Canada-based Origin House (once known as CannaRoyalty Corp.) (CSE: OH) (OTCQX: ORHOF) reported its fourth quarter and year-end results ending in December 2018 in Canadian dollars. The fourth quarter saw revenues of $7.9 million an increase of 638% over last year’s $1.1 million for the same time period. The net loss for the quarter was $6.1 million.
The adjusted EBITDA loss was $1.9 million versus the adjusted EBIDTA profit of $7.9 million for last year’s fourth quarter. Gross margin, excluding fair value items, was $0.2 million as compared $0.1 million, an increase of 87%; Operating expenses were $15.4 million as compared to $4.6 million, an increase of 233%.
Full Year Results
For 2018, the company delivered revenues of $18.7 million an increase of 507% over 2017’s $3.1 million. The net loss for the year was $9 million. The pro-forma revenues were $37.4 million and were $48.7 million with the acquisition of 180 Smoke on February 19, 2019. The adjusted EBITDA profit of $3.4 million versus the 2017 adjusted EBIDTA profit of $4.1 million. Gross margin, excluding fair value items, was $1.5 million as compared $0.9 million, an increase of 67%.
Cresco Labs Acquisition
On April 1, 2019, Origin House agreed to be acquired by Cresco Labs for $1.1 billion, creating a North American cannabis powerhouse. Last year, Origin House acquired Kaya Manufacturing, Alta Supply, RVR Distribution, FloraCal Farms, and 180 Smoke in 2018 to create a footprint today comprised of 6 licenses, 8 facilities, and over 350 employees in California and Canada, with pro-forma revenue of $37.4 million. Pro-forma revenue reached $48.7 million with the acquisition of 180 Smoke in Q1 2019.
“During 2018, Origin House delivered demonstrable value creation for shareholders through organic execution, judicious acquisitions and the crystallization of value embedded in non-core assets,” said Marc Lustig, CEO of Origin House. “Throughout the year, we continued to aggressively build our platform of brands and distribution capability focused in California, and this culminated in reaching a definitive agreement to be acquired by Cresco Labs for $1.1 billion on April 1, 2019. This partnership is just the beginning of our journey together. The combined entity will be a U.S. distribution powerhouse, with a growing portfolio of over 50 brands on the shelves of over 725 dispensaries across 11 states.”
The company listed the following summary of key balance sheet totals as of December 31, 2018:
- Cash was $69.2 million as compared to $4.5 million an increase of 1430%;
- Total assets of $230.7 million as compared to $46.1 million, an increase of 400%;
- Current assets of $86.0 million as compared to $7.9 million, an increase of 982%;
- Current liabilities of $26.2 million as compared to $2.1 million, an increase of 1126%; and
- Long-term debt financing of $16.0 million as compared to $2.3 million, an increase of 610%.
“We spent the past 12 months successfully implementing our strategy to build a platform of premium brands by creating the top distribution and brand support platform in California,” said Afzal Hasan, President and General Counsel of Origin House. “Our team executed and successfully integrated five acquisitions during the year while adding several key experiential brands to our Brand Accelerator and distribution platform. In March 2019, with the integration of our two distribution companies under the Continuum banner, Origin House now controls one of the top state-wide distribution networks in California. With 2018’s regulatory growing pains behind us and a recent commitment on the part of the government to redouble its efforts to quash the still-thriving illegal cannabis market in the state, Origin House is off to a running start in early 2019.”