NANAIMO, British Columbia--(BUSINESS WIRE)--Tilray, Inc., (“Tilray” or the “Company”) (Nasdaq: TLRY) a global leader in cannabis research, cultivation, production and distribution, today reported financial results for the first quarter ended March 31, 2019. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated.

“We are pleased with our first quarter results and the ongoing, substantial progress our team has made to position Tilray as a global leader in the cannabis industry,” said Brendan Kennedy, Tilray President and CEO. “We have made significant progress integrating our recent acquisitions of Manitoba Harvest and Natura Naturals, accelerating our entry into the United States hemp and CBD markets, and increasing our production and manufacturing capacity in North America and Europe. As we expand our operations around the world, we remain focused on making disciplined investments to maximize the multiple paths to value creation we are aggressively pursuing for our visionary investors.”

First Quarter 2019 Financial Highlights

Revenue increased 195.1% to $23.0 (C$31.0) million, compared to the first quarter of last year, driven by the legalization of Canadian adult-use in 2018, the addition of hemp food sales from the Manitoba Harvest acquisition during the quarter, and strong growth in international medical markets. Excluding excise tax, revenue was $21.5 million.

Three months ended March 31, Three months ended March 31, Cannabis revenue mix 2019 2018 $ Change % Change Adult-use $ 7,881 $ — $ 7,881 N/A ACMPR (direct to patient & bulk) 7,763 7,378 385 5 % Food products 5,582 — 5,582 N/A International - medical 1,812 430 1,382 321 Total $ 23,038 $ 7,808 $ 15,230 195 %

Total kilogram equivalents sold increased over two-fold to 3,012 kilograms from 1,299 kilograms in the prior year period.

Average net selling price per gram decreased to $5.60 (C$7.54) compared to $5.94 (C$8.00) in the prior year period. The average net selling price excluding excise taxes was $5.28 (C$7.02) per gram for the first quarter of 2019.

Gross margin increased sequentially to 23% from 20% in the prior quarter. Gross margin in the first quarter of 2018 was 50%. Gross margin continues to be impacted by increased costs incurred with the ramping up of cultivation facilities in Canada and Portugal and acquiring third party supply. Additionally, food product margins were impacted by an approximately $0.7 million non-cash charge related to purchase accounting for the fair value of inventory. The remaining non-cash charge of approximately $1.4 million will be incurred in the second quarter of 2019.

Net loss for the quarter was $30.3 million or $0.32 per share compared to a loss of $5.2 million or $0.07 per share for the prior year period. The non-GAAP adjusted Net loss for the quarter was $25.2 million or $0.27 per share for the first quarter of 2019. The adjustments to the net loss are non-recurring acquisition related charges. Adjusted EBITDA was a loss of $14.6 million compared to a loss of $3.2 million the prior year period. The increased net loss and Adjusted EBITDA declines were primarily due to the increase in operating expenses related to growth initiatives, the addition of Manitoba Harvest, and the expansion of international teams.

Business Highlights

Acquired Manitoba Harvest, a hemp and natural foods producer in Winnipeg, Manitoba, for up to $310 (C$410) million, subject to certain revenue milestones. Manitoba Harvest distributes its products to over 16,000 retail locations in the United States and Canada.

Acquired Natura Naturals Holdings, a licensed cannabis cultivation facility in Leamington, Ontario, for up to $54 (C$71) million, subject to certain cultivation milestones.

Completed a long-term revenue sharing agreement with Authentic Brands Group (ABG) to leverage their portfolio of brands and develop, market and distribute consumer cannabis products across the world. The partnership will initially focus on CBD products in the U.S. and THC/CBD products in Canada and expand globally as regulations permit.

Completed a successful harvest of medical cannabis and hosted inauguration 1 at the Company’s European Union (“EU”) campus in Cantanhede, Portugal. The Company expects multiple harvests from this facility in the coming months.

at the Company’s European Union (“EU”) campus in Cantanhede, Portugal. The Company expects multiple harvests from this facility in the coming months. Announced support of two new clinical studies: a pilot study led by Murdoch Children’s Research Institute (MCRI) in Melbourne, to evaluate the feasibility and acceptability of a larger randomized placebo-controlled trial of cannabis extract as a form of treatment for reducing Severe Behavioral Problems (SBP) in pediatric patients with Intellectual Disabilities (ID); and a study with McGill University Health Centre’s Division of Infectious Diseases and Chronic Viral Illness, to examine the effectiveness of medical cannabis on immune activation in People Living with HIV. 2

Announced an investment of $32.6 million to increase our Canadian production and manufacturing footprint by 203,000 square feet across three facilities in Nanaimo, British Columbia, Leamington, Ontario, and London, Ontario.3 The investment will expand Tilray’s total production and manufacturing footprint from 1.1 million to 1.3 million square feet worldwide.

1 Announced April 24, 2019

2 Announced April 1, 2019

3 Announced May 8, 2019

Conference Call

The Company will host a conference call to discuss these results today at 5:00 p.m. ET. Investors interested in participating in the live call can dial 877-489-6528 from the U.S. and 629-228-0736 internationally. A telephone replay will be available approximately two hours after the call concludes through Tuesday, May 28, 2019, by dialing 855-859-2056 from the U.S., or 404-537-3406 from international locations, and entering confirmation code 9896647.

There will also be a simultaneous, live webcast available on the Investors section of the Company’s website at www.tilray.com. The webcast will be archived for 30 days.

