Editor-in-Chief

Debra BorchardtDebra BorchardtNovember 26, 2019
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3min4200

MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) reported first fiscal quarter revenue of $44 million, up 105% year-over-year and 5% sequentially. The company also reported an eye-popping net loss of $82 million. MedMen delivered an Adjusted EBITDA loss of $22.2 million for the quarter.

Approximately $7.4 million of rent expense was not included in Adjusted EBITDA for the quarter due to the application of IFRS 16 Leases. Adjusted EBITDA loss under the previous methodology would have been $29.6 million compared to a $39.4 million loss in the previous quarter.

“We entered Fiscal 2020 on a mission to build a more nimble and financially flexible MedMen,” said Adam Bierman, MedMen co-founder and chief executive officer. “As we right-size our organization and implement an intensified focus on free cash flow generation, our business will become more efficient, in turn allowing us to better serve our stakeholders. Through the successful execution of these goals, we expect MedMen will be EBITDA positive by the end of calendar year 2020.”

“Since 2016, MedMen has aggressively executed on a plan to become the most recognizable brand in cannabis. The company’s focus on profitability will provide greater flexibility to navigate near term market fluctuations, as they continue to capitalize on the sector’s overall opportunity. We have supported the business since 2016 and are supportive of the vision going forward,” said Ben Rose, executive chairman of the Board and chief investment officer of Wicklow Capital.

Gross margins across retail operations were 52% compared to 50% in the prior quarter. The increase in gross margins reflects increased leverage with suppliers and favorable vendor terms.

Corporate SG&A totaled $30.6 million, a 21% decrease from fiscal second quarter 2019, representing $31.6 million in annualized savings since the initial cost-cutting efforts began.

More Money From Gotham Green

As part of the amendment to the company’s $250 million senior secured credit facility, Gotham Green Partners has an obligation to fund the $10 million tranche by November 29, 2019.


Debra BorchardtDebra BorchardtNovember 26, 2019
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6min2100

Green Growth Brands

Green Growth Brands Inc. (CSE: GGB) (OTCQB: GGBXF) reported its results for fiscal first-quarter 2020 ending September 28, 2019. Revenues for the period totaled $12.7 million, a 77% increase over the previous quarter. However, the company delivered a whopping net loss of $30 million versus last year’s net loss of $2.8 million for a net loss of 15 cents per share over last year’s net loss per share of three cents per share.

Expenses Are Very High

General and administrative costs were $11,433,502 for the 13 weeks ended September 28, 2019, compared to
$2,450,960 for the three months ended September 30, 2018, of the prior year. This included head office salaries of
$5,654,77, legal and professional fees of $3,290,363, travel-related costs of $405,474, occupancy costs of $435,863, insurance costs of $349,938, and other expenses of $302,032 for the 13 weeks ended September 28, 2019. Also included in general and administrative costs for the 13 weeks ended September 28, 2019, are termination and severance payment of $421,396 and write-down of technology of $573,662.

“As we approach the holiday shopping season, we are confident in our growth trajectory,” said Peter Horvath, CEO of Green Growth Brands. “We are proud of the topline growth we accomplished in Q1 and are extremely pleased with our current results, which are an indication of future growth. In fact, the four weeks of fiscal November, retail CBD sales were two-thirds of our total CBD sales reported in all of the thirteen weeks of first quarter fiscal 2020, which we are reporting today. This topline growth is reflective of our shift from investing in the foundation of our CBD business to focusing on its execution.”

CBD Biz Costs More Than It Makes

While the company is touting its CBD success, the hard numbers aren’t that great. For the quarter CBD sales came in at $5.1 million. The CBD segment, however, incurred operating expenses of $11,225,559. Sales and marketing include personnel costs of $3,319,371; advertising costs of $1,966,655; occupancy costs of $570,254; professional fees of $229,852; supplies, postage and credit card fees of $483,125; travel of $303,657; and other expenses of $606,147.

“In a very short time, we have grown a meaningful CBD footprint. We believe our products, network of shops, rapidly growing web business and wholesale relationships position us as a leader in the industry. In the coming quarters, we look forward to reporting similar trends and results for our MSO segment of the business. As we begin to reach scale our consumer and operations expertise will be clearly reflected, not only in the customer experiences we create and the loyalty we drive but also in our financials as we work towards profitability.”

