Aleafia Health Reaffirms Revenue Guidance, Implements $6.7 Million In Annualized Cost Savings

Aleafia Health Inc. AH ALEAF reaffirmed its guidance with an announcement that it expects to achieve between $53 million and $63 million in net revenue in the current fiscal year.

The company also provided a corporate update of its ongoing cost containment initiatives.

CFO Matt Sale emphasized that in 2021 Aleafia launched a transformational organizational change that identified and put into effect numerous cost efficiencies.

Additional cost efficiencies identified represent a further $4.4 million in annualized cost savings to be completed in this quarter and will drive further operational efficiencies, enhance operating leverage, and accelerate the pathway to Adjusted EBITDA breakeven profitability expected to occur in the second half of 2022.

"Aleafia Health continues to deliver on its forecast and strategy, experiencing record growth in sales, capturing additional adult-use cannabis market share, and now achieving important efficiencies and additional cost reductions," added Tricia Symmes, the company’s CEO. "These organizational realignments helped create a leaner, more nimble workforce optimized to accelerate revenue velocity and maximize margin.”

The company reported reducing its adjusted selling, general and administrative expenses by 37% to $7.1 million, from $11.2 million in the period ending December 31, 2020.

“Management continues to build on that momentum with aggressive cost containment,” Sale continued. “In the quarter ended March 31, 2022, the company identified further headcount reductions, operational efficiencies, redundancies, and nonrecurring costs, which together with those already implemented, total $6.7 million on an annualized basis.

Medical Business Organizational Realignment

In the company's fast-growing medical business, there was also an integration initiative that identified $1.25 million in annual cost efficiencies through operational process efficiency gains and organizational realignment.

These cost savings are reflected in the projected $4.4 million in annualized cost savings.

Grimsby Realignment

"At the 160,000 sq. ft. Grimsby, Ontario hybrid greenhouse, the Company drove operational efficiencies and remapped its processes to allow its cultivation organization to meet our anticipated growing throughput," said Sale. "We also assessed procurement practices, resulting in a consolidation of certain vendors leading to cost efficiencies."

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