Can iAnthus’s New Financing Plan Drive Growth?

Yesterday, iAnthus Capital Holdings (IAN) (ITHUFannounced a new $100 million financing plan. According to the press release, Gotham Green Partners (or GGP) is to invest an additional $100 million in iAnthus to fund its expansion plans in existing markets. As part of the deal, GGP has invested $20 million in iAnthus by purchasing senior secured convertible notes. Last year, GGP invested $50 million in the company.

In the press release, iAnthus CEO Hadley Ford said, “We believe this level of support from GGP will fully fund the development of our existing assets and provide the necessary capital for iAnthus to achieve positive and sustainable EBITDA and operational free cash flow in 2020.

Furthermore, iAnthus COO Pat Tiernan stated that of the company’s 27 operating dispensaries, 11 had opened in the last ten months. He added that iAnthus is planning to open 12 more dispensaries in the next six months.

Can iAnthus’s New Financing Plan Drive Growth?

iAnthus’s stock performance

This year, iAnthus stock had fallen 66.2% as of yesterday. The company canceled its executive stock options and reissued them at a lower price earlier this year, which appears to have not gone well with investors. Additionally, higher operating expenses, regulatory scandals, and concerns over vaping-related diseases have weakened the cannabis sector, dragging down iAnthus stock.

On August 26, iAnthus reported its second-quarter results. In the quarter, the company’s revenue doubled sequentially to $19.2 million. Its adjusted gross margins improved from 23.4% to 52.4%.

Peer comparison

This year, iAnthus has underperformed peers and broader equity markets. MedMen Enterprises (MMEN) and The Green Organic Dutchman (TGOD) have fallen 49.6% and 17.5%, respectively. Meanwhile, Curaleaf (CURA) (CURLF) has risen by 11.0%.

On August 13, MedMen announced its preliminary systemwide revenue for the fourth quarter was $61 million. Since then, the company has introduced delivery services in California and Nevada. It has also opened three stores in Florida.

Curaleaf missed estimates in the second quarter. However, the company’s optimistic outlook for fiscal 2020 boosted its stock. To learn more, read Curaleaf: Analysts’ Target Price and Ratings.

After Aurora Cannabis (ACB) sold its stake in The Green Organic Dutchman last month, TGOD stock fell. Recently, the company announced Ontario customers had responded favorably to its organic products.