Origin House's Revenue Soars Ahead of Its Acquisition by Cresco Labs

Investors have had to wait quite a while to learn how Origin House (NASDAQOTH: ORHOF) performed in the fourth quarter of 2018. The cannabis products and brands company reported its last quarterly update in November 2018 for the period ending Sept. 30, 2018. That wait is now over, though.

Origin House announced its fiscal 2018 fourth-quarter results before the market opened on Monday. The company once again posted sizzling revenue growth. Here are the highlights from Origin House's Q4 update. 

Image source: Getty Images.

Origin House results: The raw numbers

Data source: Origin House. All data expressed in Canadian dollars. N/A = not applicable.

What happened with Origin House this quarter?

Origin House started off providing funding to cannabis operators via royalty streaming deals. But while the company still makes some of its revenue from that business, it's now focused on its California cannabis brands and distribution operations.

Although Origin House didn't provide details on how much of its fourth-quarter revenue stemmed from each line of business, we can get a pretty good feel based on the company's full-year 2018 numbers. For the full year, over 92% of Origin House's revenue came from its California operations, with the remainder coming from services, royalties, and interest. All of the company's revenue growth last year stemmed from its California operations.

Perhaps the most important to thing to know about Origin House's fourth-quarter revenue was that it represented a 19% jump from the third-quarter's total revenue of CA$6.62 million. This increase was due to growth in the company's California distribution business and the addition of new cannabis brands to its product lineup.

Origin House's most notable developments came after the end of the fourth quarter. Over the last four months, the company completed the acquisition of Canadian vape retailer 180 Smoke. It signed distribution deals with several cannabis brands, including Henry's Original, Kurvana, and Viola Brands. Origin House also completed strategic financing deals with Humboldt's Finest Farms and Utopia Cannabis.

However, the biggest story of all was that U.S. cannabis operator Cresco Labs (NASDAQOTH: CRLBF) plans to acquire Origin House. The all-stock transaction would be the biggest acquisition of a public U.S. cannabis company ever. 

What management had to say

Afzal Hasan, president and general counsel of Origin House, said in a statement:

We are very pleased with the performance our team generated in 2018. 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. 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 statewide 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. Our pipeline of potential brand partners is more robust than at any point in our recent history and our ability to leverage a fully integrated network, positions us to win California while generating strong performance for our brand partners as well as for shareholders.