2Q19 and decreased 14% from $two.9M in 1Q20. Emerald was capable to keep sales at a fairly flat level in 2Q20 in comparison to 1Q in spite of the considerable industry and pricing stress of dried flower in the retail sector and the delay of the launch of the SouvenirTM brand, which only occurred in the final week of June 2020.
  • Total SG&ampA expense of $three.5M, which consists of $1. of non-money expenditures, decreased $9.0M from $12.4M in 2Q19 and decreased $two.5M from $six.0M in 1Q20.
  • Net loss of $18.9M consists of a $17.1M impairment of the Verdélite money producing unit (a non-money item). Specifics on the impairment are obtainable in the condensed interim consolidated monetary statements for the period ended June 30, 2020.
  • Operating loss of $two.4M decreased 82% from $12.4M in 2Q19 and decreased 64% from $six.9M in 1Q20. Improvement in operating loss was driven by improvements in gross margin and decrease SG&ampA expenditures when compared to 1Q20.
  • EBITDA of adverse $1.2M in 2Q20 reflects a $six.1M improvement from adverse $7.3M EBITDA in 2Q19 and $two.7M improvement more than 1Q20. The EBITDA figure does not involve any share of EBITDA from the Pure Sunfarms’ joint venture and only reflects Emerald’s operating outcomes.
  • Adjusted EBITDA of adverse $.1M reflects Emerald’s proportionate share of Pure Sunfarms’ 2Q20 EBITDA.
  • Net money flow utilised in operating and investing activities of $two.4M in 2Q20 decreased by $19.9M from $22.3M utilised in 2Q19 and decreased $two.2M from $four.6M utilised in 1Q20.

Crucial Initiatives and Accomplishments

  • Enhanced recreational dried flower sales by 16% and volume (kilograms) by 23% from 1Q20. Income development benefited from expanding sales of Emerald-grown, Emerald-branded flower outdoors of Quebec and 1 week of sales, following a effective late-June launch of the new SouvenirTM brand, in Quebec. Initial shipments of Emerald-grown goods to Alberta, Manitoba, Saskatchewan and Newfoundland and Labrador have been produced in April and May possibly, and to Ontario in the final week of 2Q20. Emerald produced its 1st solution shipments from its Richmond greenhouse to British Columbia in late 1Q20.
  • Effectively executed on our partnership with the Valens Business and shipped our 1st version of SYNC 25 CBD oil from our partner’s facility in May possibly 2020. Emerald also expanded its geographical industry for SYNC 25 CBD from Alberta, British Columbia, Manitoba, Ontario, Newfound Land and Labrador, Saskatchewan and Nova Scotia with its 1st shipment to Quebec in June 2020.

Pure Sunfarms Joint Venture (41.three%-owned)

  • Net sales, consisting completely of dried cannabis, have been $12.9M in 2Q20 compared to $18.0M in 1Q20. This quarter was marked by an 89% raise in volume sold of branded retail goods compared to the prior quarter. The reduce in net sales was largely the outcome of a 29% decrease net typical promoting value per gram of dried flower in 2Q20 compared to 1Q20 and a substantial reduce of sales in the wholesale industry due to industry situations.
  • Price of goods sold of $.83 per gram in 2Q20 compared to $.88 per gram in 1Q20. The raise in significant-format SKUs in Pure Sunfarms’ solution mix contributed to a decrease all round expense per gram sold in 2Q20.
  • Net loss of $.2M in 2Q20 was negatively impacted by a $1.7M loss on fair worth modifications in biological assets.
  • Seventh consecutive quarter of good EBITDA.
  • Emerald recognized $.2M as its share of loss from Pure Sunfarms, as compared to $five.2M share of revenue recognized in 1Q20.
  • Pure Sunfarms ready for the imminent launch of its cannabis oil goods and new solution types below its Cannabis two. solution roll-out program.
  • Received from Well being Canada its cannabis cultivation sales licence primarily based on an initial production location inside its second 1.1 million square foot greenhouse in Delta, British Columbia (Delta two), enabling it to expand capacity as necessary by means of license amendments.
  • Expanded its credit facility with a lending syndicate led by Bank of Montreal and which includes Farm Credit Canada and the addition of CIBC to its complete $59 million capacity with the completion of the Credit Facility’s accordion function.