About Tilray®

Tilray is a global pioneer in the research, cultivation, production and distribution of cannabis and cannabinoids currently serving tens of thousands of patients and consumers in twelve countries spanning five continents.

Forward Looking Statements

This press release contains “forward-looking statements”, which may be identified by the use of words such as, “may”, “would”, “could”, “will”, “likely”, “expect”, “anticipate”, “believe, “intend”, “plan”, “forecast”, “project”, “estimate”, “outlook” and other similar expressions, including statements regarding our growth potential, the sustainability of growth, demand for our products and the medical and adult-use cannabis markets and anticipated plans for strategic partnerships. Forward-looking statements are not a guarantee of future performance and are based upon a number of estimates and assumptions of management in light of management’s experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances, including assumptions in respect of current and future market conditions. Actual results, performance or achievement could differ materially from that expressed in, or implied by, any forward-looking statements in this press release, and, accordingly, you should not place undue reliance on any such forward-looking statements and they are not guarantees of future results. Forward-looking statements involve significant risks, assumptions, uncertainties and other factors that may cause actual future results or anticipated events to differ materially from those expressed or implied in any forward-looking statements. Please see the heading “Risk Factors” in Tilray’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 25, 2019, for a discussion of the material risk factors that could cause actual results to differ materially from the forward-looking information. Tilray does not undertake to update any forward-looking statements that are included herein, except in accordance with applicable securities laws.

Use of Non-U.S. GAAP Financial Measures

To supplement its financial statements, the Company provides investors with information related to Adjusted EBITDA, which is not a financial measure calculated in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). Adjusted EBITDA is calculated as net income (loss) before interest expense, net; other income, net; deferred income tax recovery, income tax expense; foreign exchange (gain) loss; depreciation and amortization; and stock-based compensation expense. A reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. The Company believes Adjusted EBITDA provides useful information to management and investors regarding certain financial and business trends relating to the Company’s financial condition and results of operations. Management uses Adjusted EBITDA to compare the Company's performance to that of prior periods for trend analyses and planning purposes. Adjusted EBITDA is also presented to the Company’s Board of Directors.

Non-U.S. GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with U.S. GAAP. Non-U.S. GAAP measures exclude significant expenses that are required by U.S. GAAP to be recorded in the Company's financial statements and are subject to inherent limitations.

TILRAY, INC. Condensed Consolidated Statements of Net Loss and Comprehensive Loss (in thousands of U.S. dollars, except for share and per share data, unaudited) Three months ended March 31, 2019 2018 Revenue 23,038 $ 7,808 Cost of sales 17,653 3,912 Gross margin 5,385 3,896 General and administrative expenses 12,797 4,145 Sales and marketing expenses 7,821 2,263 Depreciation and amortization expense 1,863 222 Stock-based compensation expense 5,306 31 Research and development expenses 1,048 975 Acquisition and integration expenses 4,424 — Operating loss (27,874 ) (3,740 ) Foreign exchange loss, net 179 1,146 Interest expense, net 8,745 416 Finance income from ABG Profit Participation Arrangement (135 ) — Other income, net (2,345 ) (121 ) Loss before income taxes (34,318 ) (5,181 ) Deferred income tax recovery (3,777 ) — Current income tax recovery (240 ) — Net loss $ (30,301 ) $ (5,181 ) Net loss per share - basic and diluted (0.32 ) (0.07 ) Weighted average shares used in computation of net loss per share - basic and diluted 94,875,351 75,000,000 Net loss $ (30,301 ) $ (5,181 ) Foreign currency translation loss (475 ) (1 ) Unrealized gain on cash equivalents and investments 1,408 — Other comprehensive income 933 (1 ) Comprehensive loss $ (29,368 ) $ (5,182 )

TILRAY, INC. Condensed Consolidated Balance Sheets (in thousands of U.S. dollars, except for share and par value data, unaudited) March 31, 2019 December 31, 2018 Assets Current assets Cash and cash equivalents $ 294,205 $ 487,255 Short-term investments 31,229 30,335 Accounts receivable, net of allowance for doubtful accounts of $972 and $292, respectively 19,708 16,525 Other receivables 378 969 Inventory 48,712 16,211 Prepaid expenses and other current assets 5,357 3,007 Total current assets 399,589 554,302 Property and equipment, net 128,963 80,214 Intangible assets, net 364,060 4,486 Goodwill 156,364 — Investments 19,650 16,911 Deposits and other assets 7,970 754 Total assets $ 1,076,596 $ 656,667 Liabilities Current liabilities Accounts payable $ 17,179 $ 10,649 Accrued expenses and other current liabilities 152,819 14,818 Accrued obligations under capital lease 366 470 Total current liabilities 170,364 25,937 Accrued obligations under capital lease 8,661 8,286 Deferred tax liability 92,220 4,424 Convertible Notes, net of issuance cost 422,868 420,367 Other liabilities 563 — Total liabilities $ 694,676 $ 459,014 Stockholders’ equity Class 1 common stock ($0.0001 par value, 250,000,000 shares authorized; 16,666,667 shares issued and outstanding) 2 2 Class 2 common stock ($0.0001 par value; 500,000,000 shares authorized; 80,131,560 and 76,504,200 shares issued and outstanding, respectively) 8 8 Additional paid-in capital 515,692 302,057 Accumulated other comprehensive income 4,696 3,763 Accumulated deficit (138,478 ) (108,177 ) Total stockholders’ equity 381,920 197,653 Total liabilities and stockholders’ equity $ 1,076,596 $ 656,667