Comp tables as of March 30, 2020: Multiples expand as US estimates decline

Average trading multiples for U.S.-focused operators expanded to 1.9X 2020 sales and 10.1X 2020 EBITDA from last week’s 1.7X and 8.1X, respectively, because of a decline in estimates as the average stock price was flattish.

Canada-focused operators still trade at a premium on sales compared to U.S. operators, despite a smaller market and lower margins, but they now trade in line on EBITDA at 4.5X 2020 sales and 10.2X 2020 EBITDA, compared with last week’s 3.5X and 8.1X, respectively.

The only problem with saying they trade in line is that most of the Canadian operators don’t have positive EBITDA to even calculate the multiple – supporting our contention that U.S.-focused operators are fundamentally more attractive.

Twelve of the 17 U.S. operators on our sheet have an EBITDA multiple for 2020, while only three of the 16 Canadian operators have a multiple.

While these valuations are low compared to past weeks, they are reasonable for normal industrial- and consumer-focused companies.

The average stock price for U.S.-focused vertically integrated operators was flat for the week and remains down 48% year to date, while the average for Canadian-focused vertically integrated operators increased 13% for the week and remains down 46% year to date.

For context, the S&P 500 increased 6% for the week and is down 19% year to date.

This week, we removed CannTrust because it is halted indefinitely and its multiples fall into the “not meaningful” category. This removal will improve the performance metrics of the stock prices.

We also updated MedMen for its recapitalization and have assumed it will raise another $50 million through the credit facility. We also assumed Hexo will raise the CA$40 million in equity as required by its credit facility.

As we noted in our commentary on the correction, cannabis stocks are “high beta,” meaning they will move more than the market in both good times and bad.

These comp tables provide a benchmark for private investors to evaluate existing and future investments and a way for companies to judge their own valuations for current and future capital raises, as well as a menu for public investors to peruse.

Tracking the multiples and estimates over time can show how the returns of the stock are decomposed in changes in expectations (sales and EBITDA estimates) and the cost of capital (i.e., multiples applied to those estimates).

The shares outstanding and net debt levels for most companies have been adjusted for future dilution by including in-the-money warrants, options, convertible debt and shares to be issued in pending acquisitions.

The comp tables organize companies into groups based on the main business model (U.S.-focused vertically integrated operators, Canada-focused vertically integrated operators, hemp/CBD, pharmaceutical and ancillary products and services).

These tables also list the equity market capitalization, enterprise value (EV), sales and EBITDA estimates as well as the EV/sales and EV/EBITDA multiples on those projections.

Everything is converted, calculated into and listed as U.S. dollars.

Nonmeaningful outliers are removed before the averages by group are calculated.

These comp tables compute enterprise value as the greater of market capitalization or market capitalization plus net debt.

This is a middle road. It does not penalize companies that have high gross debt and high gross cash levels, but it also reflects that companies with high net cash levels will be using that cash in their operations.

Are there companies missing from this table? A metric you believe is relevant to include? A feature you’d like to see?

Email us at [email protected] and let us know.

Download the PDF or the sortable excel spreadsheet for more details about each company, including estimates for 2020 and 2021.

Priced as of March 30, 2020.

