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[capital10x]

iAnthus is Back on a Path to Profitability after Solid Q2 Earnings Report

Bottom Line

iAnthus had a strong bounce back this quarter from operational hiccups in Q1 and continues to match the organic revenue growth of MSO competitors. With supply issues in Florida behind them and $80 million of cash in the bank, iAnthus now has the cash needed to reach profitability in 2020. iAnthus continues to be a top 3 MSO (Multi-State Operator) in our view for the following reasons: The 11 state footprint is in the top third of MSO's with assets in high population, low competition states like New York, New Jersey and Florida. Capital structure is much simpler than peers with less dilutive securities and cheap founder's shares and minimal super-voting shares to pressure the stock price. The company continues to trade at a 45% discount to peers with no operational weakness to explain such a big discount. Quarter over Quarter Growth

Source: Sedar, Company Filings iAnthus has a number of catalysts throughout the rest of 2019 to turn sentiment around. Output from the Florida Greenhouse will quadruple in the second half of the year. Retail rollout accelerates in the last two-quarters of 2019 and revenue growth with it. Nationwide CBD rollout later in 2019. New CMO from Monster Beverage leading cohesive nationwide branding push. Post-merger financials will show much-improved margins catching back up to peers. We have always liked iAnthus as a discounted entry into the U.S. cannabis market. The management team has the longest public history among any other multi-state operator and has proven they can execute without any nasty capital raising surprises. Now that the stock is 60% cheaper compared to where it traded in May, we are content to increase our stake in anticipation of a turn in overall sector sentiment going into 2020. We think in hindsight, the cannabis selloff this summer will be turn out to be a superb buying opportunity before regulatory change in congress could potentially supercharge the entire industry in 2020. We prefer to own discounted MSOs that are executing vs expensive names where any misstep will lead to a big fall in the share price. iAnthus is on a path to profitability and has all the tools it needs to excel. 2019E Price to Sales Estimates

Source: SEDAR, Capital10x Estimates

Quarterly Review

With the MPX acquisition behind them, iAnthus posted some strong quarterly numbers, growing revenues and gross margins as their net loss shrunk. Specifically, quarterly revenue grew 100% QoQ to USD19.2 M while cost of goods sold grew only 27% to $10 M. With these results, iAnthus is demonstrating their ability to scale efficiently, which bodes well for future performance. Their gross profit was $9.2 M, up 430% quarter over quarter and good for a gross margin of 48%. While they won’t be able to maintain +400% QoQ gross profit growth, holding a gross margin of 48% would certainly speed up their path to profitability. G&A and salaries increased modestly by 35% to $13.8 M. Management attributed this to the MPX acquisition and corresponding new additions to the team. Given revenues increased 100%, we see this as a reasonable increase to operational expenses. Net loss for the quarter was $9.3 M, good for a reduction of 50% quarter over quarter. While this drop was partially driven by large one off acquisition-related costs in Q1, it is still moving in the right direction. At the end of the quarter, iAnthus had $30.5 M of cash on hand, however, with the recently closed $50 M debt financing, the company is in a solid cash position. Based on its quarterly cash burn rate, iAnthus has over a year of runway to reach profitability. As iAnthus continues their expansion, their revenue will grow with them. If they can continue to expand this efficiently, they should have little issue achieving profitability in 2020.

Expansion Details

Notable highlights for iAnthus include the closing of the CBD For Life acquisition in July. CBD For Life is a  well-recognized lifestyle brand and will provide iAnthus with immediate exposure to the rapidly growing CBD market. We see this as a savvy strategic move. By year-end, iAnthus has plans to own and operate 40 dispensaries (with licenses secured for 68). They currently sit at 26, so this should provide a substantial boost to revenues. Further, with the rollout of their retail facing lifestyle brand Be., iAnthus is well-positioned to the drive revenue and gross profit growth through the higher-margin retail market.   Read the full article

[capital10x]

iAnthus Purchases Nevada Operator Sierra Well

iAnthus Capital Holdings Inc. (CSE: IAN) has bolstered its Nevada footprint by purchasing Sierra Well in a deal worth US$27.6 million. #marijuanastocks #potstocks $IAN Read the full article

[capital10x]

iAnthus Stock Positioned to Profit Along With the Company

ITHUF stock experienced a brutal selloff over the spring and summer, but continued expansion and improved profitablity could turn iAnthus around. #marijuanastocks #potstocks $ITHUF $IAN $IAN.CN Read the full article

[capital10x]

iAnthus Is Back on a Path to Profitability after Solid Q2 Earnings Report

iAnthus Capital Holdings (CSE: IAN) had a strong Q2, posting growth in revenues and gross profit while shrinking net loss. Profitability is on the horizon. #marijuanastocks #potstocks $IAN Read the full article

[capital10x]

iAnthus Secures $50m Loan Deal to Accelerate National Expansion

iAnthus (CSE: IAN) has secured a $50 million loan from Torian Capital in order to boost expansion efforts in Florida, New York, New Jersey and Nevada. #marijuanastocks #potstocks $IAN $IAN.CN Read the full article

[capital10x]

iAnthus Unveils Plans for Miami Dispensary

Multi-state operator iAnthus Capital Holdings (CSE: IAN) will increase its Florida retail estate to six when it opens a site in Miami next week. #marijuanastocks #potstocks $IAN $IAN.CN Read the full article

[capital10x]

iAnthus Subsidiary Expands Retail Footprint with Dillard's Deal

iAnthus Capital Holdings (CSE: IAN) subsidiary CBD For Life has expanded its retail footprint via a nationwide deal with Dillard's department stores. #marijuanastocks #potstocks $IAN $IAN.CN Read the full article

[capital10x]

Interview with Hadley Ford CEO of iAnthus Capital Holdings

Capital 10X sat down with Hadley Ford, CEO of iAnthus Capital Holdings (CSE: IAN) to discuss his strategy for growing iAnthus' multi-state-operations. #marijuanastocks #potstocks Read the full article

[capital10x]

iAnthus Q1 2019 Earnings - The Storm Before the Calm

iAnthus (CSE: IAN) release 2019 Q1 earnings, the first after their big MPX acquisition. Revenues saw a big jump with their newly increased U.S. footprint. #marijuanastocks #potstocks Read the full article

[capital10x]

iAnthus Nominates Five New Independent Directors

Multi-state operator iAnthus (CSE: IAN) has announced plans to establish a new board with a majority of independent directors. #marijuanastocks #potstocks $IAN $IAN.CN Read the full article