Aphria shares gain after pot grower reveals CEO is stepping down

Pot Producer Aphria’s CEO to Step Down Following Short Seller AllegationsMore

It also posted net income of $55-million, due mainly to gains on its investment portfolio from selling shares of Hiku Brands Company Ltd. and Liberty Health Sciences Inc.

The quarter though wasn't without problems.

The Leamington, Ont. -company also announced Friday that co-founder Cole Cacciavillani will also leave his current role as vice-president growing operations in the coming months, but both he and Neufeld will remain on the board.

Aphria has since become the target of a takeover attempt by Green Growth Brands, and there's renewed criticism in some quarters about insider connections between the two companies.

Aphria shares were down 2.43% to $6.40 a share early Friday.

"This is the first quarter to partially include adult-use sales, helping to drive 63% quarter-over-quarter net revenue growth, as did continued strength in sales to the medical-use market", said Chief Executive Officer Vic Neufeld.

The cash cost to produce a gram of dried cannabis rose from C$1.30 a year ago to C$1.76 in this past quarter. The cost per gram jumped from $1.30 in Q1 to $1.76.

The company's gross margin decline to 47 per cent of net revenue from 64 per cent was attributed to lower selling prices in the Canadian recreational cannabis market, lower grow yields and higher production costs.

The moves come as the company released quarterly results that failed to meet analyst expectations. GGB says it's offer values Aphria at $11 per share or $2.8 billion at the time of the announcement and would be an all-stock transaction.

Aphria was rallying Friday, up 8.51% at $7.13 a share, after the short seller Quintessential Capital Management declared victory on its bet against the company.

"Succession is the plan".

"Vic and I have worked tirelessly for decades, building great businesses, but now in our sixties, it is time for both of us to step back from the demands of leading a world-class organization", Mr. Cacciavillani said in a statement. "The Part IV and V expansions of Aphria One are now complete and awaiting Health Canada approval, while an application for a cultivation license at Aphria Diamond has been submitted and is awaiting pre-cultivation inspection".

"During this transition period, we're going to work hard to benefit from their mentorship", he added.

Headquartered in Leamington, Ontario, Aphria produces and sells medical cannabis in Canada and internationally. We're excited to have just closed the previously announced acquisition of CC Pharma, based in Germany, which distributes pharmaceuticals and medical cannabis to over 13,000 pharmacies.

In early December, Aphria shares plummeted after its business was attacked by a short-seller, and a company backed by a billionaire OH family launched a hostile takeover bid in late December, though that effort has a number of red flags.

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