Emerald Health Reports Surging Sales at Pure Sunfarms Venture

Emerald Health Therapeutics, Inc. has announced that sales grew to $32.5 million during Q2 2019 at its Pure Sunfarms joint venture.

The facility sold 8,000 kg of cannabis during Q2 and that drove a 125% revenue increase on the previous quarter. Net income surged past the $34 million mark, including a net gain of $20 million on changes in the valuation of assets, which led the venture to a third consecutive quarter of profitability.

The Pure Sunfarms facility reached its full annualized run rate last month. That took production capacity to 75,000 kg per year, and its output should double to 150,000 kg in 2020 after a second greenhouse is built out.

Pure Sunfarms is 50/50 owned by Emerald and Village Farms International, which has brought agricultural expertise to the project after building up its reputation as a vegetable producer.

This year, Emerald has secured supply deals with Alberta Gaming, Liquor and Cannabis and the Saskatchewan Liquor and Gaming Authority. It now serves most provinces and territories across Canada.

Pure Sunfarms has now begun generating significant revenue by supplying Emerald and other customers. EBITDA was $25 million in Q2, at a margin of 78%, and net cash from operations was just over $6 million. The facility achieved a gross margin of 84%.

It revealed that production cost was $0.65 per gram, allowing it to earn that substantial margin. It sold 4,000 kg in Q1 and that doubled to 8,000 kg in Q2.

“With continued optimization, and expansion underway to double overall output at Pure Sunfarms to approximately 150,000 kg annually, we anticipate significant growth in operating cash flow and the value of this asset to Emerald,” said Emerald executive chairman and president Avtar Dhillon.

Pure Sunfarms expects to receive a licensing amendment from Health Canada to allow it to directly supply provincial distributors in the near future. It will complete a 65,000 sq. ft. extraction and processing facility by the end of the year, and the first harvest at its second greenhouse should begin by the middle of 2020.

Emerald can purchase up to 40% of Pure Sunfarms’ production at a set price during 2019. It will announce its Q2 results on Aug. 28 after the market close.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Martin Green
Martin Green is an experienced journalist with a strong focus on the cannabis, alcohol, and gambling industries. He is particularly interested in the political issues affecting the global marijuana trade, and he has a keen focus on regulation changes and legal topics. He holds a BA English Literature, MA Creative Writing and a National Qualification in Journalism diploma. He has worked in journalism since 2009 and written for a broad range of newspapers, business titles and magazines, including The Sun, The Metro, The Journal, Livestrong, Drinks Retailing News, Harpers, Sportsbook Review, Vital Football, Essex Live and Surrey Live.

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