Harvest Health & Recreation has been on an acquisition streak, and when the U.S.-based cannabis company reported earnings Tuesday morning, executives made it clear the company isn’t backing down from its mission “to become the most valuable company in the cannabis industry,” CEO Steve White said on a call with analysts.
Harvest Health, which trades on the Canadian Securities Exchange and over the counter in the U.S., beat analyst expectations when it reported fourth quarter and full year earnings and revenue. The company reported $16.9 million in revenue, up 135 percent year-over-year. It also reported a net loss of $71.1 million. For fiscal 2018, Harvest reported $47 million in revenue, a 106 percent jump from 2017, and a net loss of $67.5 million. The quarterly and full year losses include a $50.7 million expense related to converting debt to equity for the company’s reverse takeover listing on the Canadian Securities Exchange in November.
Chief Financial Officer Leo Jaschke said on the same call that the company was “unapologetic and even proud” to report that kind of expense because “it represents a sustained increase in shareholder value.”
With pending acquisitions of Verano Holdings, Falcon International, Devine Holdings, and CannaPharmacy, Harvest Health said it expected 2019 revenue of $350 to $400 million, up from the $223 million it forecast in November. The company has about 13 dispensaries open currently, and is aiming to have 60 stores open by the end of the year and 120 open by the close of 2020.
Harvest Health has had a big year. Since November of last year, the multi-state operator acquired Colorado intellectual property company CBx Enterprises and San Felasco Nurseries in Florida, along with Falcon International in California, Devine Holdings in Arizona, CannaPharmacy, and Verano Holdings. The $850 million Verano deal was the largest ever between U.S. cannabis companies at the time of its announcement.
Rather than slow its acquisition activity, Harvest Health execs emphasized they have cash on hand for future acquisitions, some of which are already underway, so long as M&A targets fulfill specific criteria: expanding the company’s wholesale and retail footprint, growing exposure to in-demand brands, and bringing talented management to Harvest.
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