PR Newswire
NEW YORK and TORONTO, Aug. 26, 2019
Pro Forma Revenues of $25 million, Maintained Tight Expense Control
NEW YORK and TORONTO, Aug. 26, 2019 /PRNewswire/ - 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 second quarter ended June 30, 2019. Amounts are in U.S. Dollars, unless stated otherwise.
Hadley Ford, CEO of iAnthus, provided the following statement on the Company's second quarter results and outlook for 2019:
"The first half of 2019 has been an exciting time for team iAnthus, and I want to thank all of our employees, nearly 700 strong, for all of their hard work. We have integrated the MPX and iAnthus businesses, and the team effort is beginning to show in our results. MPX products are now carried in three states in over 110 stores and we'll be adding California, Massachusetts and Florida later this year. We continue to generate operational efficiencies without limiting growth. This is evidenced by our 35% sequential revenue growth, expanding gross margins and limited incremental G&A expenses. We are proud of our accomplishments thus far. Since opening our first Florida dispensary in December 2018, we have grown our market share to 3.5% and we are the third highest in the state in terms of THC volume per store. These results in Florida show what we can bring to other greenfield markets for iAnthus like New York and New Jersey. In Massachusetts, we have made significant progress toward opening our first adult-use store in Worcester, and this fall will mark the launch of our new Be. store brand with the opening of our Brooklyn flagship store. As always, reducing our cost of capital remains a focus. Our recently announced commitment for up to $50 million Senior Secured financing from Torian Capital, once closed, will move us forward on that front. We will continue to prioritize our capital and operating expense investments to maximize returns for our shareholders. We are very excited about the remainder of 2019 and beyond and appreciate your continued support."
Financial Highlights
Revenue
See Tables 1 and 2 below for further detail
Gross Profit
See Table 3 below for further detail
EBITDA and Net Income
See Table 3 below for further detail
Balance Sheet and Cash Flow
Second Quarter Operational Highlights
Execution against the Company's operations roadmap and planned second quarter milestones in each state was strong including:
Eastern Region:
Florida
Massachusetts
Maryland
New York
New Jersey
Western Region
Arizona
Nevada
Table 1: Unaudited Reported Financial Highlights | ||||
in thousands of US$, except share and per share amounts (unaudited) | Q2 2019 | Q2 2018 | ||
Reported revenues | $ | 19,200 | $ | 256 |
Gross profit, excluding fair value items | 9,197 | 210 | ||
Gross margin, excluding fair value items | 47.9% | 82.1% | ||
Net loss | (9,290) | (35,436) | ||
Net loss per share | -0.06 | -0.61 | ||
Table 2: Unaudited Pro Forma Revenues | ||||
in thousands of US$ (unaudited) | Q2 2019 | Q1 2019 | ||
Reported Revenues | $ | 19,200 | $ | 9,620 |
Eastern Region | 10,154 | 4,187 | ||
Western Region | 9,046 | 5,433 | ||
| ||||
MPX Bioceutical Corporation (2) | - | 3,149 | ||
CBD For Life (2) | 1,206 | 714 | ||
Managed Revenues (1) | 4,610 | 5,061 | ||
Total Pro forma Revenues(1): | $ | 25,016 | $ | 18,544 |
Table 3: Unaudited Adjusted EBITDA Highlights | ||||
in thousands of US$, except share amounts (unaudited) | Q2 2019 | Q1 2019 | ||
Reported Revenue | $ | 19,200 | 9,620 | |
Cost of Sales | (10,003) | (9,080) | ||
Fair value adjustment on inventory from acquisition (3) | 864 | 1,709 | ||
Adjusted gross profit | 10,061 | 2,249 | ||
Adjusted gross margin | 52.4% | 23.4% | ||
Fair value adjustment on sale of inventory (4) | (8,895) | 1,198 | ||
Fair value adjustment on biological assets (4) | 11,143 | 3,821 | ||
Total adjusted gross profit | 12,309 | 7,268 | ||
Operating expenses | (35,249) | (23,165) | ||
Other Items | 14,514 | (659) | ||
Adjusted net loss | (8,426) | (16,556) | ||
Income tax expense | 640 | 668 | ||
Interest expense | 3,470 | 2,346 | ||
Depreciation and amortization | 5,915 | 2,636 | ||
EBITDA (Non-IFRS) | 1,599 | (10,906) | ||
Adjusting items: | ||||
Share-based compensation | 9,586 | 1,646 | ||
Accretion expense | 4,606 | 1,515 | ||
Fair market value adjustments | (22,781) | (3,210) | ||
Profit from investment in associate | (75) | (73) | ||
Adjustment for one-time acquisition costs (5) | 1,058 | 5,173 | ||
Adjustment for other one-time costs (5) | 1,304 | - | ||
Non-cash inventory adjustment (6) | - | 720 | ||
Adjusted EBITDA(7) | (4,703) | (5,135) | ||
Adjusted EBITDA per share | -0.03 | -0.04 |
Conference Call Details
The Company will hold a conference call for financial analysts and investors at 8:30a.m. ET on August 27, 2019 to discuss the Company's second quarter financial results. The call will be archived and available on iAnthus' website for replay. Please visit https://www.ianthus.com/investors to access the archived conference call.
