Emerald Health Therapeutics Inc (OTCMKTS:EMHTF) is hot in the news again. After a year of ups and downs in the market, its recent financial reports, change in leadership and business expansion has put the company back in the spotlight. In this piece, we discuss the company, its recent releases and the possible outlook for its future.
First, take a look at its price movement below:
Emerald Health Therapeutics was founded in Jul 2007 and its head office is situated in Victoria, Canada. The firm is a licensed dried cannabis seller and producer under Canada’s Access to Cannabis for Medical Purposes Regulations (ACMPR) and produces and sells dried cannabis and cannabis oil for pharmaceutical purposes, the firm also develops and produces medical marijuana products.
Presently the firm is developing a 0.5 million square foot greenhouse located in Metro Vancouver to serve the expected lawful Canadian adult-use cannabis market which was to commence by 2018. The company currently possesses fifty percent of a joint venture investment with Village Farms International, Inc. which will be converted to an already existing 1.1 million ft2greenhouse in Delta, British Columbia to grow cannabis.
Emerald has a team which is vastly experienced in product development, life sciences as well as large-scale agribusiness. The firm forms a part of the Emerald Health Group, which has numerous firms which specialize in the development of cannabis and cannabinoid products having possible wellness and medical benefits.
For more information on the company, check out our previous post here.
Change in Leadership
Over the course of the last fiscal year, the firm appointed Rob Hill as Chief Financial Officer, Paul Dillman as Vice President of Sales & Marketing and Chris Wagner as Chief Executive Officer. It is understood that new CEO, Mr. Wagner has been in the 25 years in pharmaceutical products marketing space for 25 years during which he worked for 10 years with Eli Lily. He has also been involved in the building of biotechnology companies.
Mr. Hill has worked for more than 20 years in accounting, & finance and has garnered senior leadership experience, having worked as a senior manager of both public and private financial services and technology firms in the USA, Asia, and Canada. Mr. Dillman also brings in experience, having worked for no less than 30 years in sales, global consumer product marketing as well as general management. He has held senior leadership positions at Philip Morris, AB InBev, The Coca-Cola Company and Kraft Foods.
New Site Licenses Granted by Health Canada
During the year, Health Canada allotted a cultivation license for the firm’s co-owned Delta three greenhouse location. The efficiently developed 1.1 million square foot facility for growing cannabis is situated in Delta, British Columbia one of the best possible climates within Canada, and has been estimated to produce about 75,000 kilograms of quality cannabis yearly. Since the receipt of aforementioned cultivation license, a number of starter plants were taken to the greenhouse to induce the sales license application procedures with ACMPR.
Along with this, Health Canada also allotted a sales license for another of the Emerald Health’s sites, which belong to the firm’s wholly owned subsidiary, Emerald Health Therapeutics Canada Inc. in Victoria, British Columbia.
At the end of 2016, the firm recorded revenues of $0.19 million, a massive jump of over 750% from the revenues of the last year. However, it is anticipated that the increase in its product base and expansion plans will increase market demand for the company’s products which lead to an increase and boost sales revenues in the coming years.
However, the firm recorded very high cost of sales of $0.45 million, a significant increase from the previous year. From comparing sales to revenue ratio across both years, there are indicators that the firm may have improved some of its production efficiency in its sales operations across both years.
In line with the cost of sales, SGA, 14%, while the firm incurred R&D expenses of $0.22 million during the year. With no major additional income, while there were increases in other expenses, operating loss for the year was recorded at $2.19 million, a drop from the previous year’s loss of $2.5 million. Net loss for the year was $2.19million.
The statement of financial position reveals that the firm is not highly geared. On its books, its total debt is worth an estimated $0.35 million, leading to stable debt to equity ratio of 0.12. It also has a very high liquidity ratio of 7.6, which can be considered acceptable for its industry.
Judging from its financial results and announcements, EMHTF is on the brink of a serious breakout and market interest in the firm is only really likely to go up in the coming year.
Disclosure: We have no position in EMHTF and have not been compensated for this article.