Name Ticker Market Cap Enterprise Value EV/Sales 2020E EV/EBITDA 2020E Sales 2020E Sales Growth 2020E EBITDA Margin 2020E
US-Focused Vertically Integrated Operators
4Front Ventures Corp. FFNTF  $          166  $             211 2.1X 20.1X  $  102 303% 10%
Acreage Holdings ACRGF  $          327  $             327 1.1X n.m.  $  289 86% 1%
Cansortium CNTMF  $             14  $             103 1.1X 4.1X  $    95 215% 27%
Columbia Care CCHWF  $          491  $             491 2.2X n.m.  $  220 184% -6%
Cresco Labs CRLBF-US  $       1,391  $         1,391 2.7X 13.1X  $  521 298% 20%
Curaleaf Holdings CURLF  $       3,042  $         3,124 4.1X 19.4X  $  764 246% 21%
Green Thumb Industries GTBIF  $          784  $             890 2.0X 8.2X  $  441 104% 25%
Harvest Health & Recreation HRVSF  $          387  $             580 2.2X 11.8X  $  269 126% 18%
iAnthus Capital Holdings ITHUF  $             96  $             200 0.9X 6.5X  $  220 153% 14%
Liberty Health Sciences LHSIF  $          117  $             119 n.m. n.m.  n.m. n.m. n.m.
Medicine Man Technologies MDCL  $          135  $             195 1.3X 5.0X  $  151 5% 26%
MedMen Enterprises MMNFF  $          514  $             514 2.1X n.m.  $  242 51% -23%
MJardin Group MJARF  $               8  $             145 3.3X 26.4X  $    44 84% 12%
Planet 13 Holdings PLNHF  $          139  $             139 1.5X 5.1X  $    93 46% 29%
Slang Worldwide SLGWF-US  $             34  $               34 0.3X 1.8X  $  114 375% 17%
Trulieve Cannabis Corp. TCNNF  $          988  $         1,060 2.7X 6.8X  $  397 58% 39%
Vireo Health International VREOF  $             51  $               51 0.6X 3.8X  $    88 203% 16%
Average – US-Focused Vertically Integrated Operators  $          511  $             563 1.9X 10.1X  $  253 159% 15%
Name Ticker Market Cap Enterprise Value EV/Sales 2020E EV/EBITDA 2020E Sales 2020E Sales Growth 2020E EBITDA Margin 2020E
Canada-Focused Vertically Integrated Operators
48North Cannabis Corp. NCNNF  $             20  $               20 1.0X n.m.  $    20 151% -11%
Aphria APHA-TSE  $          818  $             849 1.9X 18.2X  $  454 53% 10%
Aurora Cannabis ACB  $       1,178  $         1,478 5.7X n.m.  $  261 32% -22%
Auxly Cannabis Group Inc. XLY-CNQ  $          156  $             160 2.7X n.m.  $    59 n.m. -9%
Canopy Growth Corp. CGC  $       5,403  $         5,403 11.3X n.m.  $  477 71% -41%
Cronos Group CRON  $       2,379  $         2,379 22.7X n.m.  $  105 341% -39%
Emerald Health Therapeutics EMHTF  $             28  $               44 n.m. n.m.  n.m. n.m. n.m.
Flowr Corp. FLWPF  $             40  $               40 0.8X n.m.  $    47 870% -7%
The Green Organic Dutchman Holdings TGODF  $             60  $               60 2.7X n.m.  $    22 176% -69%
GTEC Holdings GTEC-TSX  $               9  $               12 n.m. n.m.  n.m. n.m. n.m.
Harvest One Cannabis HRVOF  $             11  $               12 0.9X n.m.  $    14 53% -52%
Hexo Corp. HEXO  $          253  $             253 3.4X n.m.  $    74 70% -32%
Organigram Holdings OGI  $          342  $             363 3.1X 11.7X  $  118 61% 26%
Tilray TLRY  $          919  $         1,116 4.5X n.m.  $  246 47% -28%
Village Farms International VFF  $          175  $             250 1.2X 6.1X  $  217 19% 19%
WeedMD WMD-CA  $             61  $               82 1.0X 4.6X  $    79 323% 22%
Average – Canada-Focused Vertically Int. Ops.  $          741  $             782 4.5X 10.2X  $  157 175% -17%
