Heritage Cannabis Reveals 338% YoY Spike In Q2 Revenue, Ahead Of Acquiring California-Based Bloom Brands

Heritage Cannabis Holdings Corp. CANN HERTF reported financial results Monday for the second quarter and six-month period ending April 30.

The Toronto-based company disclosed that revenue totaled CA$4.6 million ($3.73 million) in the second quarter, representing a sequential and year-over-year increase of 251% and 338%, respectively.

Gross profit hit a record CA$1.5 million with gross margins improving to 32% from 28% in the prior period.

Selling, general and administrative costs as a percentage of revenue declined to 66%, versus 142% in the previous quarter.

At the quarter-end, the company had CA$25.3 million in networking capital with cash increasing to CA$11 million.

“We are excited about the results generated this quarter and the prospects for the Company moving forward,” Clint Sharples, Heritage CEO said. “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.“

Operational Milestones

The company has been bolstering its product portfolio that now includes concentrates, vapes, topicals, edibles and dried flower. Earlier this year, Heritage launched a line of cannabis concentrates in Canada under the Premium5 Ltd. brand, RAD, on the heels of closing the purchase of Premium 5 Ltd., a Canadian cannabis company specializing in full-spectrum concentrates.

The move was followed by the company’s announcement that it plans to expand Heritage’s product distribution in the U.S via a partnership with Merida Capital Holdings, the largest non-insider investor in Premium 5, which became Heritage's strategic shareholder. In May, Heritage announced a five-year collaboration with Como Health LLC, doing business as 3Fifteen Primo Cannabis, which enabled the launch of Heritage branded products in Missouri.

In June, the company revealed that it is looking to buy all of the issued and outstanding common shares of California-based Capna Intellectual, which is doing business as Bloom Brands, in an all-share transaction worth roughly $15 million and scheduled to close by the end of July.

Over the quarter, the company continued to boost its distribution channels through a deal with New Brunswick, the Northwest Territories and Medical Cannabis by Shoppers Drug Mart.

Heritage also secured some $7 million by entering into a non-revolving loan agreement with an interest rate of prime 1.25% and due September 2022.

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