Harvest Health & Recreation Inc. Reports Second Quarter 2021 Financial Results

Second quarter revenue was $102.5 million , up 84% from the second quarter 2020 and 15% sequentially
Second quarter net loss before non-controlling interest was $19.2 million , compared to $23.0 million in the first quarter 2021
Adjusted EBITDA was $28.0 million in the second quarter, compared to $26.9 million in the first quarter 2021
2021 revenue target of at least $400 million maintained

Harvest Health & Recreation Inc. ("Harvest" or the "Company") ( CSE: HARV OTCQX: HRVSF ), a vertically integrated cannabis company and multi-state operator in the U.S., today reported its financial and operating results for the second quarter 2021. All financial information is provided in U.S. dollars unless otherwise indicated.

Second Quarter 2021 Financial Results

Total revenue in the second quarter was $102.5 million , an increase of 84% from $55.7 million in the second quarter of 2020, and up 15% compared to $88.8 million in the first quarter of 2021.
Gross profit in the second quarter was $52.3 million , compared to $23.4 million in the second quarter of 2020, and $47.9 million in the first quarter of 2021.
Gross profit margin in the second quarter was 51.0%, compared to 42.1% in the second quarter of 2020 and 53.9% in the first quarter of 2021.
Net loss before non-controlling interest was $19.2 million for the second quarter, compared to $23.0 million in the first quarter of 2021.
Adjusted EBITDA in the second quarter was $28.0 million , compared to $26.9 million in the first quarter of 2021.

Please see the supplemental information regarding the use of Non-GAAP Financial Measures, and a reconciliation of Non-GAAP Financial Measures.

Second Quarter 2021 Business Highlights

On May 10, 2021 , Trulieve announced its planned acquisition of Harvest. Each Harvest shareholder is expected to receive 0.1170 shares of Trulieve for each Harvest share, representing total consideration of approximately $2.1 billion and a 34% premium to the May 7, 2021 closing price of the Harvest shares.
On May 7, 2021 , Harvest announced that a settlement was reached regarding the grower/processor permittee AGRiMED Industries of PA, LLC.
Harvest opened four new medical retail dispensaries in Florida in Lehigh Acres , North Miami Beach , Olympia Heights, and West Palm Beach and one new medical retail dispensary in York , Pennsylvania .
As of June 30, 2021 , Harvest owned, operated, or managed 42 retail locations in five states, including 15 open dispensaries in Arizona .

Recent Developments

In July, Harvest announced the conversion of the exercise price of select warrants to U.S. dollars and the acceleration of the expiry date of warrants issued in October 2020 .
On July 12, 2021 , Harvest filed a definitive proxy statement with the Securities and Exchange Commission and SEDAR for its annual and special shareholder meeting to be held on August 11, 2021 .
On July 15, 2021 , Harvest announced the divestiture of cultivation and processing assets in Utah for an immaterial amount of cash.
Harvest opened one new medical retail dispensary on July 15 ^th in South Miami Beach, Florida .
Harvest opened one new dispensary serving medical patients and adult use customers on August 6 ^th in Mesa, Arizona .
As of August 10, 2021 , Harvest owned, operated, or managed 44 retail locations in five states, including 16 open dispensaries in Arizona .

Outlook
Harvest is maintaining its full year 2021 revenue target of at least $400 million . Reported gross margins are expected to be at or above 50% and will likely continue to fluctuate from quarter to quarter.

Management Commentary
"Our second quarter results demonstrate continued momentum as Harvest builds scale and expands in its core markets" said Chief Executive Officer Steve White . "We are focused on our key operational and financial priorities in 2021 as we work toward closing the pending acquisition by Trulieve."

Conference Call & Webcast
Harvest Health and Recreation Inc. will host a conference call and audio webcast with Chief Executive Officer Steve White , Tuesday August 10, 2021 at 5:00 PM Eastern Time .

