TerrAscend Corp. reported financial results for the first quarter ending March 31, 2019. Financial results and analyses are available on the Company’s website (www.terrascend.com) and SEDAR (www.sedar.com). All figures are reported in Canadian dollars, unless otherwise indicated.
- For the three months ended March 31, 2019, TerrAscend generated revenue of $14.6 million, up from $5.0 million in the fourth quarter of 2018. The Company did not have revenue in the comparable first quarter of 2018.
- Adjusted EBITDA loss (non-GAAP measure) was $7.2 million for the first quarter of 2019, compared with a loss of $7.1 million in the fourth quarter of 2018 and a loss $1.6 million in the comparable first quarter of 2018.
- As of March 31, 2019, the Company held $8.6 million in cash and cash equivalents. On May 15, 2019, the Company closed the first tranche of its previously announced private placement with total proceeds in excess of $40.2 million. The final tranche is expected to close on or around May 27.
The Company reported its highest quarterly revenue to date driven by solid organic growth in Canada as well as the January 15, 2019 closing of the purchase of the assets which make up the wholly owned subsidiary Arise Bioscience (“Arise”). In Canada, the Company experienced strong demand in both the medical and adult-use markets; revenue for the Company’s Canadian subsidiaries totaled $8.9 million in the quarter.
“Our sales in Canada continue to be strong, driven by demand from provincial distributors and consumers,” said Michael Nashat, TerrAscend’s CEO. “We are building industry-leading cultivation and processing capabilities. Our Mississaugafacility was recently GMP certified by the German authorities – the only such certification granted in the last year – and exports to the EU will commence this quarter. We are excited about additional international expansion opportunities and will share news of these milestones as we achieve them. We will be fully operational and ready to begin sales of edibles and concentrates into the Canadian market in the fourth quarter.”
In the US, sales of hemp-derived products developed, manufactured, and distributed by Arise totaled $5.7 million in the quarter.
“Our first quarter results reflect substantial progress toward our goal of becoming the leading North American Operator in the cannabis sector,” said Matthew Johnson, President of TerrAscend Corp., and TerrAscend USA, Inc. “While achieving strong top-line growth at Arise, we’re focused on operational excellence that will enable us to become the leading global provider of hemp-based products. We’re nearing the closing of our acquisition of The Apothecarium, which we announced on February 11. In New Jersey, our first East Coast Apothecarium and supporting cultivation operations will be up and running by the second half of the year. The foundational capabilities of our US and Canadian businesses, coupled with future acquisitions and the procurement of greenfield licenses, will firmly establish TerrAscend’s global presence. We’re committed to continuing our hard work in order to exceed the expectations of our patients, customers, and stakeholders.”
First Quarter 2019 Highlights
- The Company continued to drive sales for its adult-use brand, Haven Street premium cannabis, in the six Canadian provincial jurisdictions where it is sold, achieving top-10 selling status where reported. Preparations are underway to ensure that the Company is well positioned to launch sales of oils when granted the requisite license by Health Canada, which is expected imminently.
- Arise completed the research, development, and design of Original Hemp, a premium hemp-derived cannabinoid brand that is expected to launch this quarter. To enhance collaboration and drive sales growth, Arise consolidated its sales, marketing, accounting, and operations into a new 16,000 square foot facility. Additionally, Arise made significant investments in IT systems and platforms that will enable the business to continue to scale rapidly.
- The Company announced the acquisition of the Apothecarium on February 11, 2019 for total consideration of US$118.4 million. The Apothecarium is a multi-state award-winning retail dispensary operator with three dispensaries in California; a vertically integrated operation in Nevada with cultivation, manufacturing, and an Apothecarium dispensary; and Valhalla Confections, a provider of leading premium edible products. These entities had 2018 revenues in excess of US$45.0 millionii. The Company is working towards the close of the acquisition, which will occur in stages as it receives final regulatory approvals from certain authorities, expected in the second and third quarters of 2019. The Company expects to open new Apothecarium locations in Berkeley, California and Phillipsburg, New Jersey in the fourth quarter of 2019.
- The Company made substantial progress on site development for its cultivation facility in Boonton Township and its dispensary in Phillipsburg, New Jersey. Both sites will be operational in the second half of the year.
- The Company received a Good Manufacturing Practice (“GMP”) certificate in accordance with the rules governing medicinal products in the European Union for its facility in Mississauga, Ontario. TerrAscend expects to begin distribution in Germany in the second quarter through its sales and distribution agreement with iuvo Therapeutics GmbH, making it the first and only global cannabis operator with sales in the US, Canada, and the EU.
- The Company appointed Lisa Swartzman to its Board of Directors. She currently serves as President of AirBoss of America (OTCMKTS: ABSSF). Gopal Bhatnagar stepped down from the Company’s Board. Additionally, Brian Feldman joined TerrAscend as an Officer and General Counsel effective April 8, 2019.
- On May 7, 2019, the Company announced it had closed the books on its upsized non-brokered private placement to raise approximately US$52 million through the issuance of common shares. On May 15, 2019, the Company closed the first tranche of the private placement and issued 5,257,662 common shares at a price of $7.64 per common share for total proceeds of $40.2 million. The second tranche of the private placement is expected to close on or around May 27, 2019. Please refer to the Company’s press release dated May 7, 2019 for more information.i