Tonight Liberty Health Science (CSE: LHS) announced the Company is selling 36 acres of land, comprising of its Chestnut Hill Tree Farm site in Alachua County, Florida and 50% of their Ohio investment/assets for an aggregate total of US$14,750,000 to an arm’s length purchaser.
Liberty Health Science purchased Chestnut Hill Tree Farm for approximately US$40M back in 2017, which comprised of mostly goodwill. The goodwill was primarily the license, which is presumably not included in this transaction.
The company stated in the press release they shifted their focus to their 387-acre LHS 360º Innovation Campus in Gainesville, Florida and have completed the cultivation portion of the retrofit activities at Liberty 360 in Q1. This brings the facility to 190,000 square feet of greenhouse space.
Our primary focus has been on expanding Liberty 360 facility located in Gainesville….. Growing our cultivation, processing, manufacturing, and distribution areas has been pivotal to support the allotment of dispensaries in Florida. At Liberty 360 we have plenty of room to grow and overcompensate for the market demand. We plan on initiating ethanol extraction by October 2019, which will help us expedite our overall extraction process along with maintaining our CO2 extraction for certain products.”Victor Mancebo, Interim Chief Executive Officer, Liberty Health Sciences
In terms of the Ohio assets, the most recent financial statements show a 51% ownership in a joint venture. The news release states the company is selling 50.0% of their indirect 50.1% interests in each of three joint ventures:
With a small investment made into the JV:
And from the MD&As, we can see the Ohio assets primarily consisted of a dispensary and a processing facility:
Outside of Florida, Liberty was awarded a dispensary license and a provisional processing license in the State of Ohio together with their joint venture partner, the Schottenstein Group. The joint venture opened their dispensary in Dayton, Ohio under the name Mad River Remedies in June 2019. The joint venture has also secured a 10,000 square foot processing facility that is also expected to open in August 2019. The opening of the processing facility is dependent on the receipt of the required regulatory approvals.
It is unclear who purchased the assets from Liberty Health Science, but a quick guess may be the Schottensteins, who could then roll the full Ohio operations into Green Growth Brands. Also, if the Florida state licensing allowed, use the Chestnut Hill facility for their recently acquired Florida license.
For those concerned about the potential sale of the license. It is clear the company did not sell their Florida license as they still intend to grow out of Gainsville, Florida and operate 16 dispensaries across the state. Locations listed below:
From a quick glance, it’s hard not to like this move if you’re an LHS shareholder. The company received some much needed cash and they found a way to get it without raising at a very weak price. They sold off a Florida asset they no longer needed and half of their Ohio licenses which were seemingly progressing slowly. The Ohio JV was also missing the crown jewel in the Ohio cannabis vertical, a cultivation license.
It has been a rough year for shareholders of Liberty Health Sciences. The stock is down approximately 75% from it’s 52 week high of $1.60. The stock closed at 39.5c today.
Information for this briefing was found via Sedar and Liberty Health Sciences. 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.
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%. Today he consults with microcap companies helping them with capital markets strategy and focuses on industries including cannabis, tech, and junior mining.