Harvest One

Harvest One Cannabis Inc. (TSX-V: HVT)(OTCQX: HRVOF) announced a net revenue of $4.1 million for the three months ending September 30, 2019, representing a 34% increase over the previous quarter, and a 142% increase over the same period in 2018. The company also reported a net loss of $5.2 million, which was slightly less than last year’s net loss of $5.7 million for the same time period.

Grant Froese, CEO of Harvest One, said, “We are very encouraged by strong revenue growth in the first quarter of fiscal 2020. Cannabis sales throughout the industry have been greatly impacted by provincial and regulatory challenges, particularly the slow rollout of retail stores in both Ontario and British Columbia. Unlike some other Canadian Licensed Producers, we are in a fortunate position of having a diverse product portfolio, where cultivation equates to approximately 50% of our revenue, with our remaining revenues coming from our medical and consumer divisions.”

Cost Cutting Measures

Mr. Froese continued, “In light of recent challenges within the cannabis industry, the company has made some difficult but necessary decisions to improve cash flows and reallocate capital to ensure the long-term growth of the Company. Harvest One has implemented significant cost-saving measures across all its divisions and expects to realize these savings immediately and improve upon them in future quarters.”

The company is laying off 20% of its workforce across all divisions. Harvest One also said it is planning on divesting its 50.1% interest in the Greenbelt Greenhouse facility and its outdoor growing site located in Lillooet, British Columbia. It said the sale of these non-core assets will provide cash proceeds to support the expansion of the company’s core business lines and operational strengths.

It is repurposing its Lucky Lake facility to focus on the company’s core strengths: namely, the development, production, and distribution of its value-added infused products, including the manufacture of its Satipharm Gelpell capsules in Canada.


Debra BorchardtDebra BorchardtNovember 26, 2019
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8min2600

SLANG Worldwide Inc. (CNSX: SLNG) reported its 2019 third-quarter revenue in Canadian dollars of $9.3 million which rose 29% over the $7.2 million of revenue produced in the second quarter of 2019. It easily overshadowed last year’s net revenue of $1.6 million for the same time period.  The company said that the increase reflected ongoing business strength in core markets and a favorable shift in product mix, including accelerating sales of premium products in the SLANG portfolio.

Slang also delivered a net income of $0.4 million in third-quarter versus net income of $17.5 million in the second quarter.  The company reported a net loss of $16 million in 2018 for the same time period. The company said that the net income gain was driven by a favorable $106.6 million fair value adjustment to derivative liabilities and the options to acquire NS Holdings Inc. and ACG, offset by a non-cash impairment charge relating to a write-down of goodwill for acquisitions completed in January 2019 and by increased operating expenses in the quarter.

“In Q3 2019, we continued to see strong organic revenue growth. Across our portfolio, we saw favourable developments, including a shift in consumer spending toward the premium end of our portfolio, particularly Craft Reserve and Firefly. We continue to diversify our portfolio of products to increase total cannabis market share across both historically strong and blue-sky product segments, for SLANG,” said SLANG CEO Peter Miller.

Additional Financing

Slang also announced a non-brokered private placement financing for $15 million. Investors include existing institutional shareholders of the company and additional investment by investor Bruce Linton. Slang said it intends to use the proceeds of the private placement to support strategic growth opportunities and for general corporate purposes.

Miller added, “We are excited to accept additional financing. This significant capital infusion from existing, long-term shareholders further strengthens our balance sheet. The company’s ongoing efforts toward increased acquisition-centric efficiencies, our goal of positive operating cash flow by mid-2020, today’s enhanced cash position, and our powerful, multi-state platform allow us to be opportunistic around growth opportunities in this dynamic environment. We see a huge opportunity in flower, ultra-premium concentrates, and other previously untapped product segments for SLANG.”

Vape Sales Continue

Despite the vape crisis, which has put a dentin most vape product sales, Slang said that it saw an increase in quarterly revenue driven by higher sales of premium products within the portfolio. “Despite sociopolitical headwinds, our leading Craft Reserve and Reserve brands in the O.penVAPE line maintained a #1 sales position across key markets, including Colorado, New Mexico, and Vermont.

