Debra BorchardtMarch 13, 2019
Acreage Holdings, Inc. (CSE: ACRG.U) (OTCQX: ACRGF) delivered fourth-quarter revenue of $10.5 million for an increase of 380% over the previous year’s $2.1 million. Acreage reported a whopping fourth-quarter net loss of $217.6 million. The pro forma revenue* for the fourth quarter was $22.9 million and the pro forma adjusted net loss*, which excludes certain non-cash charges and non-recurring items, for the fourth quarter was $10.8 million.
Fiscal 2018
The full year fiscal 2018 revenue of $21.1 million increased 173% over last year’s $7.7 million. The pro forma revenue* was $77.2 million for the full year fiscal 2018. The full year fiscal 2018 net loss of $219.7 million was primarily driven by non-cash charges and non-recurring items. The pro forma adjusted net loss*, which excludes certain non-cash charges and non-recurring items was $30.3 million for the full year fiscal 2018.
Growth
The company has been on a tear with its expansion During the fourth quarter of 2018, Acreage opened two dispensaries under its The Botanist brand in Buffalo, NY and Worcester, MA, and acquired one dispensary in Thames Valley, CT, ending the year with 19 dispensaries (as of today, Acreage has 24 operational dispensaries).
Growth doesn’t come cheaply. During 2018, Acreage spent over $200 million of capital in various strategic transactions and invested approximately $37 million to build out our operations. $46 million alone was spent in the fourth quarter of 2018. $22 million was invested in its subsidiaries and $15 million advanced to our managed entities to facilitate build-outs outs in the year.
Balance Sheet
According to the company’s presentation, Acreage has $105 million in cash and cash equivalents and $149 million of highly liquid short-term investments on hand as of Q4’18, compared to $16M of cash as of Q4’17. The company raised $314M from pre-RTO private placement; completed RTO and listed on the Canadian Securities Exchange. Acreage President George Allen said at this time the company doesn’t anticipate raising more money.
Kanna Acquisition
Acreage also announced it was acquiring Kanna, Inc. which holds a license to operate a cannabis dispensary in Oakland, CA. as the company enters the California market. It’s an all-stock deal valued at $11.5 million that is expected to close in the second quarter of 2019. That’s a bargain when one considers that a nearby dispensary is doing $40 million a year.
Acreage said it will issue up to 460,000 Subordinate Voting Shares at a deemed value of $25 per share. Shares are currently trading in the mid-teens, but Allen pointed out that when the company did go public it was at $25 a share. “It’s a message to our shareholders, that we’re not willing to dilute ad nauseum shareholder value,” said Allen.
The dispensary is located at 2019 MacArthur Blvd., in Oakland, but it will open in the second quarter of 2019, under Acreage’s dispensary brand The Botanist.
