Aleafia Health Inc.

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Good day, ladies and gentlemen. And welcome to the Alephia Health 2021 fourth quarter and 12 months results conference call. This morning, Alephia Health filed on CDAR. Its financial statements and associated management discussion and analysis for the three and 12 months ended December 31st, 2021. All comments to be made on this call today should be taken with reference to and are qualified in their entirety by those documents. Today's call includes estimates and other forward-looking information from which our actual results could differ. Please review the cautionary language in today's press release regarding various factors, assumptions, and risks that could cause our actual results to differ. Furthermore, during this call we will refer to certain non-IFRS financial measures, including branded cannabis net revenue, adjusted gross margin, and adjusted EBITDA. These measures do not have any standardized meaning under IFRS, and our approach to calculating these measures may differ from that of other issuers, and so these measures may not be directly comparable. Please see this quarter's MD&A for more information about these measures. I will now pass the call over to our Alephia Health CEO, Tricia Sims.

Thank you, Howard, and welcome fellow shareholders. I am very excited about Alethea's future and exciting year ahead of us. The prospects for our company are the best they have ever been, and we look forward to continuing to show shareholders and investors what great things we can do in this industry. Our mission is very direct to improve people's lives, and that is what will see us realize our personal and business ambitions. Embracing this mission is now more important than ever. First off, I would like to thank Jeff Bennett, our former CEO for the last three and a half years for his leadership, passion and mentorship to Alephia Health. He put together a phenomenal team, got Alephia off the ground and where we are today. And we wish him well in his next challenge. Now, let's talk about the company as it is today. The core strategic objectives that will drive Alephia Health to sustained profitability reflect a pivot to focus on branded cannabis revenue. In 2021, we transformed our business, evolving from a wholesale producer to a branded cannabis company, and that is a major change. Today, you will hear the words sticky and hypergrowth, two concepts that are driving us forward. Sticky, of course, means that sales will occur over and over as customers will be using our products again and again. It occurs in the medical cannabis segment where the revenue is recurring at attractive gross profit margins. And hypergrowth characterizes our trajectory in both the adult use sales channel and the opportunity we see in select international markets. Now let's talk about Alephia's transformation and what it has meant to our Q4 and 12-month results. Our revenue is driven by three strategic pillars, an exciting CPG-branded adult youth portfolio generating 24 million run rate net revenue, leadership in medical cannabis with its 10 million run rate net revenue, and burgeoning international sales, where we are well positioned in three countries, Germany, the UK and Australia, and have developed partnerships with key established European supply distributors. We consider international sales to be an important opportunity and have already delivered products overseas. More to come on that. Another highlight is that we are targeting the second half of 2022 to achieve break-even adjusted EBITDA profitability. To do this, We are improving adult use margins through portfolio optimization, and we are reallocating the company's headcount strategically to optimize talent and maximize revenue velocity. I can tell you today that we are poised to achieve a top 10 market share position in 2022, driven by leadership in the broad ranging adult use value cannabis category. Our very appealing Divi value brand is consistently among the top search brands at the Ontario Cannabis Store. Our five cannabis brands span the spectrum from premium and craft flower to the value category where we enjoy significant leadership. Since Q4 2020, 37 new SKUs have been launched as we are aggressively pursuing and gaining market share in the three largest categories, dried flower, pre-roll and vapes. We are pleased to report that Alephia delivered a top three change in market share rankings out of 40 Canadian licensed producers from Q1 2021 when we launched our Sunday Market House of Brands to Q4 2021. Here's what the results tell us. In 2021, the total net cannabis revenue of $36.1 million represented a highly diversified sales mix, with our two hyper growth segments in adult use and medical cannabis achieving 80% of net revenue, a complete turnaround from 2020, where bulk wholesale product represented 67% of net revenue. This is a complete change. We are moving away from lower margin bulk wholesale sales where the relationship with the consumer is distant. Our focus now is to