iAnthus Hits $120M Pro-Forma Revenue Run Rate

This evening iAnthus Capital Holdings (CSE: IAN) released quarterly earnings. The company showed strong top-line of 16% and a further move towards profitability posting positive operating cash flow for the quarter. We broke down the quarter-over-quarter results here:

in Millions (US$)       Q3’19Q2 ‘ 19QoQ Change
Revenue $          22.34 19.216%
Gross Profit (pre-bio) $          10.74 9.217%
Bio Adjustements $            5.80  $       2.24 159%
Gross Profit (post-bio) $          16.55  $    11.45 45%
Gross Margin74.08%59.64%24%
Operating Expenses $          37.29  $    35.25 6%
Net Loss $        (15.27) $    (9.29)64%
Operating Cash Flow $            0.56 $  (19.21) 
Investing Cash Flow $        (20.49) $  (15.59)-30%
Cash $          27.93  $    30.52 -8%
Receivables $            9.94  $       8.72 14%
Inventory $          30.69  $    24.97 23%
Biological Assets $          13.30  $    11.28 18%
Payables $          26.70  $    16.05 66%
EBITDA $          (3.89) $       1.60  
Adjusted EBITDA $          (3.65) $    (4.70)-22%

iAnthus reported pro-forma revenues of $30.9 million, up 23% from the prior quarter. They now are operating 27 stores, with 9 in Florida alone.

It was a challenging quarter for iAnthus, who like many MSOs have Black Friday Sales level of fantastic acquisitions in front of them, but raising capital has been in a concern. They announced an agreement for up to $100 million of senior secured convertible notes from Gotham Green Partners; the first $20 million closed on September 30, 2019

With cash being a challenge, iAnthus demonstrated an ability to manage expenses during a period where they saw pro-forma revenue grow by 23%. Operating cash flow finished the quarter positive, thanks largely to a 66% increase in payables, while operating expenses only grew 6%.

Overall Thoughts

Its hard not to like the execution we see from iAnthus. If they can continue to grow 23% on an annualized basis, they will see revenue double each year. Using the fully diluted share count number of 266.2M and a share price of $1.94, the company is trading at just over 4x sales given the current run rate. With a 22% QoQ growth profile, the sales multiple is seemingly very cheap.

In my opinion, management executes every quarter, but still needs to navigate the capital raising environment until we see US financial institutions open their purse strings. Investors will continue to watch if iAnthus can generate enough cash flow to service the debt or if the appetite from the institutional side changes.


Information for this briefing was found via Sedar and iAnthus Capital Holdings. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Small Cap Steve

SmallCapSteve started blogging in the Winter of 2009. During that time, he was able to spot many take over candidates and pick a variety of stocks that generated returns in excess of 200%. In the time since, he has taken a heavy focus in the cannabis space with a particular affinity for multi state operators, for which he has become a known thought leader.

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