Market Overview

Alternate Health Corp. Reports First Quarter 2017 Financial Results

Share:

Company Generates Revenue of $3.9 Million and Adjusted EBITDA of $1.4 Million – (35 Percent) During Its First Quarter as an Operating Public Company

DALLAS, TX, May 30, 2017 /PRNewswire/ - Alternate Health Corp. (Alternate Health) (CSE: AHG, OTC: AHGIF), an international medical cannabis company that uses best in class technology, research, education, production and laboratories to increase the awareness, regulatory compliance, and appropriate usage of cannabinoids in modern medical practices, today announced its results for the first quarter ending March 31, 2017.  All dollar references in Canadian dollars unless otherwise noted.

Alternate Health Corp. (CNW Group/Alternate Health Corp.)

First Quarter 2017 Financial Highlights

  • Revenue of $3.9 million compared to Nil in Q1 of last year
  • Adjusted EBITDA of $1.4 million compared to Nil in Q1 2016
  • Net loss of $0.6 million, up from a loss of $0.1 million in Q1 of last year
  • Working capital of $10.5 million, up from $0.5 million at year end 2016
  • Total assets of $30.9 million, up $28.6 million from year end 2016
  • The company ended the quarter with $11 million in cash on hand and $0.5 million in debt

Revenue for the quarter was driven by strong performance from Alternate Health Labs, a clinical laboratory acquired in January of this year.  The net loss of $0.6 million was in part due to $1.6 million of non-recurring, non-cash expense.  We raised $11.1 million in new capital during the first quarter and generated $0.2 million cash from operating activities.  We also placed $1.0 million in strategic partner investments. 

For the first quarter 2017, Net loss per share (Per International Financial Reporting Standards or "IFRS") was $0.02 and non-IFRS fully diluted earnings per share was a positive $0.03.  Adjusted net income was $1.1 million compared to negative $0.1 million for the same period last year. 

Note – Alternate Health Corp ("the Company") was formed in January 2017 from a reverse take-over of a privately held operating company, Alternate Health Inc. ("AHI").  Per the accounting guidance, the Company's first quarter operating statement ending March 31, 2017 is compared to the first quarter 2016 of AHI.  Similarly, the Company's balance sheet at March 31, 2017 is compared to the December 31, 2016 balance sheet for AHI.    

 

Management Commentary

"We are very pleased with the financial and operational performance during our first active quarter as Alternate Health Corp." said Dr. Jamison Feramisco, CEO, Alternate Health.  "We achieved outstanding financial growth, raised significant new capital and completed several key strategic acquisitions and investments.  Adjusted EBITDA for the quarter was $1.4 million and we generated positive operating cash flow."  

"Following a successful financial start with Alternate Health Labs demonstrating sustained growth, we look forward toward making continued progress across our diverse operational divisions including an expanded focus on deploying our CanaCard and VIP-Patient technologies in the United States and Internationally.  We have a unique opportunity to drive innovation and corporate revenues by deploying our novel regulatory, compliance, and therapeutic delivery solutions across the medical cannabis ecosystem."

First Quarter 2017 Operational Highlights

  • Alternate Health Corp. successfully listed its shares for trading on the OTC bulletin board under the ticker symbol AHGIF (CSE:AHG).
  • Acquired Alternate Health Labs as a key business unit of Alternate Health Corp., dramatically increased Alternate Health Lab's monthly sample volume with sample volume in March compared to January of 188%, and expanded clinical testing menu to include blood samples.
  • Secured exclusive licensing rights to transdermal and sublingual dissolvable tablets for the delivery of Cannabinoid and other cannabidiol (CBD) products.
  • Obtained AMA PRA Category 1 Credit™ approval for the first continuing medical education programs on the use of medical marijuana and cannabinoids for physicians.
  • Secured access to leading healthcare industry data analytics platform and custom applications for use in the medical cannabis and cannabinoid industry.

First Quarter 2017 Corporate Financial Summary








$ in Millions, except per share data 


Q1 2017 


Q1 2016 


Change 

Revenue


$3.9


$ -


$3.9

IFRS Net Loss


($0.6)


($0.1)


($0.5)

IFRS Net Loss Per Share


($0.02)


$0.00


($0.02)

EBITDA (1)


($0.4)


$ -


($0.4)

EBITDA Margin


(11.0%)


(87.4)%


76.4 pts

Non-IFRS Adjusted Net Income (Loss) (2)


$1.1


($0.1)


$1.2

Non-IFRS Adjusted Net Income Per Share – Diluted (2)


$0.03


$ -


$0.03

Adjusted EBITDA (2)


$1.4


$ -


$1.4

Adjusted EBITDA Margin


35.3%


- %


35.3 pts



(1)

Adjusted earnings before interest, taxes, depreciation and amortization

(2)

A reconciliation of IFRS to non-IFRS adjusted results is included in this press release and our Management Discussion and Analysis dated May 30, 2017 and available at www.sedar.com.   

