Cannabis
Emerald Health Therapeutics Reports Pure Sunfarms Second Quarter 2020 Financial Results
Pure Sunfarms achieves 89% sequential quarterly growth in retail sales volume; maintains leadership in market share in Ontario and low-cost production
Vancouver, British Columbia–(Newsfile Corp. – August 13, 2020) – Emerald Health Therapeutics, Inc. (TSXV: EMH) (OTCQX: EMHTF) (“Emerald”) has provided preliminary, unaudited financial results for the second quarter of 2020 for its 41.3%-owned joint venture, Pure Sunfarms.
“Pure Sunfarms’ leadership in low-cost production enables it to offer consumers high-quality cannabis products that are well-priced. This strong competitive positioning against both licensed and unlicensed producers has enabled it to achieve leading market share in Ontario and strong growth in other provinces,” said Riaz Bandali, President and Chief Executive Officer of Emerald. “With its broadening product mix, including forthcoming oils and Cannabis 2.0 products, we anticipate that Pure Sunfarms will continue to build on its competitiveness and accomplishments.”
Pure Sunfarms financial results for the three and six months ended June 30, 2020. Figures are in C$ ‘000, except for per gram and percent figures.
|
Three months ended, |
|||||
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June 30, 2020 |
June 30, 2019 |
||||
|
Sales, Gross |
$19,307 |
$32,356 |
|||
|
Sales, Net |
$12,902 |
$32,356 |
|||
|
Cost of Sales |
$8,594 |
$5,293 |
|||
|
Selling, general and administrative expenses |
$2,574 |
$2,384 |
|||
|
EBITDA |
$2,509 |
$25,200 |
|||
|
Cultivation $/gram (incl. depreciation) |
0.84 |
0.65 |
|||
|
Six months ended, |
|||||
|
June 30, 2020 |
June 30, 2019 |
||||
|
Sales, Gross |
$40,826 |
$46,715 |
|||
|
Sales, Net |
$30,906 |
$46,715 |
|||
|
Cost of Sales |
$17,201 |
$10,369 |
|||
|
Selling, general and administrative expenses |
$5,829 |
$3,712 |
|||
|
EBITDA |
$9,235 |
$33,776 |
|||
|
Cultivation $/gram (incl. depreciation) |
0.83 |
0.82 |
|||
Operating Highlights
- Retail branded sales volume for the second quarter of 2020 increased 89% compared to the first quarter of 2020;
- Remained the top-selling brand of dried flower products with the Ontario Cannabis Store (“OCS”) (by kilograms sold) for the year-to-date ended July 31, 2020, with a market share of 13.8% and had two of the top four selling dried cannabis products (by kilograms sold)1;
- Achieved record sales (by kilograms, defined as sales of Pure Sunfarms products by the provincial boards to retailers, as well as sales by the provincial boards directly to consumers via their web sites) in Ontario, Alberta and British Columbia in aggregate for the month of July.
- Launched its dried cannabis products in its fourth and fifth provincial markets (Saskatchewan and Manitoba). Pure Sunfarms’ products are now available in five provinces;
- Launched multiple new dried cannabis products, including additional large-format (28-gram) packages, which have consistently ranked among the best-selling dried cannabis products with the OCS since launch, as well as two new strains, additional pre-rolls, and seeds;
- Prepared for the imminent launch of cannabis oil products and new product forms under Cannabis 2.0;
- Received from Health Canada its cannabis cultivation sales licence based on an initial production area within its second 1.1 million square foot greenhouse facility in Delta, British Columbia (the “Delta 2 facility”), allowing it to expand capacity as needed through successive license amendments;
- Expanded its credit facility (the “Credit Facility”) with the lending syndicate led by Bank of Montreal and including Farm Credit Canada (“FCC”) and the addition of CIBC to its full $59 million capacity with the completion of the Credit Facility’s accordion feature.
1. Data cited has been calculated by Pure Sunfarms from sales information provided by OCS.
Financial Comments (quarterly figures)
Sales
The 40% quarter-over-quarter decrease in gross sales was primarily a result of a lower average selling price per gram of dried flower for the three months ended June 30, 2020, compared to the same period in the previous year. The net average selling price per gram of dried flower was 29% lower in the three months ended June 30, 2020, compared to the three months ended March 31, 2020.
In the three months ended June 30, 2020, total sales in kilograms were attributed 57% to provincial boards (flower) and 43% to the wholesale channel (flower and trim). This included nonmonetary transactions with extraction licensed producers in which Pure Sunfarms sold extraction grade dried flower and trim and purchased various forms of distillate from the same counterparties, which will be used in Pure Sunfarms’ future Cannabis 2.0 products.