Registration for this event is required. Please use this link to register:
https://www.directeventreg.com/registration/event/5996545

Following registration, an email confirmation will be sent including dial in details and unique conference call codes. Registration will remain open during the call however we recommend advance registration to access the event.

Second quarter results will be available at:
https://investor.harvesthoc.com/financials/default.aspx

The live conference call webcast and replay will be available at:
https://investor.harvesthoc.com/financials/default.aspx

HARVEST HEALTH & RECREATION INC.
Consolidated Balance Sheets
*(Amounts expressed in thousands of United States dollars, except share data)*

	June 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	71,064	$	78,055
Restricted cash		3,000		4,542
Accounts receivable, net		8,788		5,051
Notes receivable, current portion		9,593		21,556
Related party notes receivable, current portion		10,276		10,052
Inventory, net		44,608		36,862
Other current assets		8,125		5,280
Total current assets		155,454		161,398
Notes receivable, net of current portion		10,516		18,211
Property, plant and equipment, net		179,182		176,827
Right-of-use assets for operating leases, net		113,395		60,843
Related party right-of-use assets for operating leases, net		5,541		5,621
Intangible assets, net		272,083		272,118
Corporate investments		40,924		19,091
Acquisition deposits		50		50
Goodwill		115,541		116,041
Assets held for sale		3,689		6,585
Other assets		19,672		19,850
TOTAL ASSETS	$	916,047	$	856,635
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current liabilities:
Accounts payable	$	7,988	$	10,755
Other current liabilities		30,434		28,896
Contingent consideration, current portion		10,398		17,985
Income tax payable		10,642		17,504
Operating lease liability, current portion		1,910		2,906
Related party operating lease liability, current portion		150		135
Notes payable, current portion		134,394		20,910
Total current liabilities		195,916		99,091
Notes payable, net of current portion		144,248		244,066
Warrant liability		3,438		20,908
Operating lease liability, net of current portion		112,731		58,637
Related party operating lease liability, net of current portion		5,518		5,595
Deferred tax liability		53,082		53,082
Total liabilities associated with assets held for sale		28		718
Other long-term liabilities		11		63
TOTAL LIABILITIES		514,972		482,160
STOCKHOLDERS' EQUITY
Capital stock		736,901		667,248
Accumulated deficit		(336,234)		(293,607)
Stockholders' equity attributed to Harvest Health & Recreation Inc.		400,667		373,641
Non-controlling interest		408		834
TOTAL STOCKHOLDERS' EQUITY		401,075		374,475
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	916,047	$	856,635

HARVEST HEALTH & RECREATION INC.
Consolidated Statements of Operations
*(Amounts expressed in thousands of United States dollars, except share and per share data)*

	For the three months ended June 30,
	2021		2020
Revenue, net of discounts	$	102,463	$	55,661
Cost of goods sold		(50,201)		(32,246)
Gross profit		52,262		23,415
Expenses
General and administrative		33,126		26,940
General and administrative, related party operating lease expense		201		200
Sales and marketing		1,224		1,248
Share-based compensation		3,741		3,276
Depreciation and amortization		2,641		725
Total expenses		40,933		32,389
Operating income (loss)		11,329		(8,974)
Other (expense) income
Loss on sale of assets		(21)		(2,783)
Other income		269		1,205
Fair value of liability adjustment		(8,353)		(1,497)
Fair value of contingent consideration		(4,500)		—
Foreign currency gain		17		30
Interest expense		(9,182)		(9,169)
Contract asset impairment		—		(2,420)
Loss before taxes and non-controlling interest		(10,441)		(23,608)
Income taxes		(6,834)		(1,132)
Net loss from continuing operations before non-controlling interest		(17,275)		(24,740)
Net loss from discontinued operations, net of tax		(1,954)		(905)
Net loss before non-controlling interest		(19,229)		(25,645)
Net income attributed to non-controlling interest		(276)		(1,929)
Net loss attributed to Harvest Health & Recreation Inc.	$	(19,505)	$	(27,574)
Net loss per share – basic and diluted	$	(0.04)	$	(0.07)
Attributable to Harvest Health and Recreation Inc.	$	(0.05)	$	(0.07)
Attributable to discontinued operations, net of tax	$	(0.00)	$	(0.00)
Weighted-average shares outstanding - basic and diluted		413,103,779		364,580,737

