MedReleaf Corp. (TSX:LEAF) said it has completed the purchase of one million sq. ft. of existing greenhouse infrastructure
SmallCapPower | April 16, 2018: MedReleaf Corp. (TSX:LEAF) shares jumped nearly 10% on Thursday after the Company announced completion of the purchase of a 164-acre property at Exeter, Ontario, comprising one million sq. ft. of existing greenhouse infrastructure on a 69-acre property, and 95 acres of adjacent land. The total purchase price for the transaction was $26 million, comprising $21.5 million in cash and 225,083 common shares of MedReleaf. The Exeter facility will be MedReleaf’s third, and upon full retrofit, will produce up to 105,000 kgs of cannabis annually, increasing the total production capacity to 140,000 kgs annually. MedReleaf’s other two facilities in Markham and Bradford will produce 35,000 kgs once the construction of the Bradford Facility is fully completed in summer 2018. Retrofit of the Exeter facility will commence soon with the first harvest expected in Q1 2019.
This acquisition makes MedReleaf one of Canada’s largest cannabis producers and should help it capture a bigger slice of the recreational market opportunity set to be legalized in Canada in mid-2018. Additionally, the greenhouse facility will produce required raw material inputs for extract production, complementing MedReleaf’s portfolio of premium indoor grown cannabis products.
Alongside increasing capacity, MedReleaf continues to sign supply agreements to strengthen its distribution capabilities. Some of the recent supply agreements include Société québécoise du cannabis (supply of eight tons over three years) this week; Cannamedical Pharma GmbH of Germany in March 2018; and Shoppers Drug Mart in December 2017.
Canada’s first and only ISO 9001 and ICH-GMP certified cannabis producer, MedReleaf is focused on producing premium high-quality cannabis. For the third quarter ended December 31, 2017, MedReleaf reported record quarterly revenues of $11.4 million, up 9% YoY and 16% QoQ, driven primarily by strong growth in extract-based products. MedReleaf currently trades at a market cap of $1.85 billion, or 44.2x its TTM sales of $42.0 million.
Disclosure: Neither the author nor his family own shares in the company mentioned above.
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