iAnthus Reports Fiscal First Quarter 2019 Financial Results

CNW Group - finance.yahoo.com Posted 10 months ago
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Pro Forma Revenues of $18.5 Million , up 22% From Previous Quarter

  • Revenue generating in nine of 11 states and a footprint allowing for up to 68 dispensaries
  • Pro forma revenues1 for the first quarter were $18.5 million , up 22% sequentially from the prior quarter
  • Pro forma revenues in April were approximately $8.5 million
  • Increased wholesale distribution to 110+ doors across 3 states
  • CBD For Life acquisition expected to close in June; currently distributed in more than 1,000 retail locations across 46 states
  • Hired acclaimed brand-builder Neil Calvesbert as Chief Marketing Officer to lead brand building effort and announced the unveiling of our national retail brand Be. The Cannabis Store


NEW YORK and TORONTO , May 30, 2019 /CNW/ - iAnthus Capital Holdings, Inc. ("iAnthus" or the "Company") (CSE: IAN, OTCQX: ITHUF), which owns, operates, and partners with best-in-class regulated cannabis operations across the United States , is pleased to report its financial results for the fiscal first quarter ended March 31, 2019 . Amounts are in U.S. Dollars, unless stated otherwise.

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iAnthus Capital Holdings, Inc. (CNW Group/iAnthus Capital Holdings, Inc.)
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On February 5, 2019 , the Company closed the plan of arrangement with MPX.   The landmark transaction was the first public-to-public merger and the largest closed transaction to date for a multi-state operator in the US cannabis sector.   The transaction expanded the Company's platform to 11 states.

Hadley Ford , CEO of iAnthus, provided the following statement on the Company's first quarter results and outlook for 2019:

"2019 is off to a great start for team iAnthus, and I want to thank all of our dedicated employees for their hard work as we fully integrate the MPX and iAnthus operations.   Revenues in the first quarter are up 22% sequentially on a pro forma basis for the combined company and that pace has accelerated into April and May.  We are excited to be moving forward on our branding initiatives and look forward to opening our first flagship Be. store in Brooklyn this fall.  Momentum is continuing across all our markets, particularly in our greenfield operations in Maryland , Massachusetts , and Florida .  We expect to close the CBD For Life acquisition shortly and can't wait to share some of the exciting plans in store for that business.  Managing growth is our number one focus, and we remain committed to investing prudently in our business to take advantage of this once ever opportunity.  We will continue to be opportunistic in our approach to M&A and will maintain a strong focus on reducing our overall cost of capital.   We are very excited about 2019 and look forward to continuing to deliver for our shareholders."  

Financial Highlights

Revenue

  • Total pro forma revenues of $18.5 million 1, up 22% from the prior quarter
  • First quarter reported revenues of $9.6 million , which has increased 384% from $1.9 million in the prior quarter. (MPX results consolidated as of February 5, 2019 )
  • Preliminary April 2019 pro forma revenues of approximately $8.5 million 1


See Tables 1 and 2 below for further detail

Gross Profit

  • Adjusted gross profit of $3.4 million , up $2.0 million (or 134%) from the prior quarter. Adjusted gross profit includes adjustments related to realized fair value adjustments on biological assets and a one-time fair value adjustment on inventory acquired from MPX. Adjusted gross margin for the quarter was 36%


See Table 3 below for further detail

EBITDA and Net Income

  • Adjusted EBITDA7 loss of $5.1 million , compared to an adjusted EBITDA loss of $6.5 million in the prior quarter
  • As a result of the MPX transaction during the quarter, iAnthus incurred several acquisition related expenses totaling $5.2 million . These expenses include advisory, professional, legal, consulting, and accounting fees which have been added back to arrive at adjusted EBITDA as these costs are non-recurring and are not part of ongoing operational activities of the Company
  • iAnthus recorded a first quarter net loss of $18.3 million , compared to a net loss of $15.9 million in the prior quarter


See Table 3 below for further detail

Balance Sheet

  • As at March 31, 2019 , total assets were $797.6 million , including cash and cash equivalents of $42.3 million . This represents an increase of $629.2 million (or 374%) from the prior quarter
  • The Company also has the potential to receive over $116 million from the exercise of warrants and options by the first quarter of 2022
  • The Company closed $35.0 million and $25.0 million of financing through the issuance of convertible debentures on March 18, 2019 and May 1, 2019 , respectively. The debentures are convertible at a price of $5.92 and bear 40% warrant coverage, which resulted in the issuance of 3,732,498 warrants with an exercise price of $6.43
  • On April 24, 2019 , iAnthus issued 8,891,016 shares and 4,445,504 warrants to satisfy all remaining OID Loan holders that were eligible for conversion
  • Current fully dilutive share count of 245.5 million shares which includes 154.5 million common shares, 15.5 million class A shares and 76.4 million dilutive securities


Operational and Branding Updates

Be. The Cannabis Store

On May 14, 2019, the Company announced its new retail brand "Be."  The first flagship Be. store is under construction in Brooklyn , and the Company anticipates a grand opening in the fall of this year. New flagship stores in Miami , Las Vegas and Atlantic City will follow.  iAnthus' existing stores will be prioritized and gradually retrofit to Be. stores.  Please see the Be. press release and announcement video.

