Aphria’s Strong Q2 Results Overshadowed by Changes in Leadership

Aphria Inc (TSX:APHA)(NYSE:APHA) released its quarterly results on Friday which showed impressive sales and profit growth. Revenues of $21 million were nearly triple what the company accumulated a year ago while profits of $54 million were significantly up from the $6 million that Aphria netted a year ago.

It was a strong showing for the company, but it was overshadowed by the news that CEO Vic Neufeld would be leaving the company. Along with Co-founder Cole Cacciavillani, the two executives that have been with Aphria for five years will transition out of their roles “over the coming months,” per the release.

Although they will remain on the Board, it’s a significant move for the company during what’s been a fairly tumultuous time where the stock has fallen sharply over the past few months. Since October, Aphria’s stock has fallen by more than 50%, although we’ve seen big declines by many marijuana stocks during this time as there was a big sell-off that ensued post-legalization.

A change in leadership, especially with a replacement not confirmed, is going to create even more uncertainty for Aphria. As risky as the stock may have been on critical short-seller reports, Neufeld previously had worked with Jamieson Laboratories, a company that has been very successful at growing a brand in many parts of the world. It was experience that should have helped Aphria grow its brand and give it an advantage over other marijuana companies that lacked that same leadership.

Despite a strong showing with respect to earnings, this is definitely a problematic situation for Aphria and would make me even more hesitant to invest in the company today.