U.S. Cannabis Producer iAnthus Puts Up Q4 Sales Jump, Wider Losses

U.S. multistate marijuana producer and retailer iAnthus Capital (OTC: ITHUF) late Monday reported a jump in fourth-quarter sales but widening losses, as it tries to size up to some of the U.S. industry’s bigger players. IAnthus stock rose earlier in the day, while other marijuana stocks were mixed.

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The company, on its own, reported a net loss of around $16 million, compared to a net loss of $10 million in the third quarter and $7 million a year ago. Net sales came in at a little under $2 million. That’s roughly double the $1 million put up in the third quarter.

The sales figure remains small compared with competitors. But the company two months ago merged with another cannabis company, MPX Bioceutical, in an effort to stand up to rivals like Curaleaf (OTC: CURLF) and Green Thumb Industries (OTC: GTBIF).

The fourth-quarter results appeared Monday in an investor presentation. Analyst estimates were unavailable.

IAnthus’ results also land as the U.S. marijuana industry incinerates cash and takes on debt to try to expand and gain recognition. U.S. pot producers have snapped up more retail locations or the paperwork to open them, making for tangled org charts and widening definitions of what a company’s “footprint” is.

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IAnthus, MPX Deal

Before the MPX deal, iAnthus had two open dispensaries, with 67,500 square feet of production space in Massachusetts, Vermont and Florida, according to a GMP Securities research note last month. The MPX deal expanded that store count to 12, GMP Securities said. And it gave iAnthus licenses to eventually run nearly 60 such stores and more cultivation centers.

The company currently has 21 dispensaries open, with six in New Mexico under minority ownership. It currently has eight cultivation and processing facilities.

The deal also helps iAnthus stretch into states like Arizona — where MPX has a strong position in the medical pot market — as well as Nevada and Maryland. GMP expects iAnthus to be the second-biggest pot provider in Massachusetts this year, behind Curaleaf, as the MPX merger bulks up production capacity in the state.

More Cookies

In an October short-form prospectus, iAnthus said it believed that it had “sufficient working capital to continue operations for the next 12 months” as it spends on growth.

“Our view is, if you have access to the capital, you want to go more quickly rather than going slowly,” CEO Hadley Ford said during an interview with management on Friday. “Because you want to get that time-to-market advantage. From our perspective, if someone’s passing the milk and cookies around, take a couple extra cookies.”

Ford said he wanted to keep the company’s debt levels below 20% of its market value. And he said that the company wouldn’t be free-cash-flow positive this year.

IAnthus Stock, Other Marijuana Stocks

IAnthus stock rose 0.9% over the counter in the stock market today. Among other over-the-counter U.S. marijuana stocks, Curaleaf inched up 0.9%. Green Thumb industries picked up 2.9%. MedMen (OTC: MMNFF) fell 1.3%.

As for Canada’s marijuana stocks listed on U.S. exchanges, Aurora Cannabis (ACB) gained 1.3%. Canopy Growth (CGC) fell 2.1%. Tilray (TLRY) retreated 3.8%. Cronos Group (CRON) crept 1% higher.

Aphria (APHA) jumped 6.7%. The company on Monday said it launched a CBD-based cosmetics line in Germany.

ETFMG Alternative Harvest ETF (MJ) advanced 0.7%

Monday also marked the opening of the first pot stores in Ontario, Canada’s most populous province. But only 10 stores there actually had the paperwork in place to open, according to Bloomberg. Canada’s recreational industry remains hobbled by shortages.

Retail Moves, Family Affairs

Last week, iAnthus said it planned to acquire CBD For Life in a deal the companies valued at $13.7 million. Beth Stavola, iAnthus’ chief strategy officer, and her sister Julie Winter founded CBD For Life. Ford said Stavola precluded herself from the board vote on the deal.

Stavola is a “significant” shareholder of CBD For Life, iAnthus noted in a statement announcing the deal, making the deal a so-called “related-party transaction.” iAnthus also said it “expects” to rely on an exemption from valuation and minority shareholder approval requirements for such transactions, based on grounds that the transaction’s value doesn’t surpass 25% of iAnthus’ market value.

iAnthus commissioned GMP Securities to offer a fairness opinion of the transaction. The cannabis company said it expected GMP to conclude that value of the deal is “fair, from a financial point of view, to iAnthus.”

The acquisition would give iAnthus a hold in retailers like Urban Outfitters (URBN) and Of a Kind, an e-commerce site owned by Bed Bath & Beyond (BBBY). The 2018 Farm Bill legalized hemp, a big source of cannabidiol, or CBD.

That bigger push into mainstream retail follows news that CVS Health (CVS) and Walgreens Boots Alliance (WBA) would start selling hemp-derived CBD products in stores.

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