 

About Alternate Health Corp.

Alternate Health Corp. (CSE:AHG, OTCQB:AHGIF) is an international medical cannabis company that uses best in class technology, research, education, production and laboratories to increase the awareness, regulatory compliance, and appropriate usage of cannabinoids in modern medical practices.  The company is strategically positioned in all facets of the medical cannabis value chain through the innovative integration of proprietary technology and know-how, acquisitions and partnerships, deep direct knowledge of and experience with improving patient outcomes, and management expertise.  The company is well positioned to reinvest internal operating cash flow in its platform over the long term, thus creating an attractive investment profile for its shareholders.  The company is headquartered in the Dallas, Texas, Metroplex and has operations in Los Angeles, San Antonio and Toronto.  For more information about Alternate Health Corp., visit www.alternatehealth.ca

Neither the CSE nor its Regulation Services Provider (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.  Statements included in this announcement, including statements concerning our plans, intentions and expectations, which are not historical in nature are intended to be, and are hereby identified as "forward-looking statements".  Forward-looking statements may be identified by words including "anticipates", "believes", "intends", "estimates", "expects" and similar expressions.  The Company cautions readers that forward-looking statements, including without limitation those relating to the Company's future operations, business prospects and financing plans, are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward looking statements.  The Company cautions that the EBITDA and adjusted Net Income figures reported in this new release do not have standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers.

 

ALTERNATE HEALTH CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS






March
31,2017
(Unaudited)


December
31, 2016

ASSETS




Current assets:





Cash

$

11,026,546


$

570,003


Accounts receivable

2,648,541


-


Due to Alternate Health Labs Inc.

-


248,540


HST receivable

24,175


24,471


Prepaid expenses and deposits

710,644


44,666



Total current assets

14,409,906


887,680

Other assets





Convertible note receivable

665,200


-


Investments

8,126,423


-


Equipment

2,776,874


7,204


Intangible assets

4,296,301


1,001,928


Equipment in process

28,963


-


Deferred income taxes

587,220


431,220



Total assets

$

30,890,887


$

2,328,032





LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:





Accounts payable and accrued liabilities

$

2,784,509


$

265,088


Income taxes payable

408,719


-


Current portion of deferred revenue

115,361


167,195


Current portion of leases payable

586,620


-



Total current liabilities

3,895,209


432,283

Long-term liabilities:





Development fees payable to related party

506,528


538,200

Total liabilities

4,401,737


970,483

Total shareholders' equity

26,489,150


1,357,549

Total liabilities and shareholders' equity

$

30,890,887


$

2,328,032

 

ALTERNATE HEALTH CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)




Three Months Ended March 31,


2017


2016

Revenue

$

3,870,882


$

43,720





Operating expenses





Amortization of equipment

74,103


616


Amortization of intangibles

48,884


18,305


Consulting fees

999,448


9,764


Interest

18,328


16,819


Lab supplies

582,134


-


Loan interest

18,499


-


Loss (gain) on foreign exchange

(175,306)


5,153


Office and general

150,627


11,295


Professional fees

391,388


15,229


Management fees

809,763


-


Rent and occupancy

229,007


30,462


Research and development

212,982


-


Sales and marketing

1,021,804


-


Salaries and related

656,210


10,043


5,037,871


117,686





Loss before undernoted items and income taxes

(1,166,989)


(73,966)





Other comprehensive income

583,009


-

Income taxes

64,298


-

Net income

$

(648,278)


$

(73,966)





Basic income per common share

$

(0.02)


$

(0.00)





Shares used in per share calculation - basis

36,516,999


30,501,250


 

ALTERNATE HEALTH CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)




Three Months Ended March 31,


2017


2016

Operating activities:





Net and comprehensive loss

$

(648,278)


$

(73,966)


 Amortization of equipment

74,103


616


 Amortization of deferred charges

48,884


18,305


Equity earnings, not generating cash

(583,009)


-


Future tax recognition not providing cash

(156,000)


-


Share based compensation charge not requiring cash

1,694,410


-

Change in non-cash working capital items

(205,395)


12,674

Cash provided by (used in) operating activities

224,715


(42,371)





Investing activities:





Convertible note receivable

(665,200)


