Jushi Holdings Inc (OTCMKTS:JUSHF) (CNSX:JUSH) has made three major purchases recently, continuing its ongoing expansion across the U.S. The most recent acquisitions are Nature’s Remedy and OhiGrow. However, the cannabis company also recently purchased a massive 93,000-square-foot facility operated by its subsidiary Dalitso and about nine acres of surrounding land in Virginia.
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Jushi Holdings makes two more acquisitions
Jushi Holdings announced the acquisition of OhiGrow, one of 34 licensed cannabis cultivators in Ohio, and Ohio Green Grow for a total of $5 million in cash, including a 10,000-square-foot facility and 1.35 acres of land.
Jushi provides operational and consulting services to a medical cannabis processing facility in Ohio, and OhiGrow will complement the soon-to-be operational facility. Jushi is a vertically integrated, multi-state cannabis operator, and the company said it would continue to look for opportunities to integrate vertically in Ohio, possibly including retail opportunities.
Nature's Remedy is a vertically integrated Massachusetts operator, and the expansion increased Jushi's footprint to seven states. Nature's Remedy operates two retail dispensaries in the state, bringing Jushi's dispensary count to 19. It also operates a 50,000-square-foot cultivation and production facility with 19,500 square feet of high-quality indoor flower canopy and extraction and manufacturing capabilities. Jushi agreed to pay $110 million for the company.
Analyst comments on the expansion
In a note, Canaccord Genuity analyst Bobby Burleson noted that the Nature's Remedy acquisition adds about 6,800 pounds of flower output per year. He feels that the terms of the deal were attractive, pointing out that Jushi cited multiples of less than five times forward EBITDA.
The deal is expected to close in four to six months, so Burleson raised his estimates on a solid outlook for retail store and wholesale revenue and EBITDA. He expects the mix to be skewed a bit more toward wholesale because an expansion of the flower canopy should be complete by the time the transaction closes. The analyst expects some positive impact in the fourth quarter and a full year of benefit in 2022.
Burleson noted that the Nature's Remedy acquisition broadens Jushi's state footprint, and he sees attractive retail store and wholesale profiles for the company. He sees plenty of headroom for its production assets to expand. More stores will be allowed and haven't been included in his numbers. Burleson explained that one adult-use store and three medical stores would be allowed, with one to be co-located.
He maintained his Speculative Buy rating and $10 price target on Jushi Holdings. Burleson did not factor in the OhiGrow acquisition because it was announced after he wrote his report on Nature's Remedy. Jushi Holdings stock tumbled by about 5% in the U.S. as cannabis stocks in general plunged. Tilray Inc (NASDAQ:TLRY) was down 8%, while Aurora Cannabis Inc (NYSE:ACB) fell 5%, and Canopy Growth Corp (NASDAQ:CGC) declined 6%.
