Harvest Health & Recreation Inc. Reports Third Quarter 2019 Financial Results
— Total revenue for the third quarter was $33.2 million, up 197% from the third quarter 2018 and 25% sequentially (all dollars are U.S. dollars unless otherwise noted)
— Revenue growth was driven by new and acquired retail locations and organic growth from the existing retail and wholesale businesses
PHOENIX, Nov. 20, 2019 /PRNewswire/ — Harvest Health & Recreation Inc. (CSE: HARV,OTCQX: HRVSF), a vertically-integrated cannabis company with one of the largest and deepest footprints in the U.S., today reported the company’s third quarter fiscal year 2019 financial results. During the quarter Harvest opened six new retail locations, acquired four retail locations, won a cultivation license in Utah and made progress toward completing several significant strategic acquisitions.
During the third quarter, Harvest continued to execute on its strategy by investing in assets and infrastructure needed to return to profitable growth. As a Company, we have the assets and team required to achieve operational excellence and succeed in the cannabis industry.
Chief Executive Officer Steve White.
Financial Highlights for the Third Quarter Ended September 30, 2019
- Total revenue was $33.2 million, an increase of 197% from $11.2 million in the third quarter of 2018 and up 25%, compared to $26.6 million in the second quarter of 2019.
- On a pro forma basis, Harvest along with completed and pending disclosed acquisitions, generated $95 million of revenue in the third quarter, or over $380 million annualized.
- Third quarter pro forma revenue increased 22% over second quarter pro forma revenue of $78 million.
- Gross profit excluding biological adjustments was $11.6 million, compared to $6.7 million in the second quarter of 2019.
- Gross profit margin excluding biological adjustments was 35.0%, compared to 25.1% for the second quarter of 2019.
- Adjusted EBITDA excluding biological adjustments was ($10.9) million, compared to ($12.4) million in the second quarter of 2019.
- Net loss was $39.1 million for the third quarter, which is reflective of investments to support the Company’s growth initiatives, disclosed acquisitions and planned expansion.
Please see the supplemental information (unaudited) regarding Non-IFRS Financial Measures at the end of this press release.
Business Highlights
Financing Activities
Subsequent to quarter end, the Company has raised $6.5 million in real estate financing and CAD$62.5 million in short term secured debt financing.
Footprint Expansion
As of September 30, 2019, the Company operated 26 retail locations, compared to 16 retail locations at the end of June 30, 2019. During the quarter, the Company opened new retail locations in Chandler, AZ, Venice, CA, Gainesville, FL, Williston, ND, Bismarck, ND, and Reading, PA. Harvest acquired retail locations in Casa Grande, AZ, Phoenix, AZ, Grover Beach, CA, and Lutherville-Timonium, MD during the third quarter. Harvest was one of eight companies selected to move forward to finalize a cultivation license in Utah. Subsequent to quarter end, the Company opened new retail locations in Palm Springs, CA, Scranton, PA, Johnstown, PA, and Harrisburg, PA and was awarded a cannabis dispensary permit with delivery service by the City of Hanford, CA.
Brand and Product Distribution
During the third quarter, Harvest began offering new premium-quality products from lifestyle and cannabis brand Cookies at select Arizona retail locations.
During the third quarter, the Company commenced shipment of CBD product lines as part of a previously announced agreement with the Asian American Trade Associations Council.
Conference Call & Webcast
Harvest Health and Recreation Inc. will host a conference call and audio webcast with Chief Executive Officer Steve White and Chief Financial Officer Leo Jaschke, Wednesday November 20, 2019 at 8:00 AM Eastern Time.
To participate in the conference call, please dial:
US/Canada toll free: + 1-844-607-4373
International dial in: + 1-825-312-2262
International Toll Free Dial-In Numbers:
Australia: + 1-800-287011
Hong Kong: + 800-901-563
South Africa: + 0-800-983-113
United Kingdom: + 0-800-051-7107
Access the live webcast link here:
https://investor.harvesthoc.com/events-and-presentations/default.aspx
Third quarter results and the conference call replay will be available at: investor.harvesthoc.com/financials
Non-IFRS Financial and Performance Measures
The Company provides additional financial metrics that are not prepared in accordance with IFRS. Management uses non-IFRS financial measures, in addition to IFRS financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes and to evaluate the Company’s financial performance. This non-IFRS financial measure is Adjusted EBITDA.
Management believes that these non-IFRS financial measures reflect the Company’s ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as they facilitate comparing financial results across accounting periods and to those of peer companies. Management also believes that these non-IFRS financial measures enable investors to evaluate the Company’s operating results and future prospects in the same manner as management. These non-IFRS financial measures may also exclude expenses and gains that may be unusual in nature, infrequent or not reflective of the Company’s ongoing operating results.
As there are no standardized methods of calculating these non-IFRS measures, the Company’s methods may differ from those used by others, and accordingly, the use of these measures may not be directly comparable to similarly titled measures used by others. Accordingly, these non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
About Harvest Health & Recreation Inc.
Headquartered in Tempe, Arizona, Harvest Health & Recreation Inc. is a multi-state cannabis operator (MSO) and vertically-integrated cannabis company. Subject to completion of announced acquisitions, Harvest will have one of the largest footprints in the U.S., with rights to operate more than 210 facilities, of which approximately 130 are retail locations, and more than 1,700 employees across 18 states and territories. Since 2011, the Company has been committed to expanding its Harvest House of Cannabis retail and wholesale presence throughout the U.S., acquiring, creating and growing leading brands for patients and consumers nationally and continuing on a path of profitable growth. Harvest’s mission is to improve lives through the goodness of cannabis and is focused on its vision to become the most valuable cannabis company in the world. We hope you’ll join us on our journey: https://harvestHOC.com.
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