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Press release content from Business Wire. The AP news staff was not involved in its creation.

Heritage Cannabis Reports Second Quarter 2021 Financial Results

June 28, 2021 GMT

TORONTO--(BUSINESS WIRE)--Jun 28, 2021--

Heritage Cannabis Holdings Corp. (CSE:CANN) (OTCQX:HERTF) (“ Heritage or the Company ”), today announced its financial results as at and for the three- and six-month periods ended April 30, 2021 (“ Q2 2021 ”). All figures are in Canadian dollars unless otherwise noted.

Key Financial Highlights of Fiscal Q2

  • Revenue climbed to a record $4.6M in the second quarter of 2021, up 251% from the $1.8M reported in the previous quarter and 338% from the same period the prior year.
  • Gross profit increased to a record $1.5M, with gross margins improving to 32% from 28% in Q1 2021.
  • SG&A costs as a percentage of revenue dropped to 66% in the second quarter of 2021, compared to 142% in the first quarter of 2021.
  • Strong Balance sheet with net working capital of $25.3M, and cash increasing to $11.0M as of April 30, 2021, bolstered by a successful equity offering which closed during the quarter.

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“We are excited about the results generated this quarter and the prospects for the Company moving forward,” stated Clint Sharples, Chief Executive Officer of Heritage. “As we have been discussing the last couple of quarters, we have transitioned away from strictly providing contract manufacturing services to a company with a portfolio of six internal brands in Canada and an e-commerce medical site in the U.S. The results in the current quarter are displaying the progression of this shift which began less than one year ago, and we continue to build through the third quarter of this fiscal year. While we experience accelerated product distribution across the country, we still have underserved markets to expand and have yet to launch into the multi-billion dollar U.S. recreational market in a meaningful way. From a financial perspective, we extended our debt repayment window to late 2022, improved our working capital position and with continued strong sales growth along with managing costs, will ensure we remain in a solid financial position to fund growth and increase shareholder value.”

“Although this is the first quarter that Premium 5 has been under the Heritage banner, we are extremely happy with the performance of the organization,” said David Schwede, President of the Recreational division. “We have high expectations for ourselves and are working hard to become a recognized leader in the cannabis sector and further increasing Heritage’s position on the Cannabis map. I’m very confident, that we are positioning Heritage for continuous growth both in Canada and the U.S.”

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Operational Highlights

  • Heritage has significantly expanded its product portfolio to now include concentrates, vapes, topicals, edibles and dried flower. Provincial re-order rates and market penetration continue to see positive trends.
  • Successful launch of RAD, a value focused brand with offerings in the concentrate, flower, distillate vape, live resin vape, and edible categories. RAD has become a top brand in Canada for concentrates and completed first shipments to Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, NWT, Cannmart, Patient Choice, and will be shipping soon to PEI, Quebec, and Shelter Market in the very near future.
  • Heritage continued to grow its distribution capabilities, adding agreements with New Brunswick, the Northwest Territories, and Medical Cannabis by Shoppers Drug Mart in the second quarter. Subsequent to the end of the quarter, Heritage added Newfoundland, Nova Scotia, Cannmart, and announced an arrangement to enter Quebec through a distribution agreement with Great White North Growers.
  • Secured flower sales under the RAD brand launching Heritage into the Dried Cannabis category. This is the largest category in Canadian legal sales, representing 64% of total sales in the latest data from Health Canada.

Corporate Update and U.S. Growth Initiatives

  • The Company entered into a non-revolving loan agreement for $7M with interest rate of prime +1.25% and due September 2022. A portion of the proceeds were used to repay all of the outstanding $4.7M due under a previous credit facility, which was due January 2022.
  • On April 7, 2021, Heritage announced plans to enter the U.S. cannabis market through an expanded relationship with Merida Capital Holdings. Subsequent to that announcement, in May 2020, a five-year agreement with Como Health LLC, a license holder for the manufacturing of cannabis and operator of dispensaries in Missouri was signed.
  • Heritage announced a non-binding letter of intent to acquire California based Bloom Brands in an all-stock transaction. Bloom Brands has sales in six states including; California, Arizona, New Mexico, Washington, Oklahoma and Nevada.
  • Heritage recently succeeded with the eCommerce launch in the U.S. of ArthroCBD, the 25 mg CBD softgel capsule brand formulated using VESIsorb®. The ArthroCBD launch marks the first of a pipeline of over 7 new medicinal hemp based CBD product offerings planned.