The company statement also noted that within most key markets, the Slang SKUs are among the highest-selling concentrate products on shelves, including in Colorado where 6 of the highest-selling vape SKUs are either Craft Reserve or Reserve products. “As part of its iterative product strategy, SLANG soft-launched the FireFly Mini product in Colorado during Q3 2019. After positive traction in the market, the company now anticipates a full state-wide launch in Q4 2019, followed by a product roll-out in California, Oregon, and Washington in the first half of 2020. Additionally, SLANG anticipates offering further additions to its product mix, including live resin products in 2020.”

 


Debra BorchardtDebra BorchardtNovember 25, 2019
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5min1540

Organigram Holdings Inc. (OGI) (OGI) reported that its gross revenue grew to $19.2 million for the fourth quarter ending August 31, 2019, versus $3.1 million for the fourth quarter in 2018. The net loss for the 2019 fourth quarter was $22 million versus last year’s net income of $18 million for the same time period. The larger loss was due to “non-cash fair value changes to biological assets and inventories.”

For the full year, Organigram delivered net revenue of $80.4 million, which grew 547% over 2018’s $12.4 million. The net loss for 2019 was $9.5 million versus 2018’s net income of $22.1 million.

“Our 2019 results reflected a successful year for Organigram. Not only did we report strong top-line growth and establish an enviable national market share position in Canada, we generated positive adjusted EBITDA – one of the key measures we use to evaluate our performance,” said Greg Engel, Chief Executive Officer. “In 2019, we increased staffing and capacity to meet forecasted demand and maintain inventory in the market. Industry structural issues have challenged supply and demand dynamics in the short-term but we believe the growth opportunity in the Canadian cannabis market remains intact.”

Lower Sales Sequentially

The company’s fourth-quarter net revenue dropped to $16.3 million versus the third-quarter net revenue of $24.8 million. Organigram had warned the market about a $3.7 million in a provision for product returns and pricing adjustments. “The majority of the provision was largely related to two slower selling stock-keeping units (SKUs) sold to the Ontario Cannabis Store (OCS), comprised of a bespoke order of lower THC dried flower intended to fulfill a supply gap in the market earlier this year and THC oils which have seen less than anticipated demand in the adult-use recreational market.”

The company also said that the “lack of a sufficient retail network and slower than expected store openings in Ontario continued to impact revenue growth in Q4 2019 and were further exacerbated by increased industry supply. Quarter to quarter revenue is expected to continue to be volatile due to the timing of large pipeline orders for Ontario, in particular, where there is a centralized distribution model and where store additions are difficult to forecast.”

Year to date, Organigram said it estimates it has approximately 10% national market share based on its analysis of available data including, but not limited to, market share data from select provinces and various public data.

Cultivation Costs Come Down

The fourth-quarter “all-in” costs of cultivation of $0.66 and $0.94 per gram of dried flower harvested, respectively, dropped from $0.95 and $1.29 per gram in Q3 2019 as yield per plant increased in line with historical levels following a temporary decrease in Q3 2019 (Q4 2019: 148 grams compared to 110 grams in Q3 2019). As a result, the Q4 2019 harvest increased to 7,434 kg from 6,052 kg in Q3 2019.

Looking Ahead

Organigram said it took delivery of its high speed, high capacity, fully automated chocolate production line in October 2019. The installation has been almost completed, and the company expects to commission and license products in time for initial sales in Q1 calendar 2020.  The company said it now expects to launch powdered beverage products in Q2 calendar 2020 based on expected licensing timing for the production area and equipment delivery and commissioning schedules.

The company also stated that Q1 2020 net revenue is expected to be higher than Q4 2019 on increased sales to provinces and higher wholesale revenue. It expects increased efficiencies and economies of scale from more capacity to decrease cultivation costs in Q1 2020 from Q4 2019. Labour costs are not expected to increase commensurate with production, processing and sales volume.

“As we were one of the first success stories to supply the market in the early days of legalization, we have had visibility for some time now on ultimate sell-through to consumers and have adapted our production mix and product strategy to align with our understanding of emerging consumer preferences. We have a great conviction in our strategy and ability to onboard the new retail store openings and to launch a portfolio of edible and derivative products appealing to adult consumers. ”

The stock was up over 3% and lately trading at $2.72.


Debra BorchardtDebra BorchardtNovember 25, 2019
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8min3950

The Facilities Are Fully Funded

On Oct. 9, 2019, The Green Organic Dutchman (OTC: TGOD) said in a press release that it was updating the market on credit financing. In the statement, it noted that “The Company may revise the construction schedule for its Ancaster and Valleyfield projects if it is unable to obtain sufficient financing on reasonable terms, within the required timeframe. There can be no assurance that this review will result in the completion of any financing transaction.” Basically, TGOD said it needed money to finish the projects as planned.

