Aleafia Health Reports Q4 2021 Financial Results with $11.5 Million Branded Cannabis Gross Revenue, representing a 103% Increase from 2020

• Remodeling enterprise in the direction of a branded hashish supplier, with branded income representing 80% of whole internet income in 2021 in comparison with 33% in 2020

• 96% enhance in branded hashish internet income to $28.7 million in 2021 from $14.6 million in 2020

• 396% enhance in adult-use internet income to $16.0 million in 2021 from $3.2 million in 2020

• 60% enhance in branded hashish internet income to $8.3 million in This autumn 2021 from $5.2 million in This autumn 2020

• 33% enhance in medical hashish internet income to $10.6 million in 2021 from $8.0 million in 2020

• Consolidating medical market share with 17% progress in scripts in 2021 relative to 23% total market decline

• Common THC efficiency of twenty-two% with as much as 27% ranges achieved in record-breaking out of doors harvest

• Projecting Adjusted EBITDA Profitability through the Second Half of 2022

TORONTO, Feb. 14, 2022 (GLOBE NEWSWIRE) — Aleafia Well being Inc. (TSX: AH, OTCQX: ALEAF) (“Aleafia Well being” or the “Firm”) is happy to report its monetary outcomes for the three and 12 months ended December 31, 2021. The Firm’s 2021 unaudited, consolidated monetary statements and administration dialogue and evaluation for the fourth quarter and 12-month durations can be out there within the Traders part of the Firm’s web site at aleafiahealth.com and can be filed on SEDAR and out there at sedar.com.

“The core strategic targets that can drive Aleafia Well being to sustained profitability replicate a pivot to concentrate on branded hashish income. Branded income is comprised of ‘sticky,’ recurring medical income at engaging gross margins and strong progress in adult-use hashish income the place Aleafia continues to aggressively take market share,” mentioned Aleafia Well being CEO Tricia Symmes. “We’re centered on attaining High 10 in whole LP market share in 2022, pushed by management within the worth hashish class. Aleafia’s 5 hashish manufacturers span the spectrum from premium and craft flower to the worth class with Divvy, the place we already get pleasure from vital management. The corporate’s market share rose from 30^th in Q1 2021, once we launched our Home of Manufacturers, to fifteen^th in This autumn 2021, representing the third highest change in market share rankings out of 40 Canadian Licensed Producers (“LPs”).⁽¹⁾ This autumn retail gross sales elevated 37% relative to Q3. Our Divvy worth model is persistently among the many high searched manufacturers on the Ontario Hashish Retailer web site.”

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“In 2021, the whole internet income of $36.1 million represents a extremely diversified gross sales combine. Pushed by strong progress in adult-use and medical gross sales, these two gross sales channels represented 80% of whole internet income, an entire turnaround from 2020, the place bulk-wholesale product represented 67% of whole internet income,” Symmes added. “That is only the start, and we’re very excited in regards to the future. A record-breaking out of doors harvest that produced common THC efficiency of twenty-two% permits us to direct this flower into the adult-use market, delivering considerably larger internet margin per gram than the majority wholesale channel. With our extremely aggressive THC ranges, the standard of the model is the corporate’s aggressive benefit within the worth class, and by specializing in the highest performing excessive margin merchandise by portfolio optimization, we’re poised to attain breakeven adjusted EBITDA profitability within the second half of 2022.”

“Aleafia Well being’s income is pushed by three robust enterprise traces: its CPG branded adult-use portfolio, the place we goal to get pleasure from a High 10 total market share place, which presently generates $24 million annualized run-rate internet income, with vital momentum within the first 6 weeks of 2022; management in medical hashish with its extremely recurring $10 million annualized run-rate internet income, and a 17% enhance yr over yr in script counts; and worldwide gross sales, the place we’re properly positioned in three international locations, Germany, the UK and Australia, and have developed partnerships with key established European provide distributors.

Our Sunday Market Home of Manufacturers achieved 396% progress yr over yr and is anchored round our vastly profitable on a regular basis Divvy model, now we have moved strongly forward into classes that buyers need and are offering the revolutionary merchandise and a price proposition that they demand.”

