Mr. Vic Neufeld reports

APHRIA REPORTS STRONG PERFORMANCE IN Q1 2018, INCLUDING RECORD REVENUE AND GRAMS SOLD

Aphria Inc. has released its results for the first quarter ended Aug. 31, 2017.

                                    Q1 2018           Q1 2017

Revenue                          $6,120,359        $4,375,512
Gross profit                      7,904,441         3,782,145
Adjusted gross profit             4,774,197         3,331,596
Adjusted gross margin                 78.0%             76.1%
Net income (loss)                15,040,168           895,269
EBITDA from operations            1,548,149        11,054,269

                                                                                   Q1 2018           Q4 2017

Kilograms (or kilogram equivalents) sold                                             852.0             738.3
Revenue                                                                         $6,120,359        $5,717,866
EBITDA from operations                                                           1,548,149         2,826,667
Cash cost to produce dried cannabis/gram -- using Aphria's definition                 0.95              1.11
All-in cost of goods sold/gram                                                        1.61              1.67
Cash and cash equivalents and marketable securities                            118,731,275       167,257,202
Working capital                                                                135,127,644       169,051,562
Investment in capital and intangible assets                                     23,704,138        31,955,214
Strategic investments                                                           20,131,330        33,561,864

Operating highlights

• Eighth consecutive quarter of positive earnings before interest, taxes, depreciation and amortization; $1.5-million in EBITDA from operations in the quarter, a 47-per-cent increase from the prior year;
• First harvest and first sale of product flowered exclusively in the new facility expansion;
• Construction on part III and part IV expansion progressing as scheduled with first sale from part III expected in late May, 2018, and from part IV in mid- to late January, 2019. Economies of scale achieved as a result of the completion of these expansion projects will further promote Aphria's commitment to being one of the lowest cost producers in the industry;
• Improved all-in costs to produce dried cannabis per gram from $1.67 to $1.61 in the quarter, a decrease of 3.5 per cent;
• Lowered cash costs to produce dried cannabis per gram from $1.11 to 95 cents in the quarter, a decrease of 14.4 per cent;
• Made the step change in the quarter from a company reporting cumulative losses greater than cumulative net income (deficit) to cumulative net income exceeding cumulative losses (retained earnings). Aphria becomes one of only a few publicly listed licensed producers in this position;
• Deployed approximately $20.1-million of capital in the form of strategic investments including additional investments in Copperstate Farms Investors LLC and Green Acre Capital Fund I, and investments in TS BrandCo Holdings Inc., HydRX Farms Inc. (doing business as Scientus Pharma) and Nuuvera Corp.;
• Deployed approximately $23.7-million of capital in the form of capital expenditures related to the part II, part III and part IV expansion projects.

"In the first quarter of 2018, Aphria increased revenue and grams sold, and lowered cash costs, in addition to recording our eighth consecutive quarter of positive EBITDA," said Vic Neufeld, chief executive officer, Aphria. "A key driver of our continued performance has been our ability to maintain leadership as one of the lowest-cost producers in the industry. As legal recreational cannabis comes into market in 2018, low costs per gram will be a critical factor for the entire supply chain. Our proven ability to grow to scale while keeping costs low is an important competitive advantage; it positions Aphria to profitably meet projected demand for cannabis and deliver sustainable value to our shareholders.

"Looking ahead, we are on track to meet critical short- and long-term goals: Our fully funded facility expansion is well under way, and we expect to achieve further economies of scale once the expansion projects are completed in 2018. Additionally, we continue to develop new product innovations and invest in our recreational infrastructure and brand. This will enable us to serve growing demand from medical cannabis patients in the near term and will eventually support Aphria's position as a leader in Canada's recreational market, once federal and provincial regulatory frameworks are in place."

Financial highlights

For the eighth consecutive quarter, the company reported positive EBITDA. In the quarter, the company reported $1.5-million in EBITDA from operations, a 47-per-cent increase over the prior year. The company remains committed to the responsible use of its shareholders' investment in Aphria. The company continues to invest in its recreational brand, continues to proceed diligently on its capital investment plans and continues to explore other opportunities to increase shareholder value, including strategic investments, while ensuring appropriate liquidity risk mitigation strategies are in place.

Revenue for the three months ended Aug. 31, 2017, was approximately $6.1-million, representing a 7-per-cent increase over the prior quarter's revenue of approximately $5.7-million, in a quarter in which the company was effectively capacity constrained as the first sale from the part II expansion did not occur until late in August. Further, on a kilogram and kilogram equivalent basis, the company increased its sales by 15 per cent, from 738.3 kg to 852.0 kg. Cannabis oil sales, as a percentage of all revenue, remained constant in the quarter at 32 per cent of revenue.

Gross profit before fair value adjustments for the first quarter was approximately $4.8-million with a gross margin before fair value adjustments of 78 per cent, generated from both retail and wholesale shipments of medical cannabis. The decrease in the gross margin before fair value adjustments from the prior quarter was a function of replacing sales to veterans, once their three-gram-per-day limit became effective, with a combination of retail sales to patients and wholesale sales to other licensed producers.

During the quarter, the company's all-in costs of dried cannabis per gram decreased from $1.67 to $1.60. The decrease was largely related to economies of scale achieved as a result of the completion of the company's part II expansion. Similarly, cash costs of dried cannabis per gram decreased from $1.11 to 95 cents, for the same reason.

During the quarter, the company reported significant activity as it relates to its strategic investment portfolio, as shown in the table.

                                                                  Q1 2018       Q4 2017

Foreign exchange (loss) gain                                    $(150,702)     $417,165
(Loss) gain on marketable securities                           (1,746,367)      194,633
Gain on dilution of ownership in equity-accounted investee      7,551,158             -
(Loss) gain from equity-accounted investee                     (8,840,264)      210,400
Finance income, net                                               479,719        29,765
Unrealized gain on embedded derivatives                           532,750             -
Unrealized gain (loss) on long-term investments                19,081,556    (5,572,278)
Total                                                          16,428,131    (4,720,315)

The largest increases in the strategic investment portfolio relate to the increase in fair value of the company's investment in Copperstate Farms Investors LLC and the increase in the value of the company investment in its equity-accounted investee, Liberty Health Sciences Ltd. The largest offsetting decrease in the strategic investment portfolio was the company's share of its equity-accounted investee's, Liberty, net loss for the quarter. The company's share was $8.8-million, with the vast majority of the loss ($8.4-million) relating to Liberty's listing fees as part of its reverse takeover, go public, transaction.

Net income for the three months ended Aug. 31, 2017, was approximately $15-million or 11 cents per share as opposed to a net income of approximately $900,000 or one cent per share in the same quarter in the previous year and a loss of approximately $2.6-million or two cents per share in the previous quarter. The increase in net income for Aphria in the quarter is directly related to the net gains on the company's strategic investment portfolio in the quarter.

EBITDA from operations for the first quarter was approximately $1.5-million, compared with an EBITDA from operations of $1-million in the same period of the prior year and EBITDA from operations of $2.8-million in the previous quarter.

Aphria has a good thing growing.

About Aphria Inc.

Aphria, one of Canada's lowest cost producers, produces, supplies and sells medical cannabis. Located in Leamington, Ont., the greenhouse capital of Canada, Aphria is truly powered by sunlight, allowing for the most natural growing conditions available. The company is committed to providing pharma-grade medical cannabis, superior patient care while balancing patient economics and returns to shareholders.

We seek Safe Harbor.