Shares of Alefia Health (ALEAF) dropped on Monday after the Canadian cannabis producer and distributor reported a full-year loss almost double from a year ago amid costs related to its merger with Emblem and additional expenses related to growing its operations for marijuana production and distribution in the province of Ontario.
Aleafia stock dropped more than 3% to $1.55 after the Toronto-area company reported a loss C$18.5 million, or 16 cents a share, vs. a loss of $9.7 million, or 24 cents a share, in the comparable year-earlier period. Revenue rose to $3.3 million vs. zero over the same period in 2017.
Aleafia on its own produced a gross profit in 2018 of $1.6 million, while Emblem posted a net loss from operations of $24.3 million. Revenue on a pro forma basis, which backs out what Aleafia and Emblem would have brought in as a combined entity last year, was $11.3 million, compared to combined 2017 revenue of $2.7 million, the company said.
"We believe that our strategically placed assets, strong management team and distribution channels will allow us to scale our global mission of growing, processing and selling high-margin, value-added cannabis health and wellness products," Aleafia Health CEO Geoffrey Benic said in a statement.
Aleafia in December announced that it had acquired Emblem in an all-stock transaction for approximately C$173 million. As of Dec. 31, the companies had combined cash on hand of $63.2 million.
Aleafia grows, harvests and distributes marijuana and extractions, while Emblem produces and distributes cannabis-infused medicinal products.