However, TGOD had previously issued an investor presentation in which it stated its Ontario projects were fully funded. This did not go unnoticed by shareholders who were surprised to learn that TGOD needed more money to complete its facilities. Then on October 18, just 10 days later,  the company said, “The Ancaster greenhouse is complete, and the Ancaster processing facility is approximately five weeks from material completion.”

On November 13, the company was able to secure financing and said, “A term sheet with an investment fund for a $40 million construction mortgage loan has also been signed, secured on the facilities at Ancaster and Valleyfield.” TGOD said that now it had this money secured, it could complete construction of the processing facility at Ancaster and complete construction of six zones in the Valleyfield hybrid greenhouse and enclose the balance of the facility with the ability to quickly expand production as the market develops.

Can’t Trust

CannTrust (NYSE: CTST) earned the social media moniker “can’t trust” after the company was caught growing plants in unlicensed rooms. This past summer in July, the company conceded that it had plants seized by regulators from five unlicensed rooms. The scandal resulted in a death spiral for the company as it lost its license, saw the CEO resign and at least a hundred workers have been laid off.

Backing up a bit, roughly around May 19 CEO Peter Aceto said the company was on track to meet its production goals. Within six weeks, the company announced that it received a report of non-compliance from Health Canada. Aceto said, “Our team has focused on building a culture of transparency, trust and excellence in every aspect of our business, including our interactions with the regulator. We have made many changes to make this right with Health Canada. We made errors in judgement, but the lessons we have learned here will serve us well moving forward.”

Last month, CannTrust said it planned to destroy about $12 million worth of plants and about $65 million worth of inventory. The company has seemed to clean house and may be able to move one from this “error in judgment,” but so far the market isn’t convinced and the stock is still near its year low of 77 cents.

It’s Worth More

It’s hard to convince investors to buy company stock when the company devalues the price of said stock. Zenabis Global Inc. (TSX:ZENA) (OTC: ZBISF) destroyed the value of its stock after announcing it was going to raise $20.8 million through a rights offering to holders of its common shares of record at the close of business on October 31, 2019. The stock was lately trading at 16 cents, down from its year high of $3.03. At one point in this debacle, the stock traded at one cent.

The company said that part of the strategy was to fend off a hostile takeover, but there didn’t seem to be anyone bidding on the company. Director of Corporate Communications Jonathan Anthony said that the decline in Zenabis stock is “outside our control,” yet the company absolutely trashed the value by pricing the rights at a 70% discount.
The Twitter universe though had another opinion regarding the stock. There are accusations of Zenabis insiders shorting the stock while covering themselves with the rights offering.

Stock jocks were specifically pointing to the Twitter account of @rubiconcapital for talking up Zenabis ahead of the offering that prices the rights at 15 cents. Then, the former CEO and current Chief Facilities Officer, Kevin Coft sold 2.6 million shares right before the rights offering. The company reported its earnings on November 14 but opted to not host a conference call to discuss the earnings with investors.

Our Bad. We Thought It Was Licensed

After acquiring Newstrike Brands, HEXO Corp. learned that there were plants growing in a room called Block B. The room passed inspection by Health Canada and Hexo said Health Canada said nothing in the report gave them cause for concern. However, within days of the closing of its acquisition the company said it became aware of the illegal plants and notified Health Canada. The mistake was blamed on a new software program run by the federal regulator. Still, the plants were destroyed as a result of the snafu.

While market watchers didn’t seem to criticize Hexo in the same manner that CannTrust was criticized, it certainly didn’t help the company. The facility is no longer being used for growing cannabis.

In addition to the bogus Block B plants, in June, Hexo had said it would do $400 million in revenue in 2020 and double net revenue in the fiscal fourth quarter. Just four months later the company instead reported that revenue was $15.4 million a drop from the third-quarter revenue of $15.9 million, so it wasn’t even an increase. The net revenue for 2019 was $59 million making it abundantly clear that $400 million in 2020 is never going to happen and so that number was retracted but not replaced with a new one.


