iAnthus Hosts CBD for Life Presentation for Analysts and Investors

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Earlier today iAnthus [stock_market_widget type="inline" template="generic" color="default" assets="IAN.CN" markup="(CSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] hosted analysts and select retail investors for a presentation from CBD for Life’s Julie Stavola.

Here is a quick review of what we learned.

The Bottom Line

While iAnthus had no official position, Stavola was confident CBD for Life would be capable of generating $20 million in revenue in 2020. As the company is now a subsidiary of iAnthus, this will be recognized as revenue for iAnthus.

For September, CBD for Life generated approximately $900,000, with an average of approximately $650,000 per month for Q3. This is based on 1,500 retail locations across 46 states, along with their ecommerce sales.

Obviously they are expecting significant revenue growth as they land more partnerships with other retailers and roll out more products.

Luckily their approach favours rapid scaling — they use contract manufacturing and distribution partners across the U.S. — so they can expand output rapidly with minimal capital investment.

iAnthus has effectively acquired this brand at nearly half the price than originally intended.

Looking at the numbers, they are projecting gross margins of between 60-65% for their products, with an average selling price of between $20-25 per unit.

Given they are currently pricing their products close to other skincare products (think other moisturizers), they don’t expect much price compression from competitors as they already see themselves as far below those levels.

Further, as they continue to scale, they expect input costs to decrease. This suggests they should have little issue maintaining those margins over the coming quarters.

Based on current stock prices, we see this acquisition as an excellent move for iAnthus, especially since the acquisition was largely a stock-based deal.

iAnthus has confirmed there have been no attempts at renegotiations, which speaks to the faith CBD for Life founder, Beth Stavola, has in iAnthus as a company.

It also means IAN has effectively acquired this brand at nearly half the price than originally intended.

Other Notable Highlights

CBD for Life has taken measures to ensure they are selling a “clean” product. Their Hemp is grown “using organic methods and practices”, which is as close as they can get to certify their product as organic.

Once regulations allow, they have intentions of obtaining the USDA organic certification.

They are also rolling out a higher-end luxury brand to satisfy demand from retailers asking for “premium” products with higher pricing. They expect similar margins on these as the inputs are costlier. Along the same line, they are rolling out a Cheeky Greens brand for “adult-use” products.

Right now their focus is on building inventory so they can hit the ground running as they announce more partnerships. While they didn’t provide any specifics, they do expect some announcements in the coming months.

Lastly, they are looking to break into the European market, starting with a partnership with QVC (a television shopping channel) in 2020 Q1. It’s unclear exactly how much business they are expecting from the European market.

 

iAnthus Capital Holding is a Market Awareness client of Capital 10X.

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iAnthus Capital Holdings was a market awareness client of Capital 10X.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Evan Veryard
Evan Veryard has a Bachelor's of Chemical Engineering from McGill University and a MaSc. of Chemical Engineering from RMC. He has over 6 years of research experience focusing on industrial materials. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.
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