OPERATIONAL HIGHLIGHTS

• Web income was $36.1 million for the 12 months ended December 31, 2021 (“2021”), in comparison with $44.5 million within the 12 months ending December 31, 2020 (“2020”). For the three months ended December 31, 2021 (“This autumn 2021”), internet income was $8.8 million, in contrast with $15.2 million in This autumn 2020. The decline in internet income was based mostly on shifting from decrease margin, larger quantity bulk wholesale commodity hashish income to larger margin, larger efficiency and revolutionary adult-use merchandise, providing a singular worth proposition. The Firm’s branded hashish income consists of its “sticky” medical gross sales and market share consolidating branded adult-use hashish merchandise together with its burgeoning worldwide gross sales.

• Branded hashish internet income elevated 96% to $28.7 million in 2021 in comparison with $14.6 million in 2020, and elevated 60% to $8.3 million in This autumn 2021 in comparison with $5.2 million in This autumn 2020, largely attributable to the launch of the Sunday Market Home of Manufacturers, which loved 396% progress in 2021 in comparison with 2020, anchored round Divvy, the on a regular basis model centered on efficiency and an distinctive worth proposition. Aleafia delivered the highest 3 out of 40 Canadian LPs in market share rank enhance from Q1 2021 (#30) to This autumn 2021 (#15).⁽¹⁾

• Grownup-use internet income elevated 396% to $16.0 million in 2021 in comparison with $3.2 million in 2020, and elevated 326% to $6.0 million in This autumn 2021 in comparison with $1.4 million in This autumn 2020. Gross sales velocity continues to speed up driving market share seize with 37% retail gross sales pull by in This autumn 2021 relative to Q3 2021.⁽²⁾

• Medical hashish internet income elevated 33% to $10.6 million in 2021 in comparison with $8.0 million in 2020, pushed by robust ordering patterns from its flagship Emblem hashish model. Script depend elevated 17% yr over yr, to 37,779 in 2021 in comparison with 32,191 in 2020. The affected person base grew 13% to 19,700 in 2021 from 17,400 in 2020. In 2021, the Firm onboarded 4 unionized employers by its unique partnership with Unifor, Canada’s largest personal sector union, with greater than 515,000 members and retirees throughout the nation. The extremely scalable new affected person onboarding platform is well-positioned to speed up affected person uptake. The Firm will proceed pursuing its recurring income base by which sufferers obtain reimbursement for medical hashish.

• Bulk wholesale internet income declined 75% to $7.4 million in 2021 in comparison with $29.9 million in 2020, which was offset partially by robust progress in branded hashish income. This was pushed by the Firm’s redirection of its cultivation flower from the majority wholesale gross sales channel in the direction of its larger internet income per gram branded hashish merchandise.

• The This autumn 2021 out of doors harvest delivered over 11,600kg of excessive efficiency saleable flower with THC ranges averaging 22%. The Firm plans to primarily make the most of this product within the first half of 2022 in its adult-use branded hashish merchandise.

• Complete gross revenue honest worth changes and stock provision was 31% in This autumn 2021, in comparison with 59% in This autumn 2020, primarily as a result of Firm’s pivot away from bulk-wholesale in the direction of branded hashish merchandise that ship larger total internet margin per gram.

KEY DEVELOPMENTS
In 2021, the Firm remodeled its enterprise to develop into a branded hashish supplier. It has produced excessive efficiency flower at its Port Perry out of doors progress facility, permitting it to direct that product to larger margin, adult-use merchandise. It has engaged with the buyer and attracted a high government gross sales and advertising and marketing group, with an inside gross sales pressure, that understands the CPG market, what customers need and is targeted on the necessity to drive worth to safe loyal clients and drive and keep market share. Increased THC ranges in addition to the decrease price of enter supplies has allowed the Firm to considerably enhance its market share. Different developments embrace:

• Branded Hashish Represented 80% of 2021 Complete Web Income: The Firm launched 37 new SKUs since This autumn 2020 and constructed 5 hashish manufacturers spanning worth to premium, craft. Divvy, an on a regular basis client worth model, is persistently a high searched model on OCS.ca. Twelve new product codecs had been launched in 2021 together with: Craft Dried Flower, Milled Flower, 1g Distillate Vapes, Reside Resin Vapes, Reside Resin Diamond Sauce, Salted Caramel Pretzel Bites, Cluster Pucks, HotSauce, Omega CBD Delicate Gels, Tub Bombs, Freshly Minted Roll-Ons and Topical Lotions.