Debra BorchardtDebra BorchardtNovember 22, 2019
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5min2490

California-based dispensary company Harborside Inc. (CSE: HBOR) reported that its third-quarter revenue increased 22.4% year-over-year to $14.1 million for the quarter ending September 30, 2019. The company said that the increase in revenue was attributed to a 13.5% growth in retail revenue and 57.1% growth in wholesale revenue.

Net losses for the third quarter were trimmed to $1.2 million versus last year’s net loss of $5.2 million for the same time period. This was attributed to decreases in fair value of biological assets, increases in operating expenses and a one-time write-down of investment which was offset by a non-cash gain on derivative liabilities of $9 million due to translation on exercise prices of options and warrants, and conversion prices of debentures, denominated in other foreign currencies.

“We are pleased with the continued strong results from our retail and wholesale operations, which have contributed to a robust third quarter. Our revenue growth remains solid and Q3 represents the 15th quarter in a row in which our revenue has tracked over $10 million,” said Harborside Interim CEO Peter Bilodeau.

“While we are pleased with our third-quarter results, there is still much work to be done. We are focused on executing on our goals, continuing to drive growth through our retail and wholesale divisions, and remaining laser-focused on our California-centric growth plan. In addition, we have worked with our executives, members of the Board of Directors and insiders to extend the terms of the company’s lockup agreements until June 1, 2020, and expect analyst coverage of our company to commence shortly.”

Expenses

Harborside reported that its total operating expenses for the quarter were $8.7 million, which rose over last year’s $6.7 million for the same time period. Total operating expenses in the third quarter of 2019 included general & administrative expenses of $5.4 million,  $2.1 million in expenses related to share-based incentive compensation, $2.3 million of share-based payments, an allowance for expected credit loss of $0.3 million, and $0.284 million of depreciation and amortization.

“In addition, in order to be a profitable business, we must address costs. To reach our goal of reducing our operating expenses, we have begun implementing the cost-cutting initiatives the Alvarez & Marsal team identified to recognize the efficiencies in our business and have focused on streamlining our operating costs at our Salinas facility.” Total assets totaled $53.0 million and included $16.6 million of cash on hand.

Looking Ahead

“We are updating our full-year 2019 revenue guidance from $5557M to $5052M to reflect the delayed timing of the openings of the Desert Hot Springs and San Leandro locations and the delayed closing of the LUX acquisition. Both stores are in the process of opening, and we now expect LUX to close by the end of December, such that they will be reflected in our run rate for 2020. The delay in the closing of the LUX acquisition is expected to result in an approximately $1.5 million decrease to 2019 annual revenue, and an additional $2 million decrease in revenue resulting from the delay in the opening of the two new locations. Additionally, a production issue at the Company’s farm disrupted three harvests which the Company expected to monetize in the fourth quarter of 2019 worth approximately $1.5 million of revenue.”

The company noted that 2019 guidance does not include the results of any pipeline acquisitions other than LUX.


Debra BorchardtDebra BorchardtNovember 21, 2019
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3min3531

TILT Holdings Inc.  (CSE: TILT) (OTCQB: TLLTF) has closed an additional private placement of $10.2 million of senior secured notes from a syndicate consisting of existing shareholders and new investors, bringing to the total amount of the facility to $35.8 million, up from the previously announced maximum of $35 million.

“On the heels of the announcement of our outstanding Third Quarter financial results and earnings call yesterday, the closing of this additional financing only further illustrates the positive momentum TILT is experiencing as an organization and the growing confidence the investment community has in our refocused business plan,” said interim CEO Mark Scatterday. “We plan to use this additional funding to propel our growth into the new year and continue to invest into the operations of our core assets. The fact that the financing was oversubscribed only further speaks to the positive sentiment major investors are feeling towards what we’re accomplishing at TILT.”

While Tilt has been quick to note that the company has reported net income for the quarter, unlike many other cannabis companies, it still isn’t completely out of the woods. Canaccord Genuity analyst Bobby Burleson pointed out that the company will continue to face vape headwinds. Jupiter is 70% of the company’s revenue and while sales have rebounded, Burleson said he expects the company crisis to continue to have an effect on fourth-quarter sales. Especially the ban that was recently lifted in Massachusetts.