Use of Non-GAAP Financial Measures
This press release includes certain non-GAAP financial measures as defined by the SEC. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP are included below. This information should be considered as supplemental in nature and not as a substitute for, or superior to, any measure of performance prepared in accordance with GAAP. Our management uses adjusted EBITDA to evaluate our operating performance and trends and make planning decisions. Our management believes adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the items that we exclude. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by our management in its financial and operational decision-making.

Reconciliation of Non-GAAP Financial Measures
The table below reconciles Net loss to Adjusted EBITDA for the periods indicated.

	For the three months ended June 30,
*(Amounts expressed in thousands of United States dollars)*	2021		2020
Net loss (GAAP) before non-controlling interest	$	(19,229)	$	(25,645)
Add (deduct) impact of:
Net interest and other financing costs ⁽¹⁾		9,184		9,390
Income tax		6,834		1,132
Amortization and depreciation ⁽²⁾		3,532		1,803
Loss on sale of assets		21		2,783
Fair value of liability adjustment		8,353		1,497
Fair value of contingent consideration		4,500		—
Other income		(269)		(1,205)
Foreign currency gain		(17)		(30)
Share-based compensation expense		3,741		3,276
Contract asset impairment		—		2,420
Discontinued operations, net of tax		1,954		905
Other expansion expenses (pre-open)		3,371		2,323
Transaction & other special charges		6,047		956
Adjusted EBITDA (non-GAAP)	$	28,022	$	(395)

⁽¹⁾ Includes less than $0.1 million and $0.2 million of interest reported in cost of sales for the three months ended June 30, 2021 and 2020, respectively

⁽²⁾ Includes $1.1 million and $0.9 million of depreciation reported in cost of sales for the three months ended June 30, 2021 and 2020, respectively

Forward-looking Statements
This press release contains "forward-looking statements," within the meaning of United States and Canadian securities laws. Such statements reflect current estimates, expectations and projections about future events and involve risks and uncertainties relating to future events and Harvest's performance, and actual events may differ materially from these forward looking statements, which may be identified by the use of words such as, "may", "would", "could", "will", "likely", "expect", "anticipate", "believe, "intend", "plan", "forecast", "project", "estimate", "outlook" and other similar expressions. These forward looking statements include, without limitation, including statements regarding Trulieve Cannabis Corp.'s ("Trulieve") and Harvest's strategic business combination and the expected terms, timing and closing of the combination, estimates of pro-forma financial information of the combined company, Trulieve's and Harvest's expected financial performance for fiscal 2021, the combined operations and prospects of Trulieve and Harvest, the current and projected market and growth opportunities for the combined company and value for shareholders; current and anticipated shareholder demands and litigation in connection with the proposed transaction; our expectations for 2021 financial performance and targeted revenue and gross margin; prospects for revenue growth and profitability in our core markets and in the U.S. cannabis industry generally; our continued growth in retail dispensary openings, same store sales growth, recreational sales in Arizona , and expanded cultivation and manufacturing operations; the development of federal and state cannabis regulatory framework in the United States applicable to multi-state operators, including a delay in, or a failure to, federally decriminalize cannabis in the United States , as well as such frameworks in Harvest's core markets; adverse changes in the application or enforcement of current laws, including those related to taxation; adverse changes in the public perception of cannabis; the effects of the weather, natural disasters, and health pandemics, including recent renewed resurgence of the novel coronavirus (COVID-19) on customer demand, Harvest's supply chain as well as its consolidated results of operation, financial position and cash flows; the ability of Harvest to develop Harvest's brand and meet its growth, revenue and profitability projections and objectives; its ability to generate sufficient cash flow to repay debt obligations and to fund operating expenses and future investment; the ability of Harvest to complete planned acquisitions that are accretive to its revenue; the ability of Harvest to obtain and/or maintain licenses to operate in the jurisdictions in which it operates or in which it expects or plans to operate; changes in general economic, business and political conditions, including changes in the financial markets, and, in particular, the ability of Harvest to raise debt and equity capital in the amounts and at the costs that it expects; the ability to locate and acquire suitable companies, properties or assets necessary to execute on Harvest's business plans; the ability of Harvest to execute planned store openings and secure cannabis supply at appropriate amounts and cost; fluctuations in the prevailing prices for cannabis and cannabis products in the markets that Harvest operates in and sources supply; its ability to resolve existing and future litigation and arbitrations on acceptable terms; and increasing costs of compliance with extensive government regulation. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. In addition, even if the outcome and financial effects of the plans and events described herein are consistent with the forward-looking statements contained in this document, those results or developments may not be indicative of results or developments in subsequent periods.