Financials Benefits &amp Capital Sources

Chosen quarterly monetary info

The following table summarizes chosen quarterly monetary info for the Business, which was derived from the audited annual monetary statements ready in accordance with IFRS or the condensed interim consolidated monetary statements ready in accordance with IFRS applicable to the preparation of interim monetary statements, IAS 34, Interim Economic Reporting:

Q2 2020 Crucial Economic and Operational Metrics
(Thousands of Canadian dollars)

Q2 2020

Q1 2020

Economic Benefits

Gross income





Net income (net of excise duty)



Cannabis gross income

Dry cannabis



Cannabis oils






Gross margin (net of fair worth adjustment)



Total SG&ampA (net of share-primarily based payments)



Total R&ampD expenditures



Net loss*






Adjusted EBITDA*



Balance Sheet

Money &amp money equivalents



Net functioning capital



Operational Benefits

Typical promoting value (net of excise duty)











Pure Sunfarms Economic Benefits

Gross income





Gross margin (net of fair worth adjustment)



Total SG&ampA



Net revenue (loss)



Adjusted EBITDA***



* Share of the net revenue from Pure Sunfarms adjusted for transactions with EMH and for fair worth modifications, and adjusted EBITDA from Pure Sunfarms are reflected in EMH net loss and adjusted EBITDA respectively.

EMH adjusted EBITDA is calculated by subtracting interest revenue, obtain on modifications in fair worth of biological assets, share of revenue from joint venture and deferred revenue tax recovery, and adding back depreciation, share-primarily based payments, other expenditures, loss from fair worth modifications in monetary assets, inventories written down due to fair worth modifications, non-recurring products and share of Pure Sunfarms adjusted EBITDA from EMH net loss and extensive loss.

**EBITDA is calculated by subtracting the share of Pure Sunfarms adjusted EBITDA from Adjusted EBITDA.
***Pure Sunfarms adjusted EBITDA is calculated by adding back Pure Sunfarms’ alter in fair worth of biological asset, non operating expenditures and gains, amortization expense and provision for revenue tax to net revenue.

The Company’s unaudited condensed interim consolidated monetary statements and MD&ampA for the 3 and six months ended June 30, 2020, with each other with other info connected to the Business, which includes the Company’s most current Annual Details Type (“AIF”), can be discovered on SEDAR. Extra info connected to the Business is obtainable on its web site at www.emeraldhealth.ca

Financing and Capital Sources

In 2Q20 and subsequent to the quarter, Emerald raised capital and issued shares with the following transactions. Complete specifics are obtainable in prior press releases and in several filings on SEDAR.com.

  • April 9, 2020: raised $1.1M in gross proceeds from the physical exercise of six,250,000 warrants at $.17 per warrant. The warrants have been initially issued in 2019 with an physical exercise value of $two.00 per typical share, in connection with a convertible debenture. The terms of the six,250,000 warrants have been amended in April 2020 and the physical exercise value of the warrants was changed to $.17 per typical share.
  • June two, 2020: raised $two.1M in gross proceeds by means of a prospectus supplying, issuing 11,351,351 units at $.185 per unit. Every unit consisted of 1 typical share and 1 typical share buy warrant.
  • August 13, 2020: established an at-the-industry supplying (ATM) to situation shares from treasury for up to $three.25M to the public, from time to time, at the discretion of Emerald. Emerald has not accessed any proceeds from the ATM at the date of this release. The ATM is productive till the earlier of April 13, 2021 or completion of the sale of the maximum quantity of shares thereunder.

Other Corporate Updates

SouvenirTM brand effectively launched in Quebec with exceptional industry receptivity

On June 22, 2020, Emerald introduced its new SouvenirTM cannabis brand to the Quebec adult-recreational cannabis industry by means of the Société Québécoise du Cannabis (SQDC). The brand delivers goods grown in Quebec at Emerald’s Verdélite facility. Customer reaction to the Souvenir goods has been really sturdy and the brand has contributed much more than $1.5M in sales to date. The initial goods incorporated Chemdog and Grapefruit GG4, each higher potency THC strains with distinct terpene profiles.

Signed a share buy agreement for the sale of Verdélite Sciences and Verdélite Holdings, with each other, in consideration for a money buy value of $21. million

Emerald entered into a share buy agreement with Quinto Sources Inc. on July 30, 2020, in respect of the sale of Emerald’s wholly-owned subsidiaries, Verdélite Sciences and Verdélite Holdings. The subsidiaries personal and operate the 88,000 square foot craft cannabis production indoor facility in St. Eustache, Quebec. Pursuant to the agreement, Quinto will buy all issued and outstanding shares of the subsidiaries for a money buy value of $21.0M, topic to a 90-day functioning capital adjustment. Upon closing, Emerald will continue to sell its personal goods in Quebec, topic to particular restrictions more than 75 days, and will retain exclusive rights to its Souvenir&#x2122 brand. Completion of the transaction is topic to several situations, which includes getting applicable consents and approval of the purchaser’s shareholders. The proceeds of this transaction will be utilised in a targeted and effectively-defined manner to strengthen the Company’s functioning capital position, which includes eliminating the deferred payment in its entirety and decreasing accounts payable, as effectively as decreasing the lengthy-term debt. Even though, we count on this transaction to close in 4Q20, we can not assure its closing.