MPX

MPX's award winning products are distributed in over 110 stores across the US.   Our MPX concentrate and resin product lines continue to attract acclaim from both wholesale and retail customers.   In addition to the Company's core MPX product lines, the Company is preparing to launch several complementary product lines.  The Company is in the final stages of developing a "fighter brand" concentrate product line that will be marketed to both retail patients and wholesale clients.   Within Arizona, the Company is also about to launch a live resin collaboration with one of the most renowned cultivators within the state and will continue to keep the market informed as to new product developments.     The Company anticipates opening a second cultivation and processing facility in Massachusetts in late 2019 that will include hydrocarbon extraction equipment and enable the production of MPX products in the state.

Story continues

CBD For Life   

iAnthus expects to close the acquisition of CBD For Life, a top-ranked, national CBD brand in the U.S in early June.  CBD For Life is now available in over 1,000 doors nationwide including new distribution relationships with national and specialty retailers such as Urban Outfitters (online and 6 flagship stores), Of a Kind, and Exhale Spa.   In addition, CBD For Life will be rolling out a premium product line and an adult line during this summer. 

Massachusetts

The Company's Holliston cultivation facility has continued to see operational efficiencies and recorded current cash cultivation cost of $1.24 8 per gram during the quarter.  The Company recorded over $2.0 million of revenue during the month of April 2019 , surpassing the revenue for the first three months combined.  Wholesale demand remains strong, with products sold in 15 dispensaries throughout the state.  The Company is currently in negotiations with Allston (situated within the City of Boston ) over terms of its host agreement for an adult use license at its existing medical-only facility and the Company continues to expect that dispensary will be operating under an adult-use license in 2019.  Further, two additional dispensaries, in Worcester and Lowell , are targeted to open under adult-use licenses later this year. 

Florida

The Company's Lake Wales cultivation facility now has approximately 120,000 square feet in operation, of which 70,000 square feet is in a lower cost cultivation environment.   The 33-acre campus has significant room for expansion, in both indoor and outdoor capabilities that will be announced throughout 2019. The Company is operating three dispensaries and is planning to open an additional three dispensaries within the next 45 days.   Based on the latest reports of state-wide sales from the Office of Medical Marijuana Use, the Company is ranked third of all Florida operators in terms of THC milligrams sold per dispensary.   

Maryland

Driven by its market leading processing capabilities and products, the Company continues to show strength in both its retail and wholesale operations.  The Company's extraction footprint is being increased to over 3,000 square feet, which will increase its production capabilities over 200% from current levels.   In Maryland, MPX products are now available in 51 of 72 retail dispensaries.    

Arizona and Nevada

In the Southwest region, the Company's wholesale offerings continued to be strongly received in both markets, selling to approximately 40 dispensaries per month in the first quarter, and 46 in April 2019.   Average size of wholesale orders has increased by 100% in Nevada and 25% in Arizona since the first quarter of 2018.  On May 29, 2019 , the Arizona Supreme Court ruled in favor of the medical marijuana industry and patients who choose to use cannabis extracts such as vape cartridges, edibles, waxes and tinctures.  Extracts form a significant portion of the Arizona medical use market and the court's 7-0 ruling reflects the overwhelming support in the market for continued access to these products.  The Company's four Arizona dispensaries are also preparing for the launch of several new concentrate product lines.

New York

The Company opened two dispensaries in the first quarter of 2019, and has signed a lease for its third dispensary, located on Staten Island .  This will be the only licensed dispensary serving Staten Island's 500,000 residents and is expected to open in the fourth quarter of this year.  The Company eagerly awaits further clarity as to the development of both the medical and recreational programs within the state in order to refine its capital expenditure program.

Table 1: Unaudited Reported Financial Highlights

in thousands of US$, except share and per share amounts (unaudited)


Q1 2019


Q1 2018

Reported revenues

$

9,620

$

225

Gross profit, excluding fair value items


540


185

Gross margin, excluding fair value items


5.6%


82.3%

Net loss


(18,265)


(645)

Net loss per share


(0.15)


(0.01)

 

Table 2: Unaudited Pro Forma Revenues

in thousands of US$ (unaudited)


Q1 2019


Q4 2018

Reported Revenues

$

9,620

$

1,986

Pro forma Adjustments(1):





 MPX Bioceutical Corporation (2)


3,149


11,640

CBD For Life


714


632

Managed Revenues (1)


5,061


993

Total Pro forma Revenues(1):

$

18,544

$

15,251

 

Table 3: Unaudited Adjusted EBITDA Highlights

in thousands of US$, except share and per share amounts (unaudited)


Q1 2019

Q4 2018

Reported Revenues

$

9,620

1,986

Cost of Sales


(9,080)

(1,353)

Fair value adjustment on inventory from acquisition (3)


1,709

-

Realized fair value adjustment on biological assets (4)


1,198

842

Adjusted gross profit


3,447

1,475

Adjusted gross margin


35.8%

74.3%

Unrealized fair value adjustment on biological assets


3,821

1,285

Total adjusted gross profit


7,268

2,759

Operating expenses


(23,165)

(15,652)

Other Items


(659)

(3,033)

Adjusted net loss


(16,556)

(15,926)

Income tax expense


668

608

Interest expense


2,346

1,331

Depreciation and amortization


2,636

4,553

EBITDA (Non-IFRS)


(10,906)

(9,434)

Adjusting items:




Share-based compensation


1,646

1,841

Accretion expense


1,515

812

Fair market value adjustments


(3,210)

(559)

Foreign exchange loss


-

1,055

Profit from investment in associate


(73)

(170)

Adjustment for one-time acquisition costs (5)


5,173

-

Non-cash inventory adjustment (6)


720

-

Adjusted EBITDA(7)


(5,135)

(6,455)

Adjusted EBITDA(7) per share


(0.

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