Forward-looking statements involve significant risks, assumptions, uncertainties and other factors that may cause actual future results or anticipated events to differ materially from those expressed or implied in any forward-looking statements. Please see the heading "Risk Factors" in Harvest's Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission and in Harvest's Annual Information Circular, which was filed on SEDAR, both of which were filed on March 30, 2021 , and in our Form 10-Q for the quarter ended March 31, 2021 , which was filed with the SEC and SEDAR on May 13, 2021 , and in all subsequent filings that Harvest makes with the Securities and Exchange Commission and SEDAR, for a discussion of the material risk factors that could cause actual results to differ materially from the forward-looking information. Harvest does not undertake to update any forward-looking statements that are included herein, except in accordance with applicable securities laws.

About Harvest Health & Recreation Inc.
Headquartered in Tempe, Arizona , Harvest Health & Recreation Inc. is a vertically integrated cannabis company and multi-state operator. Since 2011, Harvest has been committed to expanding its retail and wholesale presence throughout the U.S., acquiring, manufacturing, and selling cannabis products for patients and consumers in addition to providing services to retail dispensaries. Through organic license wins, service agreements, and targeted acquisitions, Harvest has assembled an operational footprint spanning multiple states in the U.S. Harvest's mission is to improve lives through the goodness of cannabis. We hope you'll join us on our journey: https://harvesthoc.com

Facebook: @HarvestHOC
Instagram: @HarvestHOC
Twitter: @HarvestHOC

View original content: https://www.prnewswire.com/news-releases/harvest-health--recreation-inc-reports-second-quarter-2021-financial-results-301352511.html

SOURCE Harvest Health & Recreation Inc.

View original content: https://www.newswire.ca/en/releases/archive/August2021/10/c4620.html

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cannabis investing harv:cnx

Cannabis leaf on road marked with "2025," with sunlight in the background.

New Cannabis Consumption Trends, Regulatory Shifts Seen Driving Market in 2025

Understanding trends in the cannabis industry is paramount for investors eyeing a market with steady growth potential, but the landscape is complex as products and regulations continue to evolve.

Consumption habits are changing as edibles, vaping and THC beverages gain traction, especially among younger users, and cannabis companies are adapting their offerings to meet shifting demand.

Meanwhile, regulatory uncertainty, particularly surrounding the future of the US Farm Bill and state-level restrictions on hemp-derived cannabinoids, continues to challenge the market.

Despite these headwinds, production data and long-term growth forecasts suggest the cannabis industry remains on a promising — albeit turbulent — path. Read on for more on key trends to watch in 2025.

Consumption methods evolving post-legalization

Shifts in consumer behavior are reshaping markets across the board, and the cannabis industry is no exception.