Sales momentum early in the third quarter, the addition of new provincial markets and additional retail stores across the country, and the imminent launch of Pure Sunfarms’ first Cannabis 2.0 products and bottled oils are expected to positively contribute to Pure Sunfarms’ results in the second half of the year.
Cost of Sales
Higher cost of sales in the three months ended June 30, 2020, compared to the same quarter of the previous year was primarily due to additional packaging and logistics costs associated with increasing retail sales compared to the bulk wholesale model in 2019. The cost per gram sold for the three months ended June 30, 2020, was lower than the cost per gram in the first quarter of 2020, by 5%, even with the significant increase in retail sales quarter on quarter, which is a reflection of the increase in large format SKUs in the product mix and a lower cost of cultivation.
Selling, General and Administrative Expense
Selling, general and administrative expenses for the three months ended June 30, 2020, increased 3.6% compared to the same period in the previous year primarily due to regulatory fees for Health Canada and staffing.
COVID-19 Update
Pure Sunfarms’ facilities in Canada remain open and operational, and has not experienced any COVID-19 illnesses. Pure Sunfarms adheres to the highest health and safety standards in its operations and has put in place heightened hygiene practices and safety protocols, including more stringent cleaning and sanitization, and is taking appropriate precautions throughout all operations as per the recommendations of health authorities. It will continue to enhance and evolve such practices and protocols as the situation warrants.
About Emerald Health Therapeutics, Inc.
Emerald Health Therapeutics, Inc. is committed to cutting-edge cannabis science to create new consumer experiences with distinct recreational, medical and wellness-oriented cannabis and non-cannabis products. With an emphasis on innovation and production excellence, Emerald’s three distinct operating assets are designed to uniquely serve the Canadian marketplace and international opportunities. These assets, all in full production, include: its Metro Vancouver, BC-based greenhouse operation (78,000 square feet) capable of producing organic-certified product; Verdélite, its premium craft cannabis production indoor facility in St. Eustache, Québec (88,000 square foot); and Pure Sunfarms, its 41.3%-owned joint venture in Delta, BC, producing high quality, affordably priced products (1.1 M square feet). Its Emerald Naturals subsidiary has launched a new natural wellness product category with its non-cannabis endocannabinoid-supporting product line and is expanding distribution across Canada.
Please visit www.emeraldhealth.ca for more information or contact:
Jenn Hepburn, Chief Financial Officer
1(800) 757 3536 Ext. #5
Emerald Investor Relations
(800) 757 3536 Ext. #5
[email protected]
Non-GAAP Financial Measures
This press release contains references to EBITDA. This financial measure does not have any standardized meaning prescribed by IFRS and is therefore referred to as “non-GAAP measures”. Non-GAAP measures used by the Company may not be comparable to similar measures used by other companies. EBITDA is defined as “income (loss) before interest expenses, taxes, depreciation and amortization.
The Company uses these non-GAAP measures because they provide additional information regarding performance of the Company’s overall business that are not otherwise reflected under IFRS.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Note Regarding Forward-Looking Statements: Certain statements made in this press release that are not historical facts are forward-looking statements and are subject to important risks, uncertainties and assumptions, both general and specific, which give rise to the possibility that actual results or events could differ materially from our expectations expressed in or implied by such forward-looking statements. Such statements include production and processing capacity of various 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; construction and operation of a laboratory; receipt of hemp deliveries; and anticipated production costs.
We cannot guarantee that any forward-looking statement will materialize, and readers are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements involve risks and uncertainties related to, among other things, changes of law and regulations; changes of government; failure to obtain regulatory approvals; failure to obtain necessary financing; results of production and sale activities; results of scientific research; regulatory changes; changes in prices and costs of inputs; demand for labour; demand for products; failure of counter-parties to perform contractual obligations; as well as the risk factors described in the Company’s annual information form and other regulatory filings. The forward-looking statements contained in this press release represent our expectations as of the date hereof. Forward-looking statements are presented for the purpose of providing information about management’s current expectations and plans and allowing investors and others to obtain a better understanding of our anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes. The Company undertakes no obligations to update or revise such statements to reflect new circumstances or unanticipated events as they occur, unless required by applicable law.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/61650
CHICAGO, May 23, 2024 /PRNewswire/ — Cannabis Testing Market in terms of revenue was estimated to be worth $1.8 billion in 2024 and is poised to reach $4.0 billion by 2029, growing at a CAGR of 17.2% from 2024 to 2029 according to a new report by MarketsandMarkets™.
The important factors impacting market growth are legalization trends and rising medical applications for cannabis. Rising approvals for medical and recreational cannabis drive the regulations requiring product safety testing which in turn fuel the need for cannabis testing services. Additionally, the rise in the number of cannabis testing labs due to legalization is propelling the demand for analytical instruments is likely to uplift market growth in coming years.
