Aleafia Health Inc. (TSX: AH, OTCQX: ALEAF) (“Aleafia Health” or the “Company”) is pleased to report its financial results for the three months ended March 31, 2021 (“Q1 2021”).

“This quarter saw us achieve important executional breakthroughs as we realized the exponential increase of our cannabis product portfolio. Likewise, as we benefit from greater scale, we are demonstrating substantial improvements in the profitability of our core adult-use and medical cannabis product sales, contrasting with the broader industry trend of price and margin compression,” said Aleafia Health CEO Geoffrey Benic.

“To further leverage product portfolio expansion, we have only just begun the deployment of our highly differentiated medical cannabis ecosystem through the trailblazing exclusive agreement with Unifor, Canada’s largest private sector union. The ability to service a captive audience of union members who receive insurance coverage for medical cannabis is an important catalyst. We believe that this sets the table for a strong 2021, driven by repeatable, profitable sales in the medical, adult-use and international markets.”

Condensed Income (Loss) Statement

Cannabis Operational Results

Financial Highlights

• Medical cannabis net revenue was $2.7 million, an increase of 95% over the prior year’s quarter, in line with the previous quarter, and the Company’s best Canadian medical cannabis revenue reported to date.
  • Active registered patients increased to 17,637, an increase of 61% over the prior year’s quarter
  • Medical cannabis adjusted gross margin before FV adjustments improved for the second consecutive quarter to 53%
  • Revenue per gram equivalent sold improved for the fourth consecutive quarter to $8.46
• Adult-use cannabis net revenue was $1.7 million, an increase of 22% and 143% over the previous quarter and prior year’s quarter respectively
  • Adult-use cannabis adjusted gross margin before FV adjustments improved substantially to 56%, from 31% and 30% in the previous quarter and prior year’s quarter respectively
  • Adult-use cannabis revenue in the first 41 days of Q2 2021 has surpassed total adult-use cannabis revenue for Q1 2021
• As previously disclosed in the Company’s fiscal year 2020 MD&A, domestic wholesale was expected to decline, relative to Q4 2020.
• Repayment of $25.0 million of convertible debt reduces the Company’s total debt by 43%

Product & Operational Highlights

• Sublingual Strips: The category leading Kin Slips cannabis-infused sublingual strips, launched in Q4 2020 in the medical and adult-use markets. Driven by strong consumer demand, Kin Slips were the Company’s top-selling adult-use product category during the quarter, and a key driver of improved adult-use adjusted gross margin.
• Omega CBD Soft Gels: Subsequent to the reporting period, the Company launched the trailblazing Omega CBD Soft Gels, which feature full-spectrum, single strain CBD extract, and are the first Canadian cannabis products to be suspended in fish oil containing omega-3.
• Confectionary Edibles: In March 2021, the Company released THC soft chews, its first cannabis edible product. The initial launch features two SKUs, each with two five milligram chews per package. The Company is currently considering a soft chews line extension to include additional flavours, and a CBD dominant offering.
• High Potency CBD Oil: In December, the Company launched a high potency cannabis oil, CBD 50, with 50 mg per millilitre of CBD oil, provides greater consumer and patient convenience and has more than twice the potency of traditional high CBD oils.
• Dried Flower at Scale: Subsequent to the reporting period, leveraging the greater scale of cultivation capacity, the Company launched its high frequency brand Divvy, with new larger format SKUs, including a pre-roll line extension with 12 pre-rolls each of 0.35 grams.
• Unifor Program and Ford Motor Company of Canada: Entered into an exclusive 10-year agreement with Unifor, Canada’s largest private sector union, to support members securing medical cannabis insurance coverage. Recently, the Company launched the program to employees of the Ford Motor Company of Canada, with the first patients entering the program in May 2021 and purchasing cannabis through Aleafia Health’s medical subsidiary, Emblem Cannabis Corporation. The Company is also in discussions with a number of other large employers to offer similar cannabis wellness products and services to their members through insurance coverage.
• Distribution Centre Licence: On February 12, 2021, Emblem received a Health Canada Processing Licence for its new Distribution Centre. Located minutes from Toronto Pearson International Airport, the DC greatly strengthens the Company’s downstream supply chain, allowing for expansion of same day delivery service, and eventual direct-to-retailer cannabis distribution.

Conference Call & Webcast

Date: May 11, 2021
Time: 8:30 a.m. EST
USA/Canada Toll-Free Participant Call-in: (866) 679-9046; Passcode: 3486978
International Toll-Free Participant Call-in: (409) 217-8323; Passcode: 3486978

WEBCAST LINK

This conference call will be webcast live over the internet and can be accessed through the link provided. Audio of the call will be available to participants through both the conference call line and webcast; however, the presentation may only be viewed via the webcast. Participants who miss the live call can view a replay at any time via the link provided.

For Investor & Media Relations:

Nicholas Bergamini, VP Investor Relations
1-833-879-2533
This email address is being protected from spambots. You need JavaScript enabled to view it.
LEARN MORE: www.AleafiaHealth.com

About Aleafia Health:

Aleafia Health is a vertically integrated and federally licensed Canadian cannabis company offering cannabis health and wellness services and products in Canada and in international markets. The Company operates medical clinics, education centres and production facilities for the production and sale of cannabis.

Aleafia Health owns four significant licensed cannabis production facilities, including the first large-scale, legal outdoor cultivation facility in Canadian history. The Company produces a diverse portfolio of commercially proven, high-margin derivative products including oils, capsules, edibles, sublingual strips and vapes. Aleafia Health operates the largest national network of medical cannabis clinics and education centres staffed by MDs, nurse practitioners and educators and operates internationally in three continents.

Forward Looking Information

This news release contains forward-looking information within the meaning of applicable Canadian and United States securities laws. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects”, “estimates”, “intends”, “anticipates”, or “believes” or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained in this news release. Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information, including risks contained in the Company’s annual information form filed with Canadian securities regulators available on the Company’s SEDAR profile at www.sedar.com. Although the Company believes that the assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information and no assurance can be given that such events will occur in the disclosed time frames or at all. The forward-looking information included in this news release are made as of the date of this news release and the Company does not undertake any obligation to publicly update such forward-looking information to reflect new information, subsequent events or otherwise unless required by applicable securities legislation.