Aphria Inc. slashed its outlook after a delay in opening additional Ontario cannabis stores and a ban on vape products in Alberta.
The Leamington, Ont.-based cannabis company said Tuesday that it now expects net revenue for its 2020 financial year to be between $575 million and $625 million.
It had previously predicted that total would be between $650 million and $700 million.
Aphria also said its adjusted earnings before interest, taxes, depreciation and amortization will now amount to between $35 million and $42 million, rather than between $88 million and $95 million.
Shares in the company behind brands including Solei, Broken Coast Cannabis, RIFF and Good Supply were down 63 cents or about nine per cent at $6.47 in early trading on the Toronto Stock Exchange.
Aphria chief financial officer Carl Merton said the company was being hampered by a delay in opening another wave of cannabis stores in Ontario. The province recently announced it would abandon a controversial lottery-based system that allowed 25 Canadians to open pot stores in Ontario last April, but people hoping to open new stores might not get the go-ahead until spring.
“That certainly had the biggest impact,” Merton told a conference call to discuss the company’s latest financial results.
“The province of Alberta’s temporary ban was next in order of priority.”
Despite it becoming legal to sell vaping cannabis products in most provinces in December, Alberta is still studying its Tobacco and Smoking Reduction Act and has yet to allow such products.
“They’ve been a little bit tight-lipped on the full details of it. They just want to take the right steps for their consumers,” chief executive Irwin Simon said. “Based on those conversations, we feel that that’s an April decision, not something that’s going to happen in the next two, three weeks.”
Aphria was also weighed down by the cost of having to buy third-party cannabis to “meet current market demands.” Aphria didn’t receive its cultivation license from Health Canada for subsidiary Aphria Diamond until November.
The company reported a net loss of $7.9 million or three cents per share for the quarter ended Nov. 30 compared with a profit of $54.8 million or 22 cents per share in the same quarter a year ago.
Net revenue in the quarter totalled $120.6 million, up from $21.7 million a year earlier.
Aphria also announced that Simon, who has been serving as interim chief executive since last February, would drop the interim from his title.
Simon, who is also Aphria’s chairman, said he was optimistic about the company’s future given the demand the industry is experiencing and how quickly Aphria managed to roll out vape products, making them among the first to dive into that part of the industry.
He said the company was confident it can continue generating customers, especially those who would typically buy from the underground market.
“There’s lots of plans in place at Aphria how we continuously move consumers over from the illicit market into the regulated market,” he said.
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