This company has been all over the news lately.
Well, now that you’re up to recent events with this outfit, let’s catch up with their long-delayed-awaited statements (as our last Structure was published in November 2019!!).
To the financials!
- Cash on hand, $34MM. Inventory down $5MM to one quarter’s worth of sales
- Revenues of $26MM (up $4MM QoQ). $12MM COGS, running at a crisp 44% margin. Their improvement and run rate here is the story of these financials. $79MM for the year in sales.
- And Professional Fees of $17MM, SBC of $20.5MM, G&A of $19MM, and $234MM in impairments.
- Add in interest expense and accretions, iAnthus lost more than $304MM last year. More below.
- Wow, employee costs north of $55MM on the year, $11MM in the quarter. Yikes.
- The impairments were entirely attributed to Goodwill. iAnthus has always had their business segmented to ‘east’ / ‘west’, and took goodwill respectively at $74MM & $161MM in the units.
- Man, these are the last statements that are going to look anything like these. The changes in the capital structure that GothamGreen has installed will alter this balance sheet irrevocably.
- 24 dispensaries open and operating in the ‘East’, 12 in the ‘West’. And unlike $TGIF, it looks like this outfit can grow and sell. It’s a shame corporate charges squash the business.
- We see they assume the internal cost of capital is at 23%, against a market growth rate of 3%. Oof.
- 6 pages of Note 10 (Long Term Debt) is about to double.
Ok, that’s about all of the ‘big’ stuff. Seriously, I could try to be like a Dutch kid putting fingers all over this dyke, but it’d be a losing proposition.
This is an outfit drowning in debt and debt service. That their primary lender pulled the pin on them says it clearly. And I can’t emphasize how much and many things have changed for $iAN over the past 9 months, and how different not only Q1 F2020 will look like, but what’s yet to be booked. Them thar ‘Professional Fees’ are about to see an upgrade given these guys will need a full partner/Practice Lead to personally review terms.
Regarding that $304MM loss, I think it might be reported higher. There’s an odd re-val in their Note 14 (Financial Instruments) that looks to be a plug. It’s $36.476MM, under ‘Derivative Liabilities’. I can’t back into it, but it’s been reported as a gain. Ascribed to be a gain on ‘derivatives’ due to share price decline, this should be way clearer. If there’s a restatement, this is where it’ll come from:
From here, it’s just going to get complicated in terms of their balance sheet.
There’s a business in there, and I suspect there’s a couple of gems laying around their storefronts. Which, it probably the juice that Gotham’s looking to squeeze. This company was on life-support, and it’s now flatlined. The ‘Blue Team’ has run down the corridor, and is trying to save the patient. I’d look for some serious ‘cost’ reductions in headcount/wages, and perhaps an initial shop around of the middling assets. The creditors are going to make out fine.
The preceding is the opinion of the author, and is in no way intended to be a recommendation to buy or sell any security or derivative. The author holds no position in $iAN