Canopy Rivers portfolio company TerrAscend Corp. (TerrAscend) reported its second quarter results last week. The results made headlines in the cannabis sector and capped off a period in which TerrAscend had made several announcements as it executed on its U.S. strategy. Following the announcement, the closing price for TerrAscend’s shares on August 26, 2020 rose to $5.50/share, representing a 120.8% increase from its closing share price on March 31, 2020. By comparison, The Horizon Marijuana Life Sciences Index’s share price increased by 9.8% during the same time frame.
Canopy Rivers owns 19,445,285 exchangeable shares of TerrAscend that are convertible into common shares upon the occurrence of certain events, including U.S. federal cannabis legalization. Assuming conversion of the exchangeable shares, the August 26, 2020 closing price for TerrAscend’s shares would imply a value of $106.9 million for Canopy Rivers’ investment in TerrAscend.
TerrAscend’s results for the second quarter of 2020 include:
Net sales of $47.2 million, amounting to a ~36% quarter-over-quarter increase and a ~169% year-over-year increase
Adjusted EBITDA of $11.4 million, amounting to an increase of ~131% quarter-over-quarter
Positive cash flow from operations of $10.4 million
Cash and cash equivalents of $75 million, amounting to an increase of $58 million year-over-year
The company shared additional remarks on these results, as well as its strategy and outlook for the coming months during its Virtual Investor and Analyst Day presentation.
These results cap off a period in which TerrAscend announced several milestones:
April 14, 2020: Named Jason Ackerman, founder and former CEO of FreshDirect, as CEO
April 24, 2020: Appointed Keith Stauffer as CFO
May 29, 2020: Provided closing details on its oversubscribed US$37 million non-brokered private placement
July 31, 2020: Opened its 7th retail location in the United States
August 4, 2020: Received approval to start cultivation at its New Jersey facility
August 20, 2020: Announced strong second quarter 2020 financial results
TerrAscend provides quality products, brands, and services to the global cannabinoid market. As the first North American Operator (NAO), with scale operations in both Canada and the US, TerrAscend participates in the medical and legal adult use market across Canada and in several US states where cannabis has been legalized for therapeutic or adult use. TerrAscend was the first cannabis company with sales in the US, Canada, and Europe. TerrAscend operates a number of synergistic businesses, including The Apothecarium, an award-winning cannabis dispensary with several retail locations in California; Arise Bioscience Inc., a manufacturer and distributor of hemp-derived products; Ilera Healthcare, Pennsylvania’s premier medical marijuana cultivator, processor and dispenser; and Valhalla Confections, a manufacturer of premium cannabis-infused edibles. TerrAscend holds a cultivation permit in the State of New Jersey and is pending approval for a vertically integrated medical cannabis operation with the ability to operate up to three Alternative Treatment Centers. Additionally, TerrAscend holds a Medical Cannabis Processor License in the State of Utah.
Note: All amounts listed in Canadian dollars unless otherwise stated.
This is not an offer to sell or a recommendation to trade in any securities. This information is provided as of the date hereof. This document contains data obtained from third parties that Canopy Rivers has not independently verified. This document also contains forward-looking information within the meaning of Canadian securities law, which is based on certain assumptions. While management believes these assumptions are reasonable based on information available as of the current date, they may prove to be incorrect. Many assumptions are based on factors outside of Canopy Rivers’ control and actual results may differ materially from current expectations. Forward-looking information involves risks, including, but not limited to, the risk factors set out in Canopy Rivers’ most recent Management’s Discussion and Analysis and Annual Information Form. You should not place undue reliance on forward-looking information. Except as required by applicable law, Canopy Rivers assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances.
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