Emerald Well being Therapeutics Reports Second Quarter 2020 Economic Final results and Supplies Corporate Update

Vancouver, British Columbia–(Newsfile Corp. – September 1, 2020) – Emerald Well being Therapeutics, Inc. (TSXV: EMH) (OTCQX: EMHTF) (“Emerald”) reported economic outcomes for the 3 and six months ended June 30, 2020. Complete versions of the Company’s unaudited condensed interim consolidated economic statements and MD&ampA can be discovered on SEDAR at www.sedar.com.

“The second quarter was a really strong quarter in all elements of our company. It marked a basic and notable shift in our economic efficiency considerable progress in all elements of our operations the launch of new brands and new items and, importantly, substantial progress on delineating our go-forward tactic and vision,” mentioned Riaz Bandali, President &amp Chief Executive Officer of Emerald. “The reality that we had been capable to provide so effectively on all of these objectives for the duration of these unprecedented instances is a testament to the tremendous work of our group and the systematic discipline that we have placed on enhancing each aspect of our operational and economic efficiency, which has been our concentrate considering the fact that I joined the organization 13 months ago.

“In the second quarter, we began to understand the effect of our considerable expense restructuring actions more than the final 3 quarters, which when coupled to the considerable efficiencies accomplished in our operations, had a really optimistic effect on our operating outcomes, gross margin and EBITDA. In addition, our 41.three% owned joint venture, Pure Sunfarms, continues to realize top marketplace share in Ontario and powerful development in other provinces like Alberta. Pure Sunfarms not too long ago produced its very first shipment of vapes and oil tinctures to the BC liquor board, and with the shipment of its Cannabis two. items into other provinces, it continues to entrench its competitive position across Canada. We are really optimistic about the worth of our assets going forward.”

Emerald and Pure Sunfarms Joint Venture Summary

Emerald 2Q20 Financials (compared to 2Q2019 and 1Q2020)

  • Good gross margin of $1.0M shows considerable improvement more than a gross margin of unfavorable $1.3M in 2Q19 and unfavorable $.9M in 1Q20. Emerald accomplished a optimistic 30% margin of expense of goods sold more than net sales in the existing quarter. The considerable gross margin improvement is due to a bigger proportion of larger margin item sold that has been cultivated at Emerald’s personal facilities, processing efficiencies, and a reduce expense base of input material as compared to 1Q20.
  • All-in typical expanding expense of $.99 (such as depreciation excluding trim) per gram from Emerald’s two facilities in St. Eustache, Quebec and in Richmond, BC. Money expanding expense of $.78 (excluding depreciation) per gram. The two Emerald facilities harvested more than three,000 kilograms of cannabis flower and trim for the duration of the quarter.
  • Net sales of $two.5M decreased 46% compared to $four.6M in 2Q19 and decreased 14% from $two.9M in 1Q20. Emerald was capable to preserve sales at a reasonably flat level in 2Q20 in comparison to 1Q in spite of the considerable marketplace and pricing stress of dried flower in the retail sector and the delay of the launch of the SouvenirTM brand, which only occurred in the final week of June 2020.
  • Total SG&ampA expense of $three.5M, which incorporates $1. of non-money expenditures, decreased $9.0M from $12.4M in 2Q19 and decreased $two.5M from $six.0M in 1Q20.
  • Net loss of $18.9M incorporates a $17.1M impairment of the Verdélite money creating unit (a non-money item). Specifics on the impairment are out there in the condensed interim consolidated economic statements for the period ended June 30, 2020.
  • Operating loss of $two.4M decreased 82% from $12.4M in 2Q19 and decreased 64% from $six.9M in 1Q20. Improvement in operating loss was driven by improvements in gross margin and reduce SG&ampA expenditures when compared to 1Q20.
  • EBITDA of unfavorable $1.2M in 2Q20 reflects a $six.1M improvement from unfavorable $7.3M EBITDA in 2Q19 and $two.7M improvement more than 1Q20. The EBITDA figure does not involve any share of EBITDA from the Pure Sunfarms’ joint venture and only reflects Emerald’s operating outcomes.
  • Adjusted EBITDA of unfavorable $.1M reflects Emerald’s proportionate share of Pure Sunfarms’ 2Q20 EBITDA.
  • Net money flow utilized in operating and investing activities of $two.4M in 2Q20 decreased by $19.9M from $22.3M utilized in 2Q19 and decreased $two.2M from $four.6M utilized in 1Q20.