Name Ticker Market Cap Enterprise Value EV/Sales 2020E EV/EBITDA 2020E Sales 2020E Sales Growth 2020E EBITDA Margin 2020E
Hemp / CBD
cbdMD YCBD  $             51  $               51 0.8X n.m.  $    65 109% -5%
Charlotte’s Web Holdings CWBHF  $          530  $             530 3.5X n.m.  $  152 39% -8%
CV Sciences CVSI  $             74  $               74 2.3X n.m.  $    32 -41% -26%
Elixinol Global ELLXF  $             24  $               24 1.3X n.m.  $    18 0% -53%
Emerald Health Therapeutics EMHTF  $             28  $               44 n.m. n.m.  n.m. n.m. n.m.
Green Growth Brands GGBXF  $             33  $             133 1.1X n.m.  $  120 167% -17%
Neptune Wellness Solutions NEPT-CA  $          113  $             113 1.9X n.m.  $    60 178% -2%
Average – Hemp / CBD  $          122  $             138 1.8X n.m.  $    74 75% -19%
Name Ticker Market Cap Enterprise Value EV/Sales 2020E EV/EBITDA 2020E Sales 2020E Sales Growth 2020E EBITDA Margin 2020E
Pharmaceutical
Arena Pharmaceuticals ARNA  $       2,196  $         2,196 n.m. n.m.  $      7 -99% n.m.
Cara Therapeutics CARA  $          621  $             621 32.0X n.m.  $    19 -2% n.m.
Corbus Pharmaceuticals Holdings CRBP  $          404  $             404 33.0X n.m.  $    12 -66% n.m.
GW Pharmaceuticals GWPH  $       2,617  $         2,617 4.9X n.m.  $  536 72% -4%
MediPharm Labs Corp. MEDIF  $          160  $             160 1.6X 8.3X  $    98 8% 20%
Ultragenyx Pharmaceutical RARE  $       2,647  $         2,647 14.7X n.m.  $  180 73% n.m.
Zynerba Pharmaceuticals ZYNE  $             86  $               86 n.m. n.m.  $   – n.m. n.m.
Average – Pharmaceutical  $       1,247  $         1,247 17.2X 8.3X  $  122 -2% 8%
Name Ticker Market Cap Enterprise Value EV/Sales 2020E EV/EBITDA 2020E Sales 2020E Sales Growth 2020E EBITDA Margin 2020E
Ancillary Products & Services
Akerna Corp. KERN  $             72  $               72 3.4X n.m.  $    21 69% -51%
Canopy Rivers CNPOF  $          115  $             115 3.9X 7.0X  $    30 127% 55%
Greenlane Holdings GNLN  $             83  $               83 0.6X n.m.  $  135 -27% -8%
GrowGeneration Corp. GRWG  $          171  $             171 1.3X 13.4X  $  133 67% 10%
Innovative Industrial Properties IIPR  $       1,337  $         1,158 10.7X 12.3X  $  108 141% 88%
KushCo Holdings KSHB  $             82  $               93 0.6X n.m.  $  169 14% -8%
MediPharm Labs Corp. LABS-CA  $          157  $             157 1.6X 8.2X  $    98 8% 20%
New Age Beverages Corp. NBEV  $          118  $             139 0.5X n.m.  $  257 1% -8%
Scotts Miracle-Gro Co. SMG  $       6,035  $         8,205 2.4X 13.9X  $ 3,401 6% 17%
Supreme Cannabis Co. FIRE-CA  $             74  $             141 2.4X n.m.  $    58 72% -4%
The Valens Co. VGWCF  $          226  $             226 1.8X 4.2X  $  125 149% 43%
Average – Ancillary Products & Services  $          770  $             960 2.7X 9.8X  $  412 57% 14%
Cannabis Special Purpose Acquisition Corporations
Name Ticker Exchange
Merida Merger Corp. I MCMJ Nasdaq
Greenrose Acquisition Corp. GNRSU Nasdaq
Stable Road Acquisition Corp. SRACU Nasdaq
Silver Spike Acquisition Corp. SSPKU Nasdaq
Tuscan Holdings Corp. II THCA Nasdaq
Tuscan Holdings Corp. THCB Nasdaq
New Providence Acquisition Corp. NPAUU Nasdaq
Act II Global Acquisition Corp. ACTT Nasdaq
Subversive Real Estate Acquisition REIT SVX.UT-NEOE NEO
Collective Growth Corp. CGROU Nasdaq

Source: FactSet financial data and analytics, company filings and Investor Intelligence analysis.