“We believe TILT’s Q3/19 earnings result reflects solid execution of management’s strategy to enhance profitability and grow the company’s core businesses. While we are trimming our near-term estimates on vape related headwinds, with a shored up balance sheet and overall profitability driven by the company’s Massachusetts wholesale business, we continue to expect strong growth and enhanced profitability next year. We are lowering our price target to C$1.50 from C$2.00 on valuation while we maintain our SPECULATIVE BUY rating.”

Revenue estimates for the fourth quarter were slashed from C$83 million to C$47 million. Full-year 2019 revenue estimates were lowered from C$214 million to C$167 million and 2020 estimates were cut from C$442 million to C$392 million. 2019 fourth-quarter EBITDA was dropped from $10.8  million to $4.2 million.


Debra BorchardtDebra BorchardtNovember 20, 2019
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3min2710

TerrAscend Corp. (CSE: TER)(OTCQX: TRSSF)  reported that its third-quarter for 2019 increased 53% sequentially to $26.8 million from $17.6 million in the second quarter. It was a large increase over the $1.8 million delivered in the third quarter of 2018.  All figures are reported in Canadian dollars. The company attributed the increase to higher overall sales in Canada as well as strong sales in the U.S.

The net loss for the quarter was $17 million. Total operating expenses were $25 million, which also increased from $18 million in the second quarter.

“Two weeks into my new role, I continue to be impressed with TerrAscend’s unique assets and competitive positioning in both the United States and Canada,” said Jason Ackerman, TerrAscend’s Executive Chairman. “I see even greater potential for our business as we sharpen our focus on the U.S., where we are extremely well-positioned to become a leader in the markets we serve. My top priority now is to operationalize the company’s strategy while driving continued growth, improving profitability and fortifying our financial strength.”

As of September 30, 2019, TerrAscend said it had $6.9 million in cash and cash equivalents. Subsequent to quarter-end, the company said it closed on two tranches of the previously announced non-brokered private placement for total proceeds of approximately $18.0 million

Michael Nashat, CEO of TerrAscend added, “We are on track to deliver a year of tremendous progress for the overall company both operationally and financially. This has been especially evident in recent months, where we expanded our portfolio of U.S. assets with the addition of Ilera Healthcare in Pennsylvania, booked our first international shipment of medical cannabis to Europe, and received Health Canada approvals which tripled the licensed space at our Mississauga facility enabling future sales of new product formats and extracts for the Canadian Cannabis 2.0 market. Meanwhile, we have grown total sales in the third quarter to nearly $27 million from less than $2 million a year ago with improving margins.”

Ilera Healthcare

Late in the third quarter, TerrAscend acquired Ilera Healthcare, the owner of one of five fully vertically integrated licenses in the State of Pennsylvania. Ilera operates a retail dispensary in Plymouth Meeting, PA, with plans to open two additional dispensary sites in the Philadelphia area. The operations include a 67,000 sq. ft. site for cultivation and processing in Waterfall, PA with planned expansion to over 120,000 sq. ft. in 2020. In addition to selling its cannabis products in its own dispensary, Ilera distributes to 70 dispensaries throughout Pennsylvania.

 


Debra BorchardtDebra BorchardtNovember 20, 2019
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6min3060

Harvest Health & Recreation Inc. (CSE: HARV)(OTCQX: HRVSF) reported total revenue for the third quarter of 2019 of $33.2 million, an increase of 197% from $11.2 million in the third quarter of 2018. This was an increase of 25% sequentially. The net loss was $39.1 million for the quarter, which the company attributed to the cost of investments to support its growth initiatives, disclosed acquisitions and planned expansion.

“During the third quarter, Harvest continued to execute on its strategy by investing in assets and infrastructure needed to return to profitable growth.  As a Company, we have the assets and team required to achieve operational excellence and succeed in the cannabis industry,” said Chief Executive Officer Steve White.

Subsequent to quarter-end, Harvest Health said it raised $6.5 million in real estate financing and CAD$62.5 million in short term secured debt financing.

The company stated that as of September 30, 2019, it operated 26 retail locations, compared to 16 retail locations at the end of June 30, 2019.  During the quarter, the company opened new retail locations in Chandler, AZVenice, CAGainesville, FLWilliston, NDBismarck, ND, and Reading, PA.  Harvest acquired retail locations in Casa Grande, AZPhoenix, AZGrover Beach, CA, and LuthervilleTimonium, MD during the third quarter.  Harvest was one of eight companies selected to move forward to finalize a cultivation license in Utah.  Subsequent to quarter-end, the company opened new retail locations in Palm Springs, CAScranton, PAJohnstown, PA, and Harrisburg, PA and was awarded a cannabis dispensary permit with delivery service by the City of Hanford, CA.