Important Initiatives and Accomplishments

  • Elevated recreational dried flower sales by 16% and volume (kilograms) by 23% from 1Q20. Income development benefited from expanding sales of Emerald-grown, Emerald-branded flower outdoors of Quebec and a single week of sales, soon after a thriving late-June launch of the new SouvenirTM brand, in Quebec. Initial shipments of Emerald-grown items to Alberta, Manitoba, Saskatchewan and Newfoundland and Labrador had been produced in April and May well, and to Ontario in the final week of 2Q20. Emerald produced its very first item shipments from its Richmond greenhouse to British Columbia in late 1Q20.
  • Effectively executed on our partnership with the Valens Enterprise and shipped our very first version of SYNC 25 CBD oil from our partner’s facility in May well 2020. Emerald also expanded its geographical marketplace for SYNC 25 CBD from Alberta, British Columbia, Manitoba, Ontario, Newfound Land and Labrador, Saskatchewan and Nova Scotia with its very first shipment to Quebec in June 2020.

Pure Sunfarms Joint Venture (41.three%-owned)

  • Net sales, consisting completely of dried cannabis, had been $12.9M in 2Q20 compared to $18.0M in 1Q20. This quarter was marked by an 89% raise in volume sold of branded retail items compared to the prior quarter. The reduce in net sales was largely the outcome of a 29% reduce net typical promoting cost per gram of dried flower in 2Q20 compared to 1Q20 and a substantial reduce of sales in the wholesale marketplace due to marketplace circumstances.
  • Price of goods sold of $.83 per gram in 2Q20 compared to $.88 per gram in 1Q20. The raise in massive-format SKUs in Pure Sunfarms’ item mix contributed to a reduce general expense per gram sold in 2Q20.
  • Net loss of $.2M in 2Q20 was negatively impacted by a $1.7M loss on fair worth alterations in biological assets.
  • Seventh consecutive quarter of optimistic EBITDA.
  • Emerald recognized $.2M as its share of loss from Pure Sunfarms, as compared to $five.2M share of revenue recognized in 1Q20.
  • Pure Sunfarms ready for the imminent launch of its cannabis oil items and new item types beneath its Cannabis two. item roll-out program.
  • Received from Well being Canada its cannabis cultivation sales licence primarily based on an initial production location inside its second 1.1 million square foot greenhouse in Delta, British Columbia (Delta two), enabling it to expand capacity as necessary by means of license amendments.
  • Expanded its credit facility with a lending syndicate led by Bank of Montreal and such as Farm Credit Canada and the addition of CIBC to its complete $59 million capacity with the completion of the Credit Facility’s accordion function.

Financials Final results &amp Capital Sources

Chosen quarterly economic information and facts

The following table summarizes chosen quarterly economic information and facts for the Enterprise, which was derived from the audited annual economic statements ready in accordance with IFRS or the condensed interim consolidated economic statements ready in accordance with IFRS applicable to the preparation of interim economic statements, IAS 34, Interim Economic Reporting:

Q2 2020 Important Economic and Operational Metrics
(Thousands of Canadian dollars)

Q2 2020

Q1 2020

Economic Final results

Gross income

$

three,106

$

three,333

Net income (net of excise duty)

two,481

two,889

Cannabis gross income

Dry cannabis

two,281

1,964

Cannabis oils

808

1,271

Other

17

98

Gross margin (net of fair worth adjustment)

142

(504)

Total SG&ampA (net of share-primarily based payments)

two,353

four,334

Total R&ampD expenditures

275

433

Net loss*

(18,943)

(four,879)

EBITDA**

(1,176)

(three,851)

Adjusted EBITDA*

(87)

(298)

Balance Sheet

Money &amp money equivalents

1,073

581

Net operating capital

(six,721)

(9,486)

Operational Final results

Typical promoting cost (net of excise duty)

Recreational

$

three.59

$

four.32

Healthcare

$

eight.83

$

7.95

Pure Sunfarms Economic Final results

Gross income

$

19,307

$

21,519

Gross margin (net of fair worth adjustment)

four,308

9,397

Total SG&ampA

two,574

three,255

Net revenue (loss)

(158)

ten,891

Adjusted EBITDA***

two,639

eight,131

* Share of the net revenue from Pure Sunfarms adjusted for transactions with EMH and for fair worth alterations, and adjusted EBITDA from Pure Sunfarms are reflected in EMH net loss and adjusted EBITDA respectively.

