Aphria stock soars after fiscal 2Q revenue more than doubles

Aphria Inc says CEO Vic Neufeld will transition out of his role in coming

Both Neufeld and company co-founder Cole Cacciavillani are exiting their executive roles with Aphria after some eyebrow-raising allegations about the company recently emerged in the business press. In a tweet on Friday, Quintessential said it felt it had been vindicated, and "with a new management team the company has a chance to a brighter future and we are accordingly moving on to new projects".

The stock lost about half of its value after the first report was released, but has since recovered somewhat as doubt has been cast on some of the short seller's allegations.

"It was just time for us to move aside", Neufeld said on the company's earnings call Friday.

But earlier this month, an investigation by financial news outlet Bloomberg put the short seller's claims in question after journalists visited Aphria assets and properties in Jamaica that Quintessential Capital had suggested did not exist.

Irwin Simon, the company's newly-appointed chairman, also spoke during the conference call, noting that he sees many similarities between the cannabis industry and the natural organic sector that he first worked in almost three decades ago. They added that following the transition Neufeld and Cacciavillani will continue to act as special advisors to Simon and Ripshtein.

Neufeld and Aphria did not reply to requests for further comment on Friday. Neufeld said Friday that an independent committee of directors with no relationship to Green Growth will review any formal offers.

The company delivered a net income of $54.8 million or $0.22 per share versus $6.5 million or $0.05 per share for the same period a year ago. He would not quantify how much longer the process will take, but said it would take longer than "days".

Net income for the second quarter ended November 30, 2018, was C$54.8 million, or C$0.22 a share, compared to C$6.5 million, or C$0.05 per share for the same period a year ago.

The company reported mixed quarterly results Friday morning.

Cannabis sales rose 92 percent to 3,409 kilogram equivalents, with more than 1,900 kilograms of that sold to the Canadian recreational market after pot was legalized on October 17. As a result of the new recreational market, medical-use sales dropped slightly from 1,466.2 kilograms to 1,443.6 kilograms.

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. This is later than originally expected due to a backlog at Health Canada, which issues licenses to the industry. Aphria expects to produce 255,000 kilograms of pot by the end of 2019, up from 35,000 kilograms now, as new facilities come online. Year-to-date, APHA has gained 22.67%, versus a 3.25% rise in the benchmark S&P 500 index during the same period.

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