Dial-In Number: (888) 231-8191 or international: (647) 427-7450
A replay of the call will be available for 7 days by dialing: (855) 859-2056 and entering password 8867869
The Unaudited Condensed Interim Consolidated Financial Statements and Management's Discussion and Analysis for the three and six months ended June 30, 2019 and 2018 may be accessed on the Company's website at www.ianthus.com and under the Company's SEDAR profile at www.sedar.com
Non-IFRS Financial Measures Footnotes
1 Pro forma revenues: refers to full three months ended March 31, 2019 and June 30, 2019 results, regardless of when an acquisition or management contract commenced. This also includes Managed Revenues, which are sales of cannabis products from entities for which management arrangements are in place but iAnthus cannot consolidate due to regulatory restrictions, or from equity investments in which results cannot be consolidated. Managed entities include iAnthus' involvement in certain Arizona operations, Colorado, and New Mexico.
2 MPX Bioceutical Corporation includes the January 1 - February 4, 2019 unaudited revenue of MPX, as iAnthus consolidated performance when the MPX Acquisition closed on February 5, 2019. CBD For Life includes full quarter unaudited revenue prior to closing the acquisition.
3 Adjustment related to the fair value adjustment on inventory acquired as part of the MPX transaction that is being released into COGS for sales recognized during the period.
4 Adjustment to add back the fair value adjustments from the sale of inventory and growth of biological assets to represent true gross profit for the period.
5 Adjustment for one-time acquisition costs include all advisory, professional, legal, consulting, and accounting fees incurred as part of the MPX and CBD acquisitions incurred in the quarter. These costs alongside other one-time costs are added back to the total adjusted EBITDA as these expenses are non-recurring and are not part of ongoing operational activities of the Company.
6 Adjustments related to inventory write-downs recognized during the period caused from abnormal one-off events during the quarter. The Company does not expect recurring adjustments as this was an abnormal event during the period.
7 Adjusted EBITDA: The Company adds back the following items to provide a more accurate indication of performance for the period. This is a Non-IFRS metric:
The Company believes the pro forma results presented provide relevant and useful information for investors because they clarify the Company's actual operating performance, make it easier to compare the Company's results with those of other companies and allow investors to review performance in the same way as the Company's management. Since these measures are not calculated in accordance with IFRS, they should not be considered in isolation of, or as a substitute for, our reported results as indicators of the Company's performance, and they may not be comparable to similarly named measures from other companies.
About iAnthus
iAnthus. owns and operates best-in-class licensed cannabis cultivation, processing and dispensary facilities throughout the United States, providing investors diversified exposure to the U.S. regulated cannabis industry. Founded by entrepreneurs with decades of experience in operations, investment banking, corporate finance, law and health care services, iAnthus provides a unique combination of capital and hands-on operating and management expertise. iAnthus currently has operations in 11 states, and operates 26 dispensaries (AZ-4, MA-1, MD-3, FL-8, NY-2, CO-1, VT-1 and NM-6 where iAnthus has minority ownership). For more information, visit www.iAnthus.com.
Forward Looking Statements
Statements in this news release that are forward-looking statements are subject to various risks and uncertainties concerning the specific factors disclosed here and elsewhere in iAnthus' periodic filings with Canadian securities regulators. When used in this news release, words such as "will, could, plan, estimate, expect, intend, may, potential, believe, should, our vision" and similar expressions, are forward-looking statements.
Forward-looking statements may include, without limitation, statements relating to the Company's future financial performance, business development, and results of operations.
Readers should not place undue reliance on forward-looking statements. The forward-looking statements in this news release are made as of the date of this release. iAnthus disclaims any intention or obligation to update or revise such information, except as required by applicable law, and iAnthus does not assume any liability for disclosure relating to any other company mentioned herein.
The Canadian Securities Exchange has not reviewed, approved or disapproved the content of this news release.
This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
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SOURCE iAnthus Capital Holdings, Inc.
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