Key Takeaways; Cannabis Sector
Cannabis REIT IIPR generated record revenue of $70.5 million in the second quarter.
Green Thumb Q2 revenue increased 5%, to $254 million.
Scotts Miracle-Gro share price soared, despite the company missing earnings estimates.
Key Takeaways; Psychedelic Sector
Awakn received CA$2.5 government funding for phase III trial.
July was a great month for cannabis stocks, as more companies reported their second quarter financial results. Looking ahead to August, we expect the sector to continue the good performance as more companies are expected to announce their financial reports. Below is a weekly roundup on the top companies that dominated the headlines in the cannabis and psychedelic sectors with top deals and good earnings reports.
Top Marijuana Companies for Week
#1: Innovative Industrial Properties
Innovative Industrial Properties, Inc. (NYSE: IIPR) the first and only real estate company listed on the New York Stock Exchange, focusing on the regulated U.S. cannabis industry, announced the results for the second quarter ended June 30, 2022 on August 3, 2022.
For the three months that concluded on June 30, 2022, IIP generated total revenues of about $70.5 million, up from around $48.9 million for the same period in 2021, or a 44% gain. According to the company, the main drivers of the record increase in revenue were, acquisition and leasing of new properties, additional improvement allowances and construction funding at existing properties that resulted in base rent adjustments, and contractual rental escalations at certain properties.
As of August 6, 2022, IIP owned 110 properties spread across the various states in the USA, totaling about 8.6 million rentable square feet. The company has also invested about $2.1 billion across its portfolio, which includes the purchase price, construction funding, and improvements reimbursed to tenants. Additionally, the company has committed an additional $209.6 million to pay for draws made by its tenants.
#2: Green Thumb
Revenue grew to $254.3 million from $221.9 million in the same quarter previous year, a 4.8% sequential rise and a 14.6% year-over-year gain. This easily beat the Yahoo Finance average analyst estimates for sales of $248 million.
Additionally, the company outperformed analysts’ forecasts of $0.04 in earnings. In the second quarter of 2022, net income was $24.4 million, or $0.11 per basic share and $0.10 per diluted share, as opposed to the prior year’s second quarter, when net income was $22.1 million, or $0.10 per basic and diluted share.
According to GTI, the legalization of adult-use cannabis in New Jersey and Illinois, as well as the addition of 19 retail locations compared to the second quarter of last year, were the main drivers of revenue growth. Additionally, the company’s 77 open and operating retail stores saw an increase in foot traffic.
“We are pleased with our second quarter results, especially in this challenging economic environment. Five percent revenue growth and greater than 300 basis point improvement in Adjusted EBITDA margins over the previous quarter demonstrate the results of our focus. We continue to maintain a strong balance sheet, which gives us ample flexibility to support our growth initiatives,” said Green Thumb Founder, Chairman, and Chief Executive Officer Ben Kovler.
#3: Scotts Miracle-Gro
The lawn care and hydroponics company reported its third-quarter results for the period ending July 2, 2022, and revenues decreased by 26% to $1.19 billion, with decreases in both major business sectors; sales for the U.S. consumer division fell 14% to $904.5 million from $1.05 billion, while sales for the hydroponic company Hawthorne dropped by 63% to $154.5 million from $421.9 million in the same period last year.
Moreover, the sales of $1.23 billion were below the average analyst expectation on Yahoo Finance.
Scotts reported a $8.01 GAAP net loss per share, which includes pre-tax restructuring and impairment costs of $724.2 million. The non-GAAP adjusted earnings per share, which is the basis of the Company’s guidance, was $1.98.
However, on a positive note, SG&A declined 30% to $135.8 million as a result of cost-cutting initiatives and lower accruals for yearly incentive compensation.
Top Psychedelic Company for Week
Awakn Life Sciences Corp. (NEO: AWKN) (OTC: AWKNF), a commercial biotechnology company that generates revenue by researching, developing, and commercializing therapeutics to treat addiction with a near-term focus on alcohol use disorder (AUD), announced in July that the National Institute for Health and Care Research (NIHR), a UK government organization, had approved grant funding for 66% of the costs of Awakn’s Phase III clinical trial, which investigates the use of ketamine-assisted therapy for the treatment of AUD. It is estimated that the trial will cost CA$3.75 million in total, with Awakn funding approximately CA$1.25 million of that.
The funding will go toward Project Kestrel, which is Awakn’s primary clinical development program that aims to produce clear Intellectual Property and marketing authorization/regulatory approval for ketamine-assisted therapy for treating AUD in the US and the UK.
The Phase III trial is anticipated to be the largest ketamine-assisted treatment clinical trial to date and the only Phase III psychedelic clinical trial to ever receive government funding. To carry out the historic trial, Awakn will collaborate with the University of Exeter (UoE) and the UK’s National Health Service (NHS).
Professor Celia Morgan, Head of Ketamine-Assisted Therapy at Awakn and University of Exeter Professor of Psychopharmacology, will be in charge of the Phase III trial.
The CEO of Awakn, Anthony Tennyson, commented: “We are pleased with today’s news for several reasons. A government showing such strong support for this new type of treatment is a global first. Secondly, working with the NHS to deliver the treatment in their existing infrastructure is a huge statement of intent, but most importantly, for so many millions of people around the world suffering from alcohol addiction, a new treatment hope has just got one big ‘step’ closer. I could not be prouder of the Awakn team and our partners for making this a reality.”
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