While smoking remains the dominant method of cannabis consumption, a recent report from the Centers for Disease Control and Prevention highlights the growing popularity of edibles, vaping and dabbing.

The report notes that vaping and dabbing are particularly pronounced among younger adults.

A separate study published by the American Medical Association and funded in part by the Canadian Institutes of Health Research also points to how product preferences have changed among Canadian users since legalization in 2018.

The study indicates that while the use of flower, cannabis concentrates, oil, tinctures and topicals has decreased during that time, the use of vape cartridges, edibles and beverages has increased.

Edibles and beverages were legalized in Canada in late 2019, and Truss Beverage was one of the first players to introduce cannabis-infused drinks. Truss was a joint venture formed by Molson Coors Canada (TSX:TPX.A,TSX:TPX.B) and HEXO, a cannabis company that has since been acquired by Tilray Brands (TSX:TLRY,NASDAQ:TLRY).

In early 2020, Tilray launched a lineup of confectionery, wellness products and beverages through its subsidiary, High Park; Canopy Growth (TSX:WEED,NASDAQ:CGC) made a similar move. These companies gradually brought their products to the US as more states legalized cannabis for medical and/or recreational use.

Today, established cannabis brands typically offer edibles and beverages alongside their other products. Organigram Global (TSX:OGI,NASDAQ:OGI) is one of the newest US entrants, with its April acquisition of Collective Project providing immediate access to the US hemp-derived THC beverage market.

Growing awareness of health and wellness, potentially amplified by the pandemic-led adoption of health trackers, appears to be making an impact on the alcoholic beverage market.

A 2023 Gallup poll reveals a two decade decline in alcohol consumption, particularly among younger adults, suggesting a shift towards more health-conscious lifestyles within this demographic.

Craft beer production declined by 4 percent year-on-year in 2024, according to data collected by the Brewers Association. This marked the largest drop in the industry's history, excluding the pandemic. For small, independent craft breweries, 2024 marked the third consecutive year of declining production. A drop in the number of operating small breweries last year provides further evidence of this trend, with 501 closures in 2024 versus 434 openings.

Challenges in the alcohol market extend beyond the brewing industry, with the New York Times recently reporting the closure of a handful of nightclubs facing decreased alcohol sales alongside rising insurance and rent costs.

Meanwhile, cannabis lounges have been popping up across the US for the last several years. As of early 2025, several states had legalized or were in the process of implementing regulations for cannabis consumption lounges.

Hemp market growth despite regulatory uncertainty

The burgeoning hemp industry is another segment of the expanding cannabis market.

The legalization of industrial hemp — defined as cannabis with a THC concentration of 0.3 percent or less — through the 2018 Farm Bill led to initial investment and optimistic projections for CBD wellness products and various industrial applications. The sector’s rapid evolution also brought the rise of hemp-derived intoxicating cannabinoids, creating a market that presented both opportunities and complexities for participants.

However, after an initial boom, a lack of infrastructure and clearly defined regulations for CBD, as well as state-level variations and market oversupply, ultimately contributed to a quick retraction.

2024 was a pivotal year for the US hemp industry, as the hemp-related provisions of the 2018 Farm Bill — originally set to expire in September 2023, but extended to December 31, 2024 — created an urgent need to address critical issues like THC limits and the regulation of novel hemp-derived cannabinoids. A major point of contention was the proposed shift from defining hemp based on Delta-9 THC concentration (0.3 percent or less) to “total THC,” which includes THCA.

This change had the potential to significantly impact farmers and processors, as many hemp varieties that are compliant under the Delta-9 THC rule could exceed the 0.3 percent limit when THCA is included.

Various bills and amendments were proposed in 2024 as part of the Farm Bill discussions, each with different approaches to regulating hemp. Separate regulatory frameworks for industrial hemp and hemp grown for cannabinoids were suggested, and many states took their own action, leading to a patchwork of regulations and even outright bans.

