Origin House Expects to Nearly Double First Quarter Revenues

Origin House (CSE: OH) announced preliminary revenue figures for the second quarter of 2019 today, reporting estimated gross margins of 17% on top line revenues of C$21 million.

Top line revenues for the previous quarterly came in at C$11 million, demonstrating the explosive growth currently being experienced by Origin House. The firm is heavily focused on its Californian operations, wherein it has spent more than two years developing distribution lines across the growing sector.

“Origin House has continued to gain momentum as our team leveraged the California-focused platform we have built over the past two years to drive another quarter of record revenue along with steady progress on gross margin. As expressed previously, we strongly believe that 2019 will mark an inflection point both for the California market and Origin House as a whole and the numbers are proving this out.”

Marc Lustig, Chairman and CEO of Origin House

While the growth of Origin House’s operations is excellent, the company serves as a slight forewarning to other operators within the United States. As the company has finally started to display significant revenue growth as a result of combined efforts over a multi year time span, investors will not reap the full reward of this effort thanks to Origin House’s pending acquisition by Cresco Labs.

Under the acquisition that was announced April 1, 2019, Origin House shareholders are to receive 0.8428 shares of Cresco Labs for each share of Origin House currently held. This in turn limits the upward momentum investors may have otherwise seen as the firm continues to execute on its strategy.

While Cresco Labs was previously viewed as the larger entity within the proposed acquisition, the recent success of Origin House has made it a much more level playing field. Cresco Labs reported US$21.05 million in sales in the first quarter of 2019, and without demonstrating significant growth in the second quarter will nearly be on equal ground with that of Origin House in terms of revenue. While it will ultimately create a larger multi state operator with strong quarterly sales, Origin House shareholders may be left wondering if they could have received more bang for their buck had they not rushed into the proposed acquisition.

The acquisition of Origin House by Cresco Labs is currently under review by the Department of Justice, who recently issued a second request for information. Originally expected to be closed by the end of June 2019, it is believed that the merger is being reviewed for antitrust purposes. The anticipated close date has thus been pushed forward, and is slightly vague. The mandatory wait period will be extended to thirty days after Cresco and Origin file mandatory information requested by the Department of Justice. No timeline has of yet been given for the new anticipated close date as a result.

Origin House is expected to release full financial filings for the period ended June 30, 2019, in the second half of August. The company has stated that the financials will be released in time with Cresco Labs.

Information for this briefing was found via Sedar, Cresco Labs and Origin House. 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.