EMH adjusted EBITDA is calculated by subtracting interest revenue, acquire on alterations in fair worth of biological assets, share of revenue from joint venture and deferred revenue tax recovery, and adding back depreciation, share-primarily based payments, other expenditures, loss from fair worth alterations in economic assets, inventories written down due to fair worth alterations, non-recurring things and share of Pure Sunfarms adjusted EBITDA from EMH net loss and extensive loss.

**EBITDA is calculated by subtracting the share of Pure Sunfarms adjusted EBITDA from Adjusted EBITDA.
***Pure Sunfarms adjusted EBITDA is calculated by adding back Pure Sunfarms’ adjust in fair worth of biological asset, non operating expenditures and gains, amortization expense and provision for revenue tax to net revenue.

The Company’s unaudited condensed interim consolidated economic statements and MD&ampA for the 3 and six months ended June 30, 2020, collectively with other information and facts connected to the Enterprise, such as the Company’s most current Annual Info Type (“AIF”), can be discovered on SEDAR. More information and facts connected to the Enterprise is out there on its site at www.emeraldhealth.ca

Financing and Capital Sources

In 2Q20 and subsequent to the quarter, Emerald raised capital and issued shares with the following transactions. Complete specifics are out there in prior press releases and in numerous filings on SEDAR.com.

  • April 9, 2020: raised $1.1M in gross proceeds from the exercising of six,250,000 warrants at $.17 per warrant. The warrants had been initially issued in 2019 with an exercising cost of $two.00 per prevalent share, in connection with a convertible debenture. The terms of the six,250,000 warrants had been amended in April 2020 and the exercising cost of the warrants was changed to $.17 per prevalent share.
  • June two, 2020: raised $two.1M in gross proceeds by means of a prospectus supplying, issuing 11,351,351 units at $.185 per unit. Each and every unit consisted of a single prevalent share and a single prevalent share buy warrant.
  • August 13, 2020: established an at-the-marketplace supplying (ATM) to concern shares from treasury for up to $three.25M to the public, from time to time, at the discretion of Emerald. Emerald has not accessed any proceeds from the ATM at the date of this release. The ATM is helpful till the earlier of April 13, 2021 or completion of the sale of the maximum quantity of shares thereunder.

Other Corporate Updates

SouvenirTM brand effectively launched in Quebec with outstanding marketplace receptivity

On June 22, 2020, Emerald introduced its new SouvenirTM cannabis brand to the Quebec adult-recreational cannabis marketplace by means of the Société Québécoise du Cannabis (SQDC). The brand provides items grown in Quebec at Emerald’s Verdélite facility. Customer reaction to the Souvenir items has been really powerful and the brand has contributed far more than $1.5M in sales to date. The initial items integrated Chemdog and Grapefruit GG4, each higher potency THC strains with distinct terpene profiles.

Signed a share buy agreement for the sale of Verdélite Sciences and Verdélite Holdings, collectively, in consideration for a money buy cost of $21. million

Emerald entered into a share buy agreement with Quinto Sources Inc. on July 30, 2020, in respect of the sale of Emerald’s wholly-owned subsidiaries, Verdélite Sciences and Verdélite Holdings. The subsidiaries personal and operate the 88,000 square foot craft cannabis production indoor facility in St. Eustache, Quebec. Pursuant to the agreement, Quinto will buy all issued and outstanding shares of the subsidiaries for a money buy cost of $21.0M, topic to a 90-day operating capital adjustment. Upon closing, Emerald will continue to sell its personal items in Quebec, topic to particular restrictions more than 75 days, and will retain exclusive rights to its Souvenir&#x2122 brand. Completion of the transaction is topic to numerous circumstances, such as acquiring applicable consents and approval of the purchaser’s shareholders. The proceeds of this transaction will be utilized in a targeted and effectively-defined manner to enhance the Company’s operating capital position, such as eliminating the deferred payment in its entirety and minimizing accounts payable, as effectively as minimizing the lengthy-term debt. While, we count on this transaction to close in 4Q20, we can not assure its closing.

