While the reputation of Aphria Inc (TSX: APHA)(NYSE: APHA) has been dragged through the mud over the past couple of months, most analysts now have a different perspective on the company. With many internal changes happening, such as the resignation of the company’s former CEO Vic Neufeld as well as reports from independent investigations exonerating Aphria’s LATAM acquisitions, formerly damning reports from short sellers have lost credibility.
This is seen even in Aphria’s share price, which has recovered and surpassed the point where it was before the reports. In a further move guarantee no conflict of interests, Aphria has announced an early liquidation of all ownership in Liberty Health Sciences (CNSX: LHS), which was another company the short sellers originally linked to Aphria.
The announcement went on to state that Aphria terminated a variety of agreements including a promissory note work just over $59 million. The company first invested in Liberty back in April 2017, pledging $25 million that has lasted until this day. Although Aphria earned over 3.4 times its cumulative investment back in Liberty over the time period, the decision to shed all ties with Liberty represents a shift in corporate governance for the cannabis producer.
An independent investigation yielded that, although Aphria was not guilty of the outright fraud it was accused of, it still could be doing much better in terms of its corporate governance, transparency, and how it handles potential conflicts of interest. With much of the market still having a healthy skepticism for the company, Aphria has gone to work to fix their damaged reputation. Both independent investigations from Aphria and Liberty Health Sciences yielded similar findings that the reports from short-sellers were unjustified.
“The Short Seller Report was materially inaccurate with the respect to key allegations and was presented in a misleading and inaccurate manner and, accordingly, should not be relied upon,” said an independent investigation last week. “The independent directors recommended no further action be taken at this time by the Board but reserved the right to do so if present with additional information.”
Aphria’s stock price has made a full recovery over the past couple of months. Shares were sitting around the C$10 range before dropping down to C$5 once the reports came to light. Since then, however, the stock price has readily risen, reaching C$14 earlier this month and currently sits at C$12.8.
Aphria Inc Company Profile
Aphria is a leading global cannabis company driven by an unrelenting commitment to our people, product quality and innovation. Headquartered in Leamington, Ontario – the greenhouse capital of Canada – Aphria has been setting the standard for the low-cost production of safe, clean and pure pharmaceutical-grade cannabis at scale, grown in the most natural conditions possible. Focusing on untapped opportunities and backed by the latest technologies, Aphria is committed to bringing breakthrough innovation to the global cannabis market. The Company’s portfolio of brands is grounded in expertly-researched consumer insights designed to meet the needs of every consumer segment. Rooted in our founders’ multi-generational expertise in commercial agriculture, Aphria drives sustainable long-term shareholder value through a diversified approach to innovation, strategic partnerships and global expansion, with a presence in more than 10 countries across 5 continents. –Aphria
Liberty Health Sciences Company Profile
Liberty is a cannabis provider committed to providing a trusted, high-quality cannabis experience based on our genuine care for all cannabis users and a focus on operational excellence from seed to sale, with a focus on markets in the United States. Liberty’s measured approach to expansion opportunities is focused on maximizing returns to shareholders, while keeping consumers’ well-being at the forefront of what we do. –Liberty Health Sciences