CannaPharmacy Deal Revised

It was also announced that Harvest and CannaPharmacy, Inc. agreed to revise their pending transaction. “Under a new binding agreement, Harvest and CannaPharmacy have agreed to terminate their current agreement whereby Harvest would have acquired CannaPharmacy’s right to own or operate cannabis licenses in PennsylvaniaDelawareNew Jersey, and Maryland.”

According to the company statement, now Harvest will only acquire Franklin Labs, LLC, a subsidiary of CannaPharmacy, for $26 million payable with $15 million in cash and an $11 million promissory note. The revision went on to note that the parties may elect consideration consisting of certain other cannabis assets and a reduced cash payment of $8 million. The aggregate purchase price in either scenario is well below the purchase price in the previous agreement which consisted of $88 million in cash, plus Harvest stock.

The revised agreement is due, in part, to accommodate Harvest’s plans to more strategically align with Harvest’s operational needs, which have evolved since the previously announced acquisition of CannaPharmacy. The acquisition of Franklin Labs is expected to allow Harvest to more efficiently scale operations in Pennsylvania and provide dispensaries and patients in that state with access to Harvest’s intellectual property, high-quality products, and trusted retail experiences. The acquisition is subject to, among other things, the execution of definitive agreements, the receipt of regulatory approvals and the satisfaction or waiver of closing conditions customary for a transaction of this nature.

“These transactions come at a key strategic time for Harvest, as we’re working to scale our operations in key markets and to enhance our ability to pivot and fulfill product demands for our patients and consumers,” said Harvest Executive Chairman Jason Vedadi. “A critical aspect of our long-term strategy is a sharp focus on operational excellence as we build out new facilities and enhance existing ones in 2020. This revised agreement and attractive funding sources will help us toward achieving our revenue and profitability goals, delivering on our promise to increase shareholder value and ultimately fuel Harvest’s continued growth and success.”


Debra BorchardtDebra BorchardtNovember 19, 2019
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3min2490

Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) released its financial results for the third quarter of 2019 ending September 30, 2019, with revenue of $70.7 million, an increase of 22% sequentially and an increase of 150% yearo-over-year. This beat analyst estimates by $5.09M.

The company also delivered a net income of $60.3 million for the quarter, which was higher than the second quarter’s net income of $57.5 million.

“Our third-quarter results reflect our continued customer loyalty, growth, and leadership position. Trulieve’s strong brand, wide-ranging access to stores, and authentic customer experience have resonated with our customers and patients,” stated Kim Rivers, Trulieve CEO. “The third quarter was also successful in further strengthening our position in our existing markets as well as preparing for new market entry. We continue to build operational efficiencies and financial discipline to ensure a solid foundation, cash reserves, and the right tools at our disposal to expand our footprint. Looking ahead, this is an exciting time as we execute on our strategic vision to be one of the top-performing cannabis companies in North America.”

Adjusted EBITDA increased from $31.6 million in Q2 2019 to $36.9 million at September 30, 2019.

The company also stated that gross profits after net gains on biological asset transformation for the quarter was $110.1 million, up $74.3 million or 208%, from $35.8 million for 2018 for the same time period. “This increase was driven by an increased gain on biological assets and increased retail sales. Additionally, because the corporation was growing more plants as of September 30, 2019 than it was as of September 30, 2018, there are more plants undergoing transformation and therefore more gain.”

Expenses Increase As More Locations Open

Total expenses for the three months ended September 30, 2019, was $20.6 million, an increase of $12.3 million or
147%, from $8.3 million for the three months ended September 30, 2018, which is mainly due to scaling of
the business.

Trulieve said the increase in total expenses was due to an increase of retail, sales and marketing expenses
which for the quarter which was $14.7 million, up to $8.2 million or 125%, from $6.5 million for 2018. Retail, sales and marketing expenses as a percentage of revenue were 21% for the quarter, as compared to 23% for the quarter 2018. “The overall increase in retail, sales and marketing expenses was due to the opening of additional dispensary locations and the associated costs including payroll and insurance.”

The stock was lately trading at $11.30, above its 52-week low of $6.68, but below its year high of $16.23.

 



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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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