Harvest Health & Recreation Inc Trading Near Record Levels After Strong Financial Results

Harvest Health & Recreation Inc Trading Near Record Levels
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Harvest Health & Recreation Inc Remains Bullish

Harvest Health & Recreation Inc (OTCMKTS:HRVSF, CNSX:HARV) is one of the best-performing cannabis stocks in 2019.

The third-largest cultivator in the U.S., Harvest Health & Recreation just released strong financial results as it continues to expand its retail and wholesale footprint, receive new licenses, and announce the acquisitions of facilities and lucrative brands.

Harvest Health & Recreation Inc Overview

Harvest Health’s vertical solutions include cultivation, manufacturing, and retail facilities. It is also engaged in construction, real estate, technology, and operations (in-house legal, HR, and marketing). (Source: “Investors,” Harvest Health & Recreation Inc, last accessed April 23, 2019.)

Since its founding in 2011, Harvest Health has expanded its presence every year. It currently has the largest marijuana market share in Arizona and operates 10 retail locations in four states. Throughout 2019, the company expects its cultivation, manufacturing, and retail locations to experience significant growth.

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Harvest Health & Recreation Stock Information
Market Cap $2.9 billion
52-Week High $10.85
52-Week Low $4.97
Shares Outstanding 275.7 million
Float 240,590
50-Day Moving Average $8.68
200-Day Moving Average $7.71

(Source: “Harvest Health & Recreation Inc. (HRVSF),” Yahoo! Finance, last accessed April 24, 2019.)

Harvest Health, which only went public back in November, has been on a tear in 2019, with HRVSF stock advancing 96% year-to-date.

In addition to investor optimism, the company’s share price is being juiced by recent acquisitions and strong financials. Trading at $10.10 at the time of this writing, Harvest Health & Recreation stock is closing in on a resistance level near $10.90.


Chart courtesy of StockCharts.com

Q4 Revenue Up 135%, 2018 Revenue Up 106%

On April 23, Harvest Health & Recreation Inc announced its financial results for the fourth quarter and full year ended December 31, 2018. Fourth-quarter revenue was up 135% year-over-year and 52% sequentially to $16.9 million. (Source: “Harvest Health & Recreation, Inc. Reports Fourth Quarter and Fiscal Year 2018 Financial Results,” BusinessWire, April 23, 2019.)

Harvest Health reported a fourth-quarter net loss of $71.1 million, which includes a non-recurring, non-cash fair value charge of $50.7 million, which is associated with debt that was converted to equity over the course of the year.

Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) came in at $2.6 million, compared to $2.2 million in the same quarter in 2017.

Gross profit for the quarter, with the exemption of the impact of biological assets, was $7.2 million, a 342% increase from the $1.6 million reported in the same prior-year period.

Total revenue for fiscal 2018 increased 106% year-over-year to $47.0 million. The company’s net loss for 2018 was $67.5 million and includes the previously mentioned non-recurring, non-cash fair value charge of $50.7 million.

Adjusted EBITDA came in at $10.3 million, versus $6.0 million in the same time frame in 2017. Gross profit for the year, minus the factoring in of biological assets, was $24.6 million, a 135% increase over the $10.5 million recorded in 2017.

Harvest Health & Recreation Inc ended 2018 with $191.9 million in cash and cash equivalents. As of December 31, 2018, the company had $30.9 million in debt.

During 2018, the company raised nearly $300.0 million.

Harvest Health & Recreation has been very busy on the acquisition front. In November 2018, the company acquired CBx Enterprises LLC, a Colorado-based market leader and intellectual property company.

That same month, Harvest Health also netted San Felasco Nurseries, Inc., a medical marijuana license holder with authorization to operate as a medical marijuana treatment center in the State of Florida. (Source: Ibid.)

Since then, Harvest Health & Recreation has announced a number of additional acquisitions.

In February, the company announced the pending acquisition of Falcon International Corp, a California vertically-integrated cannabis operator currently serving more than 80% of the legal dispensaries in California. Harvest Health also entered into a binding agreement to acquire six licenses in Arizona from Devine Holdings, Inc.

In March, Harvest Health & Recreation announced the pending acquisition of Verano Holdings, LLC. When completed, the acquisition is expected to include licenses throughout the Midwest and East Coast and add edibles to the Harvest Health brand, as well as enable the company to operate up to 200 facilities in 16 states.

Then, on April 9, Harvest Health announced the pending acquisition of CannaPharmacy. The latter business possesses assets in New Jersey, Maryland, Delaware, and Pennsylvania. (Source: Ibid.)

Analyst Take

Harvest Health & Recreation Inc is a financially solid cannabis company that has been reporting strong revenue growth and winning new licenses throughout the country. It also continues to benefit from having one of the largest retail footprints in the United States.

Thanks to a number of significant strategic acquisitions and mergers, 2019 should be an interesting year for both the company and its shareholders.