• Important Enhance in Grownup-Use Market Share: The Firm is aggressively capturing market share. It achieved a high 3 market share rank enhance amongst 40 Canadian LPs within the Q1 2021 (#30) to This autumn 2021 (#15) interval, based mostly on HiFyre knowledge. Its 37% enhance in retail gross sales pull by from Q3 2021 to This autumn 2021 positioned it among the many high 10 Canadian LPs. The Firm’s market share elevated from 0.3% in Q1 2021 to 2.0% in This autumn 2021. Over this era, the Firm delivered robust retail gross sales pull by in every of the three main classes, with flower growing roughly 1,400%, pre-roll growing roughly 1,000% and vape growing roughly 200%. The Firm enjoys 94% penetration on the retail retailer degree in Ontario and 84% in Alberta, and has provide agreements with Saskatchewan and British Columbia.

• Medical Ecosystem Expanded: The Firm onboarded 4 unionized employers in 2021 by its unique Unifor partnership. These employers symbolize lower than 5% of the Unifor member base and the Firm continues to concentrate on extra onboardings. Regardless of restrictions on interacting straight with potential sufferers as a result of Covid-19, the Firm skilled modest progress in each Unifor-based sufferers and gross sales from Q3 2021 to This autumn 2021. The Firm noticed scripts enhance 17% yr over yr, pushed primarily by continued onboarding of third-party clinics which represented a largely reimbursed affected person base comprising roughly 55% of whole medical gross sales in This autumn 2021. The Firm launched tailor-made packages focused on the Veteran medical demographic and entered the Quebec market.

• Worldwide: The Firm efficiently noticed its merchandise exported into three international locations Germany, UK and Australia in 2021. The Firm established partnerships with key European suppliers and wholesalers to facilitate a ramp-up in pull-through into the European market in 2022.

• Cultivation: The Firm owns three licensed hashish manufacturing services and operates a strategically situated distribution centre all within the province of Ontario, together with in Port Perry the primary large-scale, out of doors cultivation facility in Canadian historical past. Port Perry delivered over 11,500 kg of flower with common THC efficiency of twenty-two% in 2021. THC ranges ranged from a record-breaking 21-to 27% and the terpene profile was excellent, starting from 2.7% to five.7%.

• Price Rationalizations: The Firm methodically reviewed its price construction and optimized its expertise and assets in the direction of the gross sales channels which delivered the best internet realizable margin per gram of flower bought – its branded hashish merchandise. The Firm initiated headcount reductions in This autumn 2021, representing roughly 10% of the workforce and roughly $1.9 million in annualized financial savings. The Firm has undergone a SKU optimization to align its portfolio on best-selling product codecs with the strongest margin profile. The Firm is within the strategy of integrating its digital, bodily and third-party clinic platform which is anticipated to generate extra working expense financial savings. The Firm reviewed its stock and glued property and recognized sure slow-moving property primarily associated to the majority wholesale gross sales channel. On account of the Firm’s pivot in the direction of specializing in branded hashish merchandise, the Firm recorded a $19.6 million stock provision. The Firm additionally recorded a $28.8 million impairment of property, plant & gear as a result of adjustments in market situations for these property.

• Adjusted EBITDA Profitability: The Firm evaluated all aspects of the group and realigned government administration to concentrate on attaining profitability. Important non-recurring one-time prices had been incurred in 2021 because the Firm developed, constructed, and launched its Sunday Market Home of Manufacturers. Most of those prices should not anticipated to be recurring. Over the past 4 quarters, the Firm noticed vital progress and is trending in the direction of attaining breakeven Adjusted EBITDA profitability within the second half of 2022.

• Repositioning the Stability Sheet. The Firm accomplished two senior secured debt financings in This autumn 2021, together with a $10 million senior secured time period credit score facility in August 2021 and a brand new $19 million credit score facility in December 2021. The brand new credit score facility consists of a $12 million time period mortgage and a revolving receivables facility of as much as $7 million. The revolving receivables facility stays undrawn, offering the Firm with liquidity to fund working capital investments required to proceed quickly scaling its adult-use gross sales. As mirrored within the Firm’s announcement on February 1, 2022, the Firm is actively partaking with holders of its listed unsecured convertible debentures maturing on June 27, 2022 (TSX: AH.DB) with a view to effecting adjustments in key phrases which are equitable to each the holders and the Firm, and supply a sustainable basis for the Firm’s continued progress.