Launched Emerald Rapid Action SYNC&#x2122 Nano Cannabis two. spray item line

On August 31, 2020, Emerald announced the launch of its Rapid Action SYNC&#x2122 Nano cannabis spray items in the adult-recreational marketplace. These items are primarily based on nanoemulsion technologies to supply fast onset and shorter duration of effects to supply customers with higher predictability and handle of their cannabis practical experience. Saskatchewan and Alberta have received initial shipments of SYNC&#x2122 15 Nano THC Rapid Action Spray. SYNC&#x2122 15 Nano CBD Rapid Action Spray is planned for distribution in the coming months. Also, Emerald effectively launched its SYNCMED Nano CBD Rapid Action Spray into the health-related marketplace in July.

Conference Contact

Emerald Well being Therapeutics will host a conference get in touch with on Tuesday, September 1, 2020 at ten:30 a.m. ET.

To access the audio broadcast, please dial (866) 652-5200, or through the Net at: https://solutions.choruscall.com/hyperlinks/emhtf200619.html.

An archived version of the presentation will be out there for 90 days on the “Investors” section of Emerald’s site: https://dev.emeraldhealth.ca/investors/events-and-presentations/

About Emerald Well being Therapeutics, Inc.

Emerald Well being Therapeutics, Inc. is committed to making new customer experiences with distinct recreational, health-related and wellness-oriented cannabis and non-cannabis items, with an emphasis on life science-primarily based innovation and production excellence. Emerald’s 3 distinct operating assets are created to uniquely serve the Canadian marketplace and international possibilities. These assets, all in complete production, involve: its Metro Vancouver, BC-primarily based greenhouse operation (78,000 square feet) capable of generating organic-certified item Verdélite, its premium craft cannabis production indoor facility in St. Eustache, Québec (88,000 square feet) and Pure Sunfarms, its 41.three%-owned joint venture in Delta, BC, generating higher top quality, affordably priced items (1.1 M square feet).

Please pay a visit to www.emeraldhealth.ca for far more information and facts or make contact with:

Jenn Hepburn, Chief Economic Officer
1(800) 757 3536 Ext. #five

Emerald Investor Relations
(800) 757 3536 Ext. #five
[email protected]

Non-GAAP Economic Measures

This press release includes references to EBITDA. This economic measure is not a measure that has any standardized which means prescribed by IFRS and is as a result referred to as “non-GAAP measures”. Non-GAAP measures utilized by the Enterprise could not be comparable to comparable measures utilized by other providers. EBITDA is defined as “revenue (loss) prior to interest expenditures, taxes, depreciation and amortization. Refer to the table above for information and facts on the calculation of EBITDA utilized in this press release.

The Enterprise makes use of these non-GAAP measures for the reason that they supply extra information and facts with regards to efficiency of the Company’s general company that are not otherwise reflected beneath IFRS.

Neither the TSX Venture Exchange nor its Regulation Solutions Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts duty for the adequacy or accuracy of this release.

Cautionary Note Concerning Forward-Hunting Statements: Particular statements produced in this press release that are not historical details are forward-seeking statements and are topic to essential dangers, uncertainties and assumptions, each common and particular, which give rise to the possibility that actual outcomes or events could differ materially from our expectations expressed in or implied by such forward-seeking statements. Such statements involve production and processing capacity of numerous facilities conversion of facilities expansion of facilities use of proceeds of financings commencement of production sales volumes receipt of licenses execution of final agreements with FTI building and operation of a laboratory receipt of hemp deliveries and anticipated production expenses.

We can not assure that any forward-seeking statement will materialize, and readers are cautioned not to spot undue reliance on these forward-seeking statements. These forward-seeking statements involve dangers and uncertainties connected to, amongst other factors, alterations of law and regulations alterations of government failure to acquire regulatory approvals failure to acquire needed financing outcomes of production and sale activities outcomes of scientific investigation regulatory alterations alterations in costs and expenses of inputs demand for labour demand for items failure of counter-parties to execute contractual obligations as effectively as the threat things described in the Company’s annual information and facts kind and other regulatory filings. The forward-seeking statements contained in this press release represent our expectations as of the date hereof. Forward-seeking statements are presented for the objective of supplying information and facts about management’s existing expectations and plans and enabling investors and other people to acquire a far better understanding of our anticipated operating atmosphere. Readers are cautioned that such information and facts could not be suitable for other purposes. The Enterprise undertakes no obligations to update or revise such statements to reflect new situations or unanticipated events as they happen, unless needed by applicable law.

To view the supply version of this press release, please pay a visit to https://www.newsfilecorp.com/release/62969

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