Jushi Holdings Inc: U.S. Pot Stock Looks Compelling After 51% drop

Jushi Stock Could Be Set to Rise Again

If you only judged Jushi Holdings Inc (CNSX:JUSH, OTCMKTS:JUSHF) by its share price, you’d be forgiven for thinking this U.S. multistate cannabis company has been having a tough time in 2021.

As of this writing, JUSHF stock is down by:

  • 25% over the last three months
  • 40% over the last six months
  • 25% year-to-date
  • 51% since hitting February highs

Pretty dire. The only saving grace for investors is that Jushi stock is up by 103% year-over-year.

Despite that, Jushi Holdings Inc has been having a pretty good year. It has reported great financial results, and management is upbeat about fiscal 2021 and 2022.

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The retraction in share price makes JUSHF stock look intriguing.

Of the Wall Street analysts following Jushi Holdings Inc, their average 12-month share-price forecast is $8.36, with a high estimate of $11.10. That points to additional upside potential of 85% and 154%, respectively.

Chart courtesy of StockCharts.com

JUSHF Stock Overview

Jushi Holdings Inc is a multistate owner and operator of cannabis cultivation, processing, and retail licenses. Its targeted footprint includes California, Nevada, Illinois, Ohio, Pennsylvania, Massachusetts, and Virginia. (Source: “Investor Presentation: August 2021,” Jushi Holdings, Inc., last accessed September 7, 2021.)

Right now, its core markets are Virginia, Pennsylvania, Illinois, and Massachusetts. Its developing markets are Ohio, Nevada, and California.

Jushi Holdings Inc currently operates 21 dispensaries under the “BEYOND/HELLO” brand and plans to open an additional 14. It also operates five cultivation facilities and five extraction and processing facilities.

The company’s award-winning brand portfolio includes “The Bank” (marijuana flower), “The Lab” (vape products), “Tasteology” (edibles), “Sèche” (fine grind and fine flower), “Nira Medicinals” (cannabidiol [CBD] products), and “Nira” (physician-formulated CBD products).

New Dispensary License in Illinois

On August 23, Jushi Holdings announced that its partner, Northern Cardinal Ventures, LLC, was awarded a conditional retail dispensary license in Illinois via the state’s lottery process. (Source: “Jushi Holdings Inc.’s Partner, Northern Cardinal Ventures, Wins Dispensary License in Illinois,” Jushi Holdings Inc, August 23, 2021.)

Jushi Holdings is an operational and 49% equity partner in Northern Cardinal.

Pending regulatory approvals, the new dispensary will operate under the BEYOND/HELLO brand, making it the fifth BEYOND/HELLO location in Illinois.

Acquisition of Licensed Processor in Ohio

In late August, Jushi announced that it had completed the acquisition of Franklin Bioscience OH, LLC, a licensed medical cannabis processor in Ohio. Franklin Bioscience operates an 8,000-square-foot processing facility located in Columbus, OH. (Source: “Jushi Holdings Inc. Completes Previously Announced Acquisition of Licensed Processor in Ohio,” Jushi Holdings Inc., August 26, 2021.)

Additionally, the company announced that it had launched a series of upcoming brands and products in Ohio, beginning with the debut of its brand, Sèche. Jushi plans to follow the Sèche brand launch with the debut of Tasteology and The Lab.

21st “BEYOND/HELLO” Retail Location

On August 31, Jushi opened its 21st BEYOND/HELLO retail location nationwide, 14th medical marijuana dispensary in Pennsylvania, and third storefront in Philadelphia, through its subsidiary Agape Total Health Care Inc. (Source: “Jushi Holdings Inc. to Open Its 21st BEYOND / HELLO Retail Location Nationwide” Jushi Holdings Inc, August 25, 2021.)

Solid Q2 Results

For the second quarter ended June 30, Jushi Holdings announced that its revenue increased by 14.6% sequentially and 219.7% year-over-year to $47.7 million. (Source: “Jushi Holdings Inc. Reports Second Quarter 2021 Financial Results,” Jushi Holdings Inc, August 25, 2021.)

Its gross profit was up by 9.2% sequentially and 193.7% year-over-year, at $21.9 million. Jushi Holdings Inc reported second-quarter net income of $4.8 million, versus a first-quarter 2021 net loss of $26.8 million.

The company’s adjusted EBITDA were $4.6 million, versus $4.5 million in the first quarter of 2021 and an adjusted EBITDA loss of $1.2 million in the second quarter of 2020.

Jushi Holdings ended the quarter with $127.0 million in cash and short-term investments, and total debt of $85.0 million.

Q2 Business Developments

During the second quarter, Jushi Holdings Inc:

  • Opened its 19th and 20th BEYOND/HELLO retail locations nationwide, with its 12th and 13th stores in Pennsylvania
  • Completed the acquisition of 100% of the equity of Organic Solutions of the Desert, LLC, an operational dispensary in Palm Springs, CA
  • Completed the acquisition of a 93,000-square-foot facility and surrounding nine acres of land operated by its wholly owned subsidiary and Virginia-based pharmaceutical processor, Dalitso LLC
  • Signed a definitive agreement to acquire Nature’s Remedy of Massachusetts, Inc., a single-state operator with two dispensaries and a 50,000-square-foot cultivation and production facility
  • Began the first phase of its expansion project at the Pennsylvania grower-processor facility
  • Completed the acquisition of an established Nevada company

Other Recent Developments

Jushi Holdings Inc has also recently:

  • Completed the acquisition of a licensed cultivator in Ohio
  • Debuted a series of cannabis brands and product launches in Virginia and Ohio
  • Received a $14.4-million interim arbitration award plus legal fees and accumulated interest
  • Announced the transition to domestic issuer status in the U.S.
  • Announced the expiration of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 waiting period for the proposed acquisition of Nature’s Remedy

“I’m very pleased with our performance in the second quarter; we achieved strong sequential revenue growth, industry leading year-over-year revenue growth, and maintained Adjusted EBITDA profitability, while continuing to invest in our strategic growth initiatives,” said Jim Cacioppo, CEO, chairman, and founder. (Source: Ibid.)

Business Outlook

Looking ahead to the remainder of the year, Cacioppo said he expects Jushi Holdings Inc to:

  • Open seven additional BEYOND/HELLO dispensaries
  • Add two dispensaries and a grower-processor facility in Massachusetts through the acquisition of Nature’s Remedy
  • Continue to build out its Pennsylvania and Virginia grower-processor facilities

For fiscal 2021, Jushi Holdings Inc revised its 2021 revenue guidance higher, from a range of $205.0–$255.0 million to $220.0–$230.0 million. Its adjusted EBITDA is expected to be in the range of $32.0–$37.0 million.

For fiscal 2022, The company expects to report revenue between $375.0 and $425.0 million and adjusted EBITDA between $110.0 and $130.0 million.

Analyst Take

Jushi Holdings Inc is one of the most compelling U.S. cannabis stocks. The company has a strong balance sheet and has built a robust, rapidly growing footprint in some of the most exciting markets in the U.S.

Thanks to its strong balance sheet, Jushi Holdings is well positioned to execute its plans to expand its national retail footprint and build out its cultivation and processing assets.

All that could continue to drive Jushi stock’s price upward.