First-quarter revenue was $45.0 million, up 134% from the first quarter of 2019.
Harvest Health & Recreation Inc. (CSE: HARV), a vertically integrated cannabis company and multi-state operator in the U.S., today reported its financial and operating results for the first quarter of 2020. All financial information is provided in U.S. dollars unless otherwise indicated.
In 2020 we have raised additional capital and completed several acquisitions adding strategic assets in core markets while continuing to streamline operations as highlighted by continued improving quarterly trends.Steve White, Chief Executive Officer
First Quarter 2020 Financial Results
- Total revenue in the first quarter was $45.0 million, an increase of 134% from $19.2 million in the first quarter of 2019 and up 19% compared to $37.8 million in the fourth quarter of 2019.
- Gross profit excluding biological adjustments in the first quarter was $18.3 million, compared to $7.9 million in the first quarter of 2019 and $16.0 million in the fourth quarter of 2019.
- Gross profit margin excluding biological adjustments in the first quarter was 40.6% compared to 41.1% in the first quarter of 2019 and 42.3% in the fourth quarter of 2019.
- Net loss was $20.0 million for the first quarter compared to a net loss of $20.0 million in the first quarter of 2019 and $88.9 million for the fourth quarter of 2019.
- Adjusted EBITDA excluding biological adjustments in the first quarter was ($3.9) million compared to ($4.7) million in the first quarter of 2019 and ($6.8) million in the fourth quarter of 2019.
First Quarter 2020 Business Highlights
- New capital raised included $20 million of real estate backed debt, $21.3 million in senior secured debt, and $59 million in equity.
- Harvest added five retail locations through a combination of organic store openings and acquisitions of operational retail locations in Arizona, Arkansas, and Michigan. As of May 20, 2020, Harvest owned, operated, or managed 35 retail locations in seven states, including 14 open dispensaries in Arizona. Harvest owned and operated dispensaries exclude retail locations serviced through Interurban Capital Group.
- Harvest completed the acquisition of Franklin Labs on March 26, 2020, adding cultivation and manufacturing capabilities to its operations in Pennsylvania.
- The acquisition of Interurban Capital Group was completed on March 13, 2020, adding strategic investors to the shareholder base and direct and indirect licenses in California and Iowa and rights to acquire assets and provide cannabis retail support services for dispensaries in California, Iowa and Washington.
- The acquisition of Arizona Natural Selections was completed on February 18, 2020, adding three open retail locations, an indoor cultivation facility, greenhouse cultivation facility and potential outdoor cultivation to Harvest's existing operational footprint in Arizona. The acquisition included a fourth vertical license in Arizona and the Darwin product line.
- High Times Holdings agreed to purchase a portfolio of 13 planned and operational dispensaries in California for total consideration up to $80 million including $5 million in cash, $7.5 million as a one-year promissory note with 10% interest, and $67.5 million in Series A Preferred Stock.
- Ongoing cost-cutting measures implemented companywide year to date are expected to yield annualized savings of $24 million.
- Our facilities have remained online with modified operating procedures due to the COVID-19 pandemic. Last week we were able to resume in-store purchases with appropriate social distancing measures at select retail locations.
Full-year 2020 revenue target is approximately $200 million. Harvest is on track to achieve positive Adjusted EBITDA during the second half of 2020. Forecasts assume no meaningful impacts or disruptions to our operations as a result of the COVID-19 pandemic beyond the new protocols and safeguards already implemented throughout the company.
"Our improved financial results during the first quarter demonstrate progress toward our primary goal of returning to profitability through cost reduction measures and investments in core markets Arizona, Florida, Maryland, and Pennsylvania," said Chief Executive Officer Steve White."
To learn more about Harvest Health & Recreation, visit the company HQ here.
Disclaimer: Past performance is not an indicator of future performance.
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