understand and deliver what the consumer demands. To look at it another way, for the 12-month period ending December 31st, 2021, branded cannabis net revenue advanced 96% to $28.7 million from $14.6 million in 2020. For Q4 2021, it increased 60% to $8.3 million from $5.2 million in Q4 2020. We are in the top three of Canadian LPs in market share rank increase to number 15 in Q4 2021, up from number 30 in Q1 2021. There was also a 37% rise in Q4 2021 retail sales pull-through relative to Q3 2021. Alephia is now a branded products company, and we are very proud of our Sunday Market House of Brands. It has achieved 396% growth year over year, and it is anchored around Divi, the everyday brand focused on quality, high margin, and high velocity sales categories, including dried flour, pre-roll, vape, and select cannabis derivative products. We delivered top 10 Q4 2021 retail sales increase relative to Q3 with a 37% sales growth. The company's adult use market share increased from 0.3 in Q1 2021 to 2.0 in Q4 2021. Adult youth net revenue increased a very impressive 396% to 16 million compared to 3.2 million in 2020 and increased 326% to 6 million in Q4 2021 compared to 1.4 million in Q4 2020. This growth was led by expansion of our flower and pre-roll retail sales. which each grew by 1000% during the last quarters. Our Divi value brand, a top searched brand on OCS.ca, reached the 10th percentile in Ontario for its vapes and its oils, are one of the top SKUs in the province. Our market share is on a dramatic upward trend, rising 27% Q4, versus Q3 2021 and achieving 15 positions from 30 at the end of Q1 2021 when the Sunday Market House of Brands was launched to 15 at Q4 2021. In the second half of 2021, there was approximately a three times increase in gross adult use sales over the first half of 2021. This momentum has continued into 2022. As you can see, our market share rank continues to rise. Over this period, the company delivered strong retail pull-through in each of the three major categories, with flower retail sales climbing approximately 1,400%, pre-roll increasing approximately 1,000%, and vape retail sales increasing approximately 200%. Alephia is a significant player in the medical cannabis market through our flagship emblem brand. And there too, revenue is climbing due to its sticky and recurring revenue base with strong gross margins. Medical cannabis net revenue increased 33% to 10.6 million in 2021 compared to 8.0 million in 2020. Driven by strong script growth, and new strategic clinic and benefit provider partnerships that see the benefit in joining the Alephia medical ecosystem. Script count increased 17% year over year, while the market declined at minus 23%. We had double digit growth in medical cannabis sales, despite the overall market decline. Third party clinics now represent just about 55% of gross medical revenue, and four new unionized employers were added in 2021. Key wins include a 22% increase in uniform patients in Q4 over Q3, a 67% increase in prescriptions from veteran patients in Q4 2021 over Q3 2021, and a 2,000% increase in Quebec scripts in Q4 2021 over Q3 2021. The medical channel represents a highly scalable, sticky, recurring revenue base. Through Unifor and our new strategic partnerships, we are poised to accelerate new patient uptake and continue to pursue those patients who are reimbursed for their medical cannabis. We are seeing strong fundamentals relative to our competitors with year-over-year script count up 17% from 32,191 in 2020 to 37,779 in 2021, and an active patient base which grew 13% from 17,400 in 2020 to 19,700 in 2021. One of the important drivers of our competitive advantage is in producing large format dried flower SKUs in Port Perry, one of the only successful outdoor cultivation facilities in Canada. As one of the first operational large-scale legal outdoor grow in Canadian cannabis history, it launched in 2019 and was an industry disruptor that enabled Alephia's strategic pivot as we began to produce large-scale harvest of THC dried flower. Dried flower and pre-rolls represent more than half of the total adult use market and we are a high quality and low cost producer of dried flower. A record-breaking outdoor harvest in 2021 puts us in a strong position to supply our burgeoning adult use sales channel. Thanks to the expertise of the team there, we produced high-potency flour that averaged 22% THC and reached up to 27% THC, the kind of level consumers are looking for. We are seeing the market evolve such that in addition to potency, consumers are paying increasingly more attention to terpenes, which went from 2.7 to 5.7 in 2021 compared to a maximum of 3.3 in 2020. The harvest this year is exponentially higher quality than 2020. In high potency flour, we cultivated approximately 500 kilos in 2020 versus 11,650 kilos in 2021, all of which is the highest grade flour already being sold at retail under the Divi brand. I will now turn the presentation over to Matt Sale, our CFO, and he will tell you more about some of Aletheia's important metrics. Matt?