-


Purchase of equipment

(21,037)


-


Equipment in process

(28,963)


-


Purchase of Hightimes Holdings Corp shares

(332,982)


-


Internally generated intangible assets

(24,752)


-


Cash on acquisition of subsidiary

8,226


-


Cash provided by (used in) investing activities

(1,064,708)


-





Loss before undernoted items and income taxes

416,430


(73,966)





Financing activities:





Issuance of share capital

11,125,270


25,000


Long-term liability

-


16,819


Share subscription receivable

-


19,000


Warrants exercised

600,000


-


Lease payments

(397,062)


-


Development fee payments

(31,672)


-


Cash provided by (used in) financing activities

11,296,536


60,819





Increase (decrease) in cash

10,456,543


18,448

Cash, beginning of period

570,003


429,946

Cash, end of period

$

11,026,546


$

448,394

 

ALTERNATE HEALTH CORP.

RECONCILIATION OF IFRS TO NON-IFRS FINANCIAL MEASURES

(Unaudited)




Adjusted net income (loss)

First Quarter


(Canadian dollars)

2017

2016

$ Change

Net loss - IFRS

$

(648,278)

$

(73,966)

$

(574,312)

Adjusted for:





Non-cash stock based compensation expense

119,758

-

119,758


Non-recurring public company listing expenses

57,508

-

57,508


Non-cash, non-recurring share compensation to partners

1,612,600

-

1,612,600

Adjusted net income (loss)

$

1,141,588

$

(73,966)

$

1,215,554

Weighted average number of outstanding shares used in computing diluted income per share (1)

38,054,970

30,501,250

7,553,720

Adjusted earnings (loss) per share - diluted

$

0.03

$

(0.00)

$

0.03



Adjusted EBITDA

First Quarter


(Canadian dollars)

2017

2016

$ Change

Net loss - IFRS

$

(648,278)

$

(73,966)

$

(574,312)

Add back (as reflected on AHC consolidated statement of operations):





Depreciation and amortization

122,987

18,921

104,066


Interest expense

36,827

16,819

20,008


Income tax

64,298

-

64,298

EBITDA

$

(424,166)

$

(38,226)

$

(385,940)

Add back non-cash and non-recurring expenses:





Non-cash stock based compensation expense

119,758

-

119,758


Non-recurring public company listing expenses

57,508

-

57,508


Non-cash, non-recurring share compensation to partners

1,612,600

-

1,612,600

Adjusted EBITDA

$

1,365,700

$

(38,226)

$

1,403,926

 

ALTERNATE HEALTH CORP.
NOTES TO RECONCILIATION OF IFRS TO NON-IFRS FINANCIAL MEASURES

USE OF NON-IFRS FINANCIAL INFORMATION

The Company occasionally utilizes financial measures not calculated in accordance with generally accepted accounting principles in Canada ("IFRS") in order to provide investors with an alternative method for assessing our operating results in a manner that enables investors to more thoroughly evaluate our financial performance.  We also believe these Non-IFRS measures provide investors with a more informed baseline for modeling Alternate Health's future financial performance.

Management uses these Non-IFRS financial measures to make operational and investment decisions, to evaluate the Company's performance, to forecast and to determine compensation.  Further, management utilizes these performance measures for purposes of comparison with its business plan and individual operating budgets and allocation of resources. We believe that our investors should have access to, and that we are obligated to provide, the same set of tools that we use in analyzing our results.  These Non-IFRS measures should be considered in addition to results prepared in accordance with IFRS, but should not be considered a substitute for or superior to IFRS results.  We have provided definitions below for certain Non-IFRS financial measures, together with an explanation of why management uses these measures and why management believes that these Non-IFRS financial measures are useful to investors.  In addition, we have provided tables to reconcile the Non-IFRS financial measures utilized to IFRS financial measures.

Adjusted Non-IFRS Measures

Our Non-IFRS measures adjust IFRS Net income, Net income per share - diluted, and EBITDA for non-cash stock-based compensation expense for employees and partners and fees incurred for listing the Company's shares on the Over the Counter ("OTC") market exchange in the United States. 

Adjusted EBITDA

Alternate Health uses adjusted EBITDA as a means to assess the overall financial performance of its business without the effects of interest, taxes, depreciation, amortization, non-cash share based compensation and non-recurring expenses associated with listing the Company's stock on the OTC as these items may distort the analysis of certain business trends and hinder comparative analysis with other healthcare businesses competing in our markets.   

SOURCE Alternate Health Corp.

View Comments and Join the Discussion!
 

Partner Center