Aphria Could Get a Big Revenue Boost from Scientus Pharma Agreement

Aphria Inc. (TSX: APH) expects the contract will generate ~$5.0 million in incremental revenues over the next 12 months, which translates into nearly 30% of the Company’s TTM revenues

SmallCapPower | July 7, 2017: Aphria Inc. (TSX: APH), one of Canada’s lowest cost producers, through its subsidiary Pure Natures Wellness Inc., announced on July 4, 2017, that it has inked a major wholesale supply agreement with HydRx Farms, Ltd. (o/a Scientus Pharma), a vertically-integrated biopharmaceutical licensed dealer focused on developing and commercializing pharmaceutical-grade cannabinoid derivative products. As part of the contract, Aphria will supply more than 25,000 fully-grown medical cannabis plants over 12 months to Scientus Pharma, with the first delivery expected in the middle of 2QFY18 ending November 2017.

The Company expects the contract will generate ~$5.0 million in incremental revenues over the next 12 months ($1.2 million per quarter), which translates into nearly 30% of the Company’s TTM revenues of $17.5 million. The current agreement is in line with Aphria’s two-pronged growth strategy for producing and selling medical marijuana and its derivatives, through both retail sales and wholesale channels. While Retail sales are primarily sold through Aphria’s online store as well as telephone orders. Wholesale shipments are sold to other ACMPR Licenced Producers. HydRx Farms, one of a limited number of Licensed Dealers in Canada authorized to handle cannabinoid products, has the ability to wholesale buy, process and sell cannabinoid derivatives, from and to Licensed Producers, as well as international markets.

Vic Neufeld, Chief Executive Officer of Aphria said “Scientus Pharma shares our vision for providing high-quality products to medical cannabis patients, which is enabled by our 509-step Seed-to Sale quality assurance program. Through this agreement, Scientus Pharma will get access to clean and safe cannabis, which is necessary in the biopharmaceutical cannabis industry. In return, Aphria will benefit from guaranteed product distribution advancing Aphria’s growth strategy.”

Following the news, Aphria shares were up 1.3% to close at $5.42 on July 4, 2017. The Company currently trades at price to TTM sales of 41.83x and Price to Book of 3.46x.

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