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Aleafia Health informed the market it has reached a milestone in its patient count after one of the biggest scandals in the cannabis industry.
One Canadian cannabis producer is crediting the high-profile failings of a competitor for its recent patient count achievement.
Last week, Geoffrey Benic, CEO of Aleafia Health (TSX:ALEF,OTCQX:ALEAF), informed shareholders that the company has reached an active patient base of 10,000 users for its medical products.
The company saw a 42 percent increase in its patient count during August and September, he said. In July, Aleafia Health had 7,000 patients.
“Growing our base of active, registered patients means increased sales of our high-margin, value-added product portfolio,” Benic said in a letter to investors.
Benjamin Ferdinand, CFO of Aleafia Health, told the Investing News Network (INN) that he attributes the company’s patient count growth to a variety of things, including the recent difficulties of some notable licensed producers (LPs) in the market.
“We’re able to very quickly take advantage of opportunities in the market,” he said.
When asked how significant the halt of medical product sales from CannTrust Holdings (NYSE:CTST,TSX:TRST) has been for his firm’s patient count growth, Ferdinand said the struggles of other producers have opened a prime spot for Aleafia Health.
“We’re extremely focused on our patients and making sure that they get the product that they deserve, so if another (LP) is not able to deliver that to them, we want to make sure that we give them the opportunity to continue their care, and we’re well positioned for that,” he said.
In July, CannTrust was found to have been growing cannabis in unlicensed rooms out of its Pelham, Ontario, facility. The scandal has followed the cannabis firm — and investors — since then.
Following the initial announcement, the firm halted all its sales to medical patients on July 10.
Before the unlicensed growing was flagged by Canadian regulators, CannTrust indicated its patient count amounted to 68,000 at the end of the firm’s Q1 2019.
Patients logging onto the CannTrust website today are faced with a warning message indicating the firm cannot sell any medical products.
Ferdinand told INN the company counts on its education platform to gain practitioner referrals for new patients. The executive said those referrals are really what are driving the patient uptick.
“The model is really built around education, referrals and high-quality service,” he said.
Ferdinand would not disclose an official guideline for the amount of patients the company expects to enroll by the end of the year; however, he added that Aleafia Health is forecasting more patient contact per month, serving as a chance to grow its count.
Nawan Butt, associate portfolio manager with Purpose Investments, told INN he agrees there are opportunities appearing from the failings of LPs such as CannTrust. But he reminded investors these advances don’t stand to make a significant impact at this stage.
“Even though there is room created because of a failing LP, that’s not where the majority of the low-hanging fruit is,” Butt said.
At this point of development in the Canadian cannabis marketplace — according to Butt — LPs are more aggressively competing with the black market options available to consumers, rather than seeking patient bases from each other.
“Yes, the failings of a single company will cause an opportunity for other companies, but I think it’s much more important to understand the context of the market as a whole,” he said.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.