Selected financial highlights for the three- and six-month periods ended April 30, 2021 include the following:

 

 

Three-month periods ended

 

Six-month periods ended

(in $CDN)

 

April 30, 2021
$

 

April 30, 2020
$

 

April 30, 2021
$

 

April 30, 2020
$

 

 

 

 

 

 

 

 

 

Gross Revenue

 

4,604,798

 

1,358,149

 

6,432,071

 

5,366,544

Net Revenue

 

3,575,175

 

884,830

 

5,095,791

 

4,516,412

 

 

 

 

 

 

 

 

 

Cost of Sales 1

 

2,083,913

 

1,009,513

 

3,094,274

 

3,258,319

Gross Margin

 

1,491,262

 

25,302

 

2,001,517

 

1,408,078

 

 

 

 

 

 

 

 

 

General and Administrative Expenses 2

 

3,043,816

 

1,922,551

 

6,190,040

 

4,167,493

Other Income (Expenses) 1

 

(641,651)

 

336,875

 

(602,901)

 

(88,108)

Comprehensive Income (Loss)

 

(5,151,011)

 

(1,681,936)

 

(8,362,093)

 

(3,700,202)

1 Restated to agree with current period presentation.

2 Excludes amortization and depreciation.

Financial Statements

The consolidated financial statements of the Company as at and for the three- and six-month periods ended April 30, 2021 and accompanying management’s discussion and analysis have been filed with the securities regulators and are available on SEDAR at www.sedar.com under the Company’s issuer profile.

About Heritage Cannabis Holdings Corp.

Heritage is a leading cannabis products company operating two licensed manufacturing facilities in Canada and offering innovative products to both the medical and recreational legal cannabis markets in Canada and U.S. The company has an extensive portfolio of high quality cannabis products under the brands Purefarma, Pura Vida, RAD, Premium 5, feelgood. and ArthroCBD.

ON BEHALF OF THE BOARD OF DIRECTORS OF HERITAGE CANNABIS HOLDINGS CORP.

“Clint Sharples”

Clint Sharples
CEO

The Canadian Securities Exchange does not accept responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements

This press release contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. The forward-looking information contained herein may include, but is not limited to, assumptions related to cash flow and capital resources, and expectations related to the supply and manufacturing agreements, the intended expansion of the Company, and partnerships and Joint Venture Partnerships.

By identifying such information and statements in this manner, the Company is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such information and statements.

An investment in securities of the Company is speculative and subject to several risks including, without limitation, the risks discussed under the heading “Risks and Uncertainties” in the Company’s annual management discussion and analysis for the year ended October 31, 2020 and dated February 26, 2021. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information and forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended.

In connection with the forward-looking information and forward-looking statements contained in this press release, the Company has made certain assumptions. Although the Company believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward-looking information and statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this notice.

View source version on businesswire.com:https://www.businesswire.com/news/home/20210628005829/en/

CONTACT: Clint Sharples

416-705-8529

csharples@heritagecann.com

or

Kelly Castledine

647-660-2560

kcastledine@heritagecann.com

KEYWORD: NORTH AMERICA CANADA

INDUSTRY KEYWORD: ALTERNATIVE MEDICINE PHARMACEUTICAL HEALTH

SOURCE: Heritage Cannabis Holdings Corp.

Copyright Business Wire 2021.

PUB: 06/28/2021 05:42 PM/DISC: 06/28/2021 05:42 PM

http://www.businesswire.com/news/home/20210628005829/en