Friday , 15 November 2019

Cannabis Central: Harvest Health Reports $20.6M Net Loss For Q2 – Stock Craters 11%

Harvest Health & Recreation, Inc. (CSE: HARV, OTCQX: HRVSF), vertically-integrated cannabis company involved in the cultivation and processing of cannabis, and the operation of retail dispensaries in the U.S., reported its Q2 & FY2019 financial results this week that are worth noting.

By Lorimer Wilson, editor of munKNEE.com (Your KEY to Making Money!)

Q2 Financial Highlights (all dollars are U.S. dollars and all comparative numbers relate to Q1)

  • Revenue increased by 39% to $26.6M
  • Gross profit increased by 114% to $16.9M
  • Gross profit margin increased to 64% from 41%
  • Adjusted EBITDA improved by 53% to a loss of $2.2M
  • Net loss was $20.6 million as a result of major investments during the quarter in people and infrastructure to support the company’s growth initiatives and planned expansion going forward
  • Cash and cash equivalents on hand of $89.9M
  • Outstanding debt of $105.1M

Q2 Business Highlights

  • Increased its retail locations (in Florida) by 3 to a total of 16 currently
  • Acquired (pending) Cannapharmacy
  • Received a retail dispensary license in Pasadena, CA
  • Added significantly to its management team
  • Increased its full time employees by 64% to 782

Activity Subsequent to the End of Q2

  • Acquired Grover Beach which operates a dispensary in California thereby giving Harvest Health & Recreation a bigger footprint in the most lucrative market in the cannabis industry
  • Added six retail locations in Arizona, California, Florida, and North Dakota
  • Selected as 1 of 8 companies to move forward to finalize a cultivation license in Utah
  • Announced an agreement with the Asian American Trade Associations Council to distribute its branded CBD product lines to 10,000+ retail locations within its network
  • Continued to add to its management team

Stock Performance

Almost no pot stock has come away unscathed from the major weakness in the cannabis stock/ETF sector over the past 6 months and Harvest Health & Recreation is no exception. The stock is:

  • down a whopping 53% from its April 3rd high of $13.98 and
  • down 10.8% in the past week alone

It is hoped that the major expansion of its executive management team and in cultivation, manufacturing, retail locations and full time employees over the remainder of 2019 and into 2020 and beyond will reap major bottom line results and cause the stock price to appreciate considerably. Time will tell!