Emerald Health Therapeutics (EMHT.F) has gotten off to a pretty good start in 2019. Its stock is up close to 30%. The Canadian marijuana producer reported a huge revenue increase earlier this month with its 2018 fourth-quarter results.
It's not common for a company to report quarterly results twice in the same month. But that's what Emerald Health Therapeutics did, announcing its 2019 first-quarter results after the market closed on Thursday. Here are the highlights from the company's Q1 update.
By the numbers
Emerald Health Therapeutics announced Q1 revenue of 2.6 million in Canadian dollars. This reflected a whopping 599% increase from the prior-year period revenue total of CA$373,218. It was also 131% higher than total revenue reported in the previous quarter.
The company posted a net loss in the first quarter of CA$3.6 million. This was an improvement from the CA$5 million net loss in the prior-year period and the CA$13.9 million net loss in the fourth quarter of 2018.
Emerald Health Therapeutics also reported an adjusted EBITDA loss in Q1 of CA$3.5 million. This reflected a slight worsening from the CA$3.4 million adjusted EBITDA loss from the prior-year period but was much better than the CA$13 million adjusted EBITDA loss reported in Q4.
The company ended the first quarter with cash, cash equivalents, and short-term investments of CA$15.7 million. This was a decrease from its cash stockpile of CA$36 million at the end of 2018.
Behind the numbers
Dry cannabis sales primarily drove Emerald Health Therapeutics' Q1 revenue growth. The company reported dry cannabis sales of CA$2.3 million, up 1,394% year over year and 160% quarter over quarter.
Emerald Health Therapeutics also announced solid -- although less impressive -- growth for its cannabis oil products. The company announced Q1 cannabis oil sales of CA$332,527, which reflected a 55% year-over-year increase and was 44% higher than the previous quarter.
It should be noted that Emerald's Q1 numbers didn't include contributions from its Pure Sunfarms joint venture with Village Farms (NASDAQ: VFF). Pure Sunfarms generated sales in the first quarter of CA$14.4 million, with Emerald's portion totaling CA$7.2 million. The joint venture's Delta 3 greenhouse in British Columbia didn't achieve full production until April.
Additional capacity should be important for Emerald going forward. The company's Pure Sunfarms joint venture is on track to produce 75,000 kilograms on an annualized basis this summer. Another 1.1 million square foot greenhouse is also planned for construction that would double that capacity by late 2020.
Emerald should also benefit from the launch of its SYNC 25 CBD oil in Canada. CBD oils command higher prices and generate nice profit margins.
On a less positive note, the company appears likely to dilute the value of existing shares more by issuing new stock. Emerald filed a base shelf prospectus in the first quarter to raise up to CA$150 million by issuing new shares. So far, the company has sold around CA$9.8 million worth of additional stock.