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Browse in-depth TOC on “Cannabis Testing Market”
439 – Tables
52 – Figures
378 – Pages
Cannabis Testing Market Scope:
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Report Coverage |
Details |
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Market Revenue in 2024 |
$1.8 billion |
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Estimated Value by 2029 |
$4.0 billion |
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Growth Rate |
Poised to grow at a CAGR of 17.2% |
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Market Size Available for |
2022–2029 |
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Forecast Period |
2024–2029 |
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Forecast Units |
Value (USD Billion) |
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Report Coverage |
Revenue Forecast, Competitive Landscape, Growth Factors, and Trends |
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Segments Covered |
By Product & Software, By Service & By End User |
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Geographies Covered |
North America, Europe, the Asia Pacific, Latin America and the Middle East & Africa |
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Report Highlights |
Updated financial information / product portfolio of players |
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Key Market Opportunities |
Untapped markets in emerging economies |
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Key Market Drivers |
Increasing legalization of medical and recreational cannabis |
Products segment held the highest estimated share of the cannabis testing market.
Based on product & software, the cannabis testing market is segmented into products (analytical instruments {chromatography instruments [liquid chromatography, gas chromatography & other chromatography instruments], spectroscopy instruments [mass spectrometry instruments & atomic spectroscopy instruments] & other analytical instruments} and consumables {chromatography columns, standards and CRMS, sample preparation products and other consumables) and software. The product segment accounted for the largest share of the cannabis testing market in 2023. Market growth is driven by technological advancements providing sophisticated tools for precise analysis, ensuring compliance and quality control, and the expanding legalization of cannabis products. Additionally, increasing requirements for potency labeling and pesticide screening fuel the demand for specialized consumables, further propelling growth in the cannabis testing market. For example, Thermo Fisher Scientific Inc. launched the Thermo Scientific SureSTART consumables portfolio consisting of vials, well plates, caps, inserts, kits, and mats to improve analytical performance and sample security for chromatography and mass spectrometry users in routine and research labs in clinical, food, pharma, biopharma, environmental, and academic sectors.
High growth of services segment attributed to potency testing services.
Based on service, the cannabis testing market is broadly segmented into terpene profiling, microbial analysis, residual solvent analysis, potency testing, heavy metal testing, pesticide screening, and other services. In 2023, potency testing accounted for the largest share of the cannabis testing services market. The high growth of this segment is due to stringent regulatory requirements ensuring accurate THC and CBD levels. This is crucial for product labeling, consumer safety, and compliance, driving demand from producers and dispensaries seeking to meet legal standards and provide reliable, high-quality products.
Services take away the largest estimated share of the end-user segment.
Based on end users, the cannabis testing market is classified into segmented into product & software end users (cannabis testing laboratories {small-scale laboratories, medium-scale laboratories, large-scale laboratories} and research institutes) and service end users (cannabis drug manufacturers & dispensaries, cannabis cultivators/growers). In 2023, the service end users’ segment was predicted to account for the highest share of the global cannabis testing market. The large share of this end user segment is due to the rising consumer awareness of quality and safety, rising legalization of cannabis, stringent regulatory standards, and technological advancements in cannabis testing.
During the forecast period, North America displayed lucrative market growth.
North America accounted for the largest share of 65.5% of the cannabis testing market in 2023. The North American market is projected to reach a value of USD 2.6 billion by 2029 from an estimated value of USD 1.2 million in 2024, at a CAGR of 17.3% during the forecast period. The region leads the cannabis testing market due to stringent regulatory standards, robust infrastructure, and widespread legalization of cannabis for medical and recreational purposes. Additionally, North America’s advanced R&D capabilities and evolving consumer demand for quality assurance drive its prominence in this growing sector.
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Cannabis Testing Market Dynamics:
Drivers:
- Increasing legalization of medical and recreational cannabis
- Increasing use of cannabis for medicinal applications
- Technological advancements in testing technologies
Restraints:
- Lack of standardization
- Investment risks due to regularization
Opportunities:
- Untapped markets in emerging economies
- Research collaborations
Challenge:
- High setup costs
Key Market Players of Cannabis Testing Industry:
The global cannabis testing market comprises many key market players competing for markets shares like Agilent Technologies, Inc. (US), Shimadzu Corporation (Japan), Thermo Fisher Scientific Inc. (US), Danaher Corporation (US), Waters Corporation (US), Restek Corporation (US), SGS SA (Switzerland), Merck KGaA (Germany), PerkinElmer, Inc. (US), Hamilton Company (US), Sigma Analytical Services (Canada), SC Labs (US), PharmLabs LLC (US), MCS, Inc. (US), ProVerde Laboratories (US), and Eurofins Scientific (Luxembourg).
