TerrAscend Sees Q1 Revenue Jump

TerrAscend Corp. saw revenue increase to C$14.6 million in Q1 2019 as a result of sales growth in Canada and the purchase of Arise Bioscience.

That represented a 192% sequential increase on the C$5 million the firm brought in during Q4 2018. Net loss widened slightly, from C$7.1 million in the final three months of 2018 to C$7.2 million in Q1 2019.

TerrAscend’s Canadian subsidiaries – Solace Health, Solace Rx, Solace Health Network, Haven St., and Knuba Naturals – generated Q1 revenue of C$8.9 million.

On Jan. 15, 2019, it completed the C$13 million acquisition of hemp producer and distributor Grander and renamed it Arise Bioscience. This business makes hemp-based products and sells them in 10,000 retail stores across the world, with a particular focus on the U.S. market since the 2018 Farm Bill passed into law. Arise generated revenue of C$5.7 million between Jan. 15 and Mar. 31, leaving TerrAscend with its highest ever quarterly revenue figure.

“Our first quarter results reflect substantial progress toward our goal of becoming the leading North American Operator in the cannabis sector,” said president Matthew Johnson. “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.”

2019 Guidance Reiterated

TerrAscend reiterated guidance claiming it will achieve revenue of C$135 million in 2019. The sharp increase will be down to U.S. retail brand The Apothecarium, which the firm has agreed to purchase in a US$118.4 million deal made up of cash and stock.

Johnson said it is “nearing the closing” of the acquisition. The Apothecarium has three stores in San Francisco and one in Las Vegas, while it will open another dispensary in New Jersey before the end of the year, plus a cultivation facility in the Garden State.

TerrAscend is a vertically integrated operator and it produces modest amounts of cannabis under the Haven St. and Knuba brands. Haven St. sells in six Canadian provinces and the company claims it is among the top bestselling lines in each.

It is keen to boost its footprint in the growing market for hemp-derived health and wellness products, and the Arise team has been working on a new brand called Original Hemp, which will launch this month.

A Global Cannabis Company

TerrAscend has a sales and distribution agreement in place with German pharmaceutical wholesaler Iuvo Therapeutics GmbH and it expects its products to hit German pharmacies before the summer.

As of Mar. 31, 2019, the firm held $8.6 million in cash. It set out to raise C$20 million in a private placement funding round, and eventually upsized it twice due to high demand. In the end it closed a first tranche of C$40.2 million, with the final tranche expected to close on May 27.

This will go towards a U.S. acquisition strategy in addition to general working capital.

TerrAscend bills itself as the first cannabis company to sell its products in Canada, the U.S., and Europe after its facility secured GMP certification, which is required to sell goods in the EU. It has a sales and distribution agreement in place with German pharmaceutical wholesaler Iuvo Therapeutics GmbH and it expects its products to hit German pharmacies before the summer.

Shares in TerrAscend opened at C$7.99 on Thursday, May 23, leaving it with a market cap of C$755.5 million. It began 2019 trading at C$5.83, and reached a high of C$8.81 on Feb. 1.

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.

Martin Green
Martin Green is an experienced journalist with a strong focus on the cannabis, alcohol, and gambling industries. He is particularly interested in the political issues affecting the global marijuana trade, and he has a keen focus on regulation changes and legal topics. He holds a BA English Literature, MA Creative Writing and a National Qualification in Journalism diploma. He has worked in journalism since 2009 and written for a broad range of newspapers, business titles and magazines, including The Sun, The Metro, The Journal, Livestrong, Drinks Retailing News, Harpers, Sportsbook Review, Vital Football, Essex Live and Surrey Live. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.

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