Despite challenges, data from the US Department of Agriculture suggests signs of recovery.

The department's annual National Hemp Report from 2024 points to an 18 percent increase in industrial hemp production value between 2022 and 2023, with output growth seen in specific sectors like floral (18 percent), fiber (133 percent) and seed hemp (414 percent). The 2025 report from the Department of Agriculture indicates further expansion, with notable increases observed in both acreage (up 64 percent from 2023) and value (46 percent).

The 2024 Farm Bill ultimately did not pass, and right now the hemp industry is operating under a temporary extension of the 2018 Farm Bill under the American Relief Act of 2025, signed into law on December 21, 2024.

The 2018 Farm Bill is now set to expire on September 30, 2025.

While analysts for Markets and Markets project that the North American hemp industry will grow at a CAGR of 22.4 percent and ultimately reach a valuation of US$30.24 billion by 2029, the future of the industry will be heavily influenced by the outcome of the ongoing Farm Bill discussions.

US cannabis legalization remains stalled

Although there is clear demand for cannabis products, the now-defunct rescheduling process in the US is likely to continue casting a shadow of uncertainty over the industry's long-term trajectory.

Legal and procedural delays, including allegations of improper conduct and bias within the US Drug Enforcement Administration (DEA), led to hearing cancellations, and the new administration of US President Donald Trump has brought leadership changes to key agencies like the DEA and the Department of Justice.

Terry Cole, who Trump nominated to be DEA administrator on February 11, has a history of opposing cannabis legalization in the country. Similarly, Pam Bondi, Trump’s pick to lead the justice department, staunchly opposed a movement to legalize medical cannabis during her tenure as Florida’s attorney general.

While there have been bipartisan efforts in Congress to end federal cannabis prohibition and establish regulations for eventual legalization, the DEA’s actions and statements indicate a potential stall or reversal of progress.

In addition to that, new research is adding complexity to the debate.

A study published in the American Journal of Psychiatry this past March highlights an association between the use of high-potency cannabis strains and increased risks of psychosis, a factor that may not have been fully considered by the Department of Health and Human Services. As stronger cannabis strains become more widely available, a reassessment of their potential health risks may be required.

Investor takeaway

While the cannabis industry holds promise for growth and innovation, investors must remain acutely aware of the regulatory uncertainties and market volatility that will undoubtedly shape its trajectory in the years to come.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.

Harvest Health & Recreation Inc. Reports Second Quarter 2021 Financial Results

In this article

Guide to cannabis in Australia: New South Wales

Guide to cannabis in Australia: Victoria

Guide to cannabis in Australia: Queensland

Guide to cannabis in Australia: South Australia

Guide to cannabis in Australia: Western Australia

Guide to cannabis in Australia: Tasmania

Guide to cannabis in Australia: Northern Territory

Guide to cannabis in Australia: Australian Capital Territory

Consumption methods evolving post-legalization

Hemp market growth despite regulatory uncertainty

US cannabis legalization remains stalled

Investor takeaway

1. Botanix Pharmaceuticals (ASX:BOT)

2. Vitura Health (ASX:VIT)

3. IDT Australia (ASX:IDT)

4. Little Green Pharma (ASX:LGP)

5. Neurotech (ASX:NTI)

6. ECS Botanics (ASX:ECS)

7. Cann Group (ASX:CAN)

8. Althea (ASX:AGH)

9. Ecofibre (ASX:EOF)

10. Argent Biopharma (ASX:RGT)

Road to cannabis rescheduling hits another speed bump

Pennsylvania governor proposes legal cannabis market in state budget

Senate committee re-examines the SAFER Banking Act

Aurora, Canopy Growth report earnings

US lawmakers unlikely to prioritize banking reform

Cannabis rescheduling meets delays and controversies

Virginia makes progress on adult-use cannabis

Tilray sees growth across all segments in quarterly results

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