Launched Emerald Quickly Action SYNC&#x2122 Nano Cannabis two. spray solution line

On August 31, 2020, Emerald announced the launch of its Quickly Action SYNC&#x2122 Nano cannabis spray goods in the adult-recreational industry. These goods are primarily based on nanoemulsion technologies to present speedy onset and shorter duration of effects to present buyers with higher predictability and manage of their cannabis practical experience. Saskatchewan and Alberta have received initial shipments of SYNC&#x2122 15 Nano THC Quickly Action Spray. SYNC&#x2122 15 Nano CBD Quickly Action Spray is planned for distribution in the coming months. Moreover, Emerald effectively launched its SYNCMED Nano CBD Quickly Action Spray into the health-related industry in July.

Conference Contact

Emerald Well being Therapeutics will host a conference get in touch with on Tuesday, September 1, 2020 at ten:30 a.m. ET.

To access the audio broadcast, please dial (866) 652-5200, or through the World-wide-web at: https://solutions.choruscall.com/hyperlinks/emhtf200619.html.

An archived version of the presentation will be obtainable for 90 days on the “Investors” section of Emerald’s web site: https://dev.emeraldhealth.ca/investors/events-and-presentations/

About Emerald Well being Therapeutics, Inc.

Emerald Well being Therapeutics, Inc. is committed to producing new customer experiences with distinct recreational, health-related and wellness-oriented cannabis and non-cannabis goods, with an emphasis on life science-primarily based innovation and production excellence. Emerald’s 3 distinct operating assets are created to uniquely serve the Canadian marketplace and international possibilities. These assets, all in complete production, involve: its Metro Vancouver, BC-primarily based greenhouse operation (78,000 square feet) capable of making organic-certified solution Verdélite, its premium craft cannabis production indoor facility in St. Eustache, Québec (88,000 square feet) and Pure Sunfarms, its 41.three%-owned joint venture in Delta, BC, making higher excellent, affordably priced goods (1.1 M square feet).

Please take a look at www.emeraldhealth.ca for much more info or speak to:

Jenn Hepburn, Chief Economic Officer
1(800) 757 3536 Ext. #five

Emerald Investor Relations
(800) 757 3536 Ext. #five
[email protected]

Non-GAAP Economic Measures

This press release consists of references to EBITDA. This monetary measure is not a measure that has any standardized which means prescribed by IFRS and is for that reason referred to as “non-GAAP measures”. Non-GAAP measures utilised by the Business could not be comparable to comparable measures utilised by other firms. EBITDA is defined as “revenue (loss) just before interest expenditures, taxes, depreciation and amortization. Refer to the table above for info on the calculation of EBITDA utilised in this press release.

The Business utilizes these non-GAAP measures due to the fact they present extra info relating to efficiency of the Company’s all round enterprise that are not otherwise reflected below IFRS.

Neither the TSX Venture Exchange nor its Regulation Solutions Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts duty for the adequacy or accuracy of this release.

Cautionary Note Concerning Forward-Searching Statements: Specific statements produced in this press release that are not historical information are forward-seeking statements and are topic to essential dangers, uncertainties and assumptions, each basic and certain, which give rise to the possibility that actual outcomes or events could differ materially from our expectations expressed in or implied by such forward-seeking statements. Such statements involve production and processing capacity of several facilities conversion of facilities expansion of facilities use of proceeds of financings commencement of production sales volumes receipt of licenses execution of final agreements with FTI building and operation of a laboratory receipt of hemp deliveries and anticipated production expenses.

We can not assure that any forward-seeking statement will materialize, and readers are cautioned not to location undue reliance on these forward-seeking statements. These forward-seeking statements involve dangers and uncertainties connected to, amongst other items, modifications of law and regulations modifications of government failure to receive regulatory approvals failure to receive required financing outcomes of production and sale activities outcomes of scientific analysis regulatory modifications modifications in costs and expenses of inputs demand for labour demand for goods failure of counter-parties to carry out contractual obligations as effectively as the threat elements described in the Company’s annual info type and other regulatory filings. The forward-seeking statements contained in this press release represent our expectations as of the date hereof. Forward-seeking statements are presented for the goal of giving info about management’s existing expectations and plans and enabling investors and other people to receive a improved understanding of our anticipated operating atmosphere. Readers are cautioned that such info could not be acceptable for other purposes. The Business undertakes no obligations to update or revise such statements to reflect new situations or unanticipated events as they happen, unless essential by applicable law.

To view the supply version of this press release, please take a look at https://www.newsfilecorp.com/release/62969

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