The primary interviews conducted for this report can be categorized as follows:
- By Respondent: Supply Side- 70%, and Demand Side – 30%
- By Designation (Supply Side): Managers – 45%, CXOs & Directors – 30%, Executives- 25%
- By Region: North America -40%, Europe -25%, Asia-Pacific -20%, Latin America -10%, MEA- 5%
Recent Developments:
- In September 2023, Shimadzu Corporation launched the Brevis GC-2050 gas chromatograph used in various applications including cannabis testing.
- In April 2023, SC Labs, one of the leading cannabis testing companies, acquired C4 Laboratories, one of the first Arizona cannabis labs, thus allowing it to be licensed and accredited in five states: California, Colorado, Michigan, Oregon, and Arizona.
- In June 2022, Shimadzu Corporation launched the AA-7800 series atomic absorption spectrophotometers. The AA-7800 series is used for quality control in the raw material, food, and for inspecting water quality and hazardous substances in soil thus presenting an advantage in heavy metal testing of cannabis.
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Cannabis Testing Market – Key Benefits of Buying the Report:
The report will help market leaders/new entrants by providing them with the closest approximations of the revenue numbers for the overall cannabis testing market and its subsegments. It will also help stakeholders better understand the competitive landscape and gain more insights to better position their business and make suitable go-to-market strategies. This report will enable stakeholders to understand the market’s pulse and provide them with information on the key market drivers, restraints, opportunities, and challenges.
The report provides insights on the following pointers:
- Analysis of key drivers (increasing legalization of medical and recreational cannabis, increasing use of cannabis for medicinal applications and technological advancements in testing technologies), restraints (lack of standardization and investment risks due to regularization), opportunities (untapped markets in emerging economies and research collaborations) and challenges (high setup costs) are influencing the growth of cannabis testing market.
- Product Development/Innovation: Detailed insights on newly launched products of the cannabis testing market.
- Market Development: Comprehensive information about lucrative markets – the report analyses the cannabis testing market across varied regions.
- Market Diversification: Exhaustive information about new products, untapped geographies, recent developments, and investments in the cannabis testing market.
- Competitive Assessment: In-depth assessment of market shares, growth strategies, and product offerings of leading players include Agilent Technologies, Inc. (US), Shimadzu Corporation (Japan), Thermo Fisher Scientific Inc. (US), Danaher Corporation (US), Waters Corporation (US), Restek Corporation (US), SGS SA (Switzerland), Merck KGaA (Germany), PerkinElmer, Inc. (US), Hamilton Company (US), Sigma Analytical Services (Canada), SC Labs (US), PharmLabs LLC (US), MCS, Inc. (US), ProVerde Laboratories (US), and Eurofins Scientific (Luxembourg) among others in the cannabis testing market.
Related Reports:
Drug Screening Market – Global Forecasts to 2029
Laboratory Proficiency Testing Market – Global Forecasts to 2028
Life Science Instrumentation Market – Global Forecasts to 2028
Digital PCR Market – Global Forecasts to 2028
Flow Cytometry Market – Global Forecasts to 2028
Get access to the latest updates on Cannabis Testing Companies and Cannabis Testing Industry Growth
About MarketsandMarkets™:
MarketsandMarkets™ has been recognized as one of America’s best management consulting firms by Forbes, as per their recent report.
MarketsandMarkets™ is a blue ocean alternative in growth consulting and program management, leveraging a man-machine offering to drive supernormal growth for progressive organizations in the B2B space. We have the widest lens on emerging technologies, making us proficient in co-creating supernormal growth for clients.
Earlier this year, we made a formal transformation into one of America’s best management consulting firms as per a survey conducted by Forbes.
The B2B economy is witnessing the emergence of $25 trillion of new revenue streams that are substituting existing revenue streams in this decade alone. We work with clients on growth programs, helping them monetize this $25 trillion opportunity through our service lines – TAM Expansion, Go-to-Market (GTM) Strategy to Execution, Market Share Gain, Account Enablement, and Thought Leadership Marketing.
Built on the ‘GIVE Growth’ principle, we work with several Forbes Global 2000 B2B companies – helping them stay relevant in a disruptive ecosystem. Our insights and strategies are molded by our industry experts, cutting-edge AI-powered Market Intelligence Cloud, and years of research. The KnowledgeStore™ (our Market Intelligence Cloud) integrates our research, facilitates an analysis of interconnections through a set of applications, helping clients look at the entire ecosystem and understand the revenue shifts happening in their industry.
To find out more, visit www.MarketsandMarkets™.com or follow us on Twitter, LinkedIn and Facebook.
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