Observe that the Firm introduced on February 8, 2022 that it modified its year-end to March 31. Consequently, on this transition yr, annual audited monetary statements for the 15 months ended March 31, 2022 can be issued previous to June 29, 2022.

NET INCOME & ADJUSTED EBITDA

CONFERENCE CALL & WEBCAST
Date: February 15, 2022
Time: 9:30 a.m. ET
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WEBCAST LINK

This convention name can be webcast dwell over the web and will be accessed by the hyperlink offered. Audio of the decision can be out there to individuals by each the convention name line and webcast; nonetheless, the presentation could solely be considered by way of the webcast. Contributors who miss the dwell name can view a replay at any time by way of the hyperlink offered.

For Investor & Media Relations:

Matt Sale, CFO

1-833-879-2533
[email protected]
LEARN MORE: www.AleafiaHealth.com

About Aleafia Well being:

Aleafia Well being, a vertically built-in and federally licensed Canadian hashish firm, owns three licensed hashish manufacturing services, together with the primary large-scale, authorized out of doors cultivation facility in Canadian historical past, and operates a strategically situated distribution centre, all within the province of Ontario. The Firm produces a various portfolio of hashish spinoff merchandise together with oils, capsules, edibles, sublingual strips, and vapes, on the market in Canada within the adult-use and medical markets and is pursuing alternatives in choose worldwide jurisdictions. The Firm owns and operates a digital community of medical hashish clinics staffed by physicians and nurse practitioners.

FORWARD LOOKING INFORMATION

Sure statements herein referring to the Firm represent “forward-looking data”, throughout the which means of relevant securities legal guidelines, together with with out limitation, statements relating to future estimates, enterprise plans and/or targets, gross sales packages, forecasts and projections, assumptions, expectations, and/or beliefs of future efficiency, are “forward-looking data”. Such forward-looking statements contain unknown dangers and uncertainties that would trigger precise and future occasions to vary materially from these anticipated in such statements. Ahead-looking statements embrace, however should not restricted to, statements with respect to our market share, internet income, internet branded income, gross revenue, gross revenue margin, Adjusted SG&A, Adjusted EBITDA, and different monetary outlook projections for fiscal yr 2022, our business operations, together with manufacturing and / or gross sales of hashish, portions of future hashish manufacturing, anticipated income in reference to such gross sales, and different Info that’s based mostly on forecasts of future outcomes, estimates of manufacturing not but determinable, and different key administration assumptions. The next materials elements or assumptions had been used to develop the forward-looking data: market measurement and progress of the Canadian adult-use and medical hashish markets, retail retailer penetration, script developments, cultivation and processing capability, prices of manufacturing, gross and internet income per gram.

Precise outcomes could differ materially from these expressed or implied by such forward-looking statements and contain danger and uncertainties referring to: future cultivation yield and high quality, precise working efficiency of services, product launches, facility licenses and amendments, common promoting costs, price of products bought, working bills, Adjusted EBITDA, regulatory adjustments within the Canadian and worldwide markets, and different uninsured dangers. The forward-looking data was authorised by Administration as of February 14, 2022. The Firm assumes no accountability to replace or revise forward-looking data to replicate new occasions or circumstances except required by regulation. The forward-looking data is offered for data functions solely and readers are cautioned that it is probably not applicable for different functions. This presentation is offered for common data functions solely and doesn’t represent a suggestion to promote or solicitation of a suggestion to purchase any safety in any jurisdiction.

CAUTIONARY STATEMENT REGARDING NON-IFRS MEASURES

Branded Hashish Web Income, Adjusted SG&A, and Adjusted EBITDA should not acknowledged monetary measure below IFRS, doesn’t have a standardized which means and subsequently is probably not corresponding to comparable measures introduced by different issuers. For extra data together with the definition and function of the non-IFRS measure, see “Cautionary Assertion re Non-IFRS measures” within the Firm’s Administration’s Dialogue and Evaluation for the interval ended December 31, 2021 discovered on SEDAR at www.sedar.com.”

1. Based mostly on HiFyre knowledge evaluating retail gross sales pull by March 31, 2021 to December 31, 2022 rankings.

2. Based mostly on HiFyre knowledge evaluating Q3 2021 to This autumn 2021 retail gross sales pull by.