Pot Producer Aphria’s CEO to Step Down Following Short-Seller Allegations

  • Pot Producer Aphria’s CEO to Step Down Following Short-Seller Allegations

Pot Producer Aphria’s CEO to Step Down Following Short-Seller Allegations

The moves come as the company released quarterly results that failed to meet analyst expectations.

Beleaguered cannabis producer Aphria Inc.'s chief executive officer is stepping down following short-seller allegations that have hit the company's stock.

"Building and leading a Company like Aphria, which exploded from an idea in late 2013 to our many successes to-date, has been an incredible journey, despite the toll it has taken on health, family and personal priorities".

Aphria CEO Vic Neufeld.

Aphria's stock fell 4.6 percent to $6.28 as of 8:22 a.m.in pre-market trading in NY.

Aphria shares were down 2.8% early Friday.

The leadership transition comes after short sellers Hindenburg Research and Quintessential Capital Management sparked a plunge in Aphria's shares after alleging the company sold assets at inflated prices to insiders. Since their report was released on December 3, the company's stock is down 17 per cent. However, QCM didn't respond to BNN Bloomberg's inquiries to verify if the hedge fund had fully withdrawn its short position on the company.

Neufeld and Cacciavillani will remain with Aphria as special advisors to the chairman and president to ensure "a smooth transition of institutional experience and strategic advice" until the new CEO is appointed.

Aphria also received a hostile takeover offer late a year ago from Ohio-based Xanthic Biopharma Inc., which does business as Green Growth Brands, that it rejected as being too low.

Neufeld has been at the helm of the company throughout its meteoric rise, but has also overseen the recent volatility. "And I've got to tell you, I've never seen an operation that has been built [like] Aphria", Simon said.

The company earned $21.6 million in revenue in the three months up to the end of November, the period in which recreational marijuana use became legal.

Cannabis sales rose 92 percent to 3,409 kilogram equivalents, with more than 1,900 kilograms of that sold to the Canadian recreational market after pot was legalized on October 17. Net income was $54.8 million or $0.22 per share, compared with $0.09 a share previous year, with the increase related to gains on its long-term investment portfolio. However, its average selling price fell to C$6.54 per gram from C$7.12 in the prior quarter due to lower average prices in the recreational market compared with the medical market.