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Acreage Holdings, Inc. (OTCQX: ACRHF, ACRDF) reported its Q4 financials on Friday for the 3-month period ending December 31st, 2021. 

Financial Highlights

(All figures are in U.S. Dollars and compared to the previous quarter)

• Consolidated Revenue: increased +21% to $58.1M
• Gross Profit: increased +16% to $27.6M
  • As a % of Revenue: declined to 48% from 49%
• Adj. EBITDA: increased +30% to $8.5M
• Net Loss: increased +228.5% to $(40.4)M
• Cash on Hand: increased 55% to $43.2M

 Operational Highlights

• Acquired operations in Ohio, consisting of a 70,000 sq. foot cultivation and processing facility and 5 operating retail stores.
• Increased cultivation capacity output nearly fourfold at the Egg Harbor facility in New Jersey.
• Secured a $150 million long-term debt agreement on attractive terms to repay existing debt, and fund working capital and future capital projects.

Management Commentary

Peter Caldini, CEO, said:

• “Acreage made significant improvements during 2021,

• achieved its first quarter of positive EBITDA and then continuing the trajectory of positive EBITDA each subsequent quarter,

• strengthened its balance sheet through the sale of operations in Florida, repaying near-term debt obligations, and securing a $150 million credit facility and

  • accelerated growth in our core markets with

    • the opening of a new retail location in New Jersey,

    • the completion of cultivation expansion projects in Pennsylvania, Illinois, and New Jersey,

    • the opening of an edibles kitchen in Massachusetts, and

    • the acquisition of high-quality operations in California, Maine, and Ohio.

• We have set the stage to extend this success with the right footprint, operations, and team to continue to grow our business and further drive value for our shareholders.”

Share Prices

Canopy Growth's original deal was to buy 100% of Acreage Holdings when the U.S. federally legalized cannabis. That deal was subsequently amended and resulted in the creation of two new share classes namely, Class D “floating” shares (ACRDF) and Class E “fixed” shares (ACRHF).

In the new deal, Canopy will buy only 70% of Acreage at the fixed share price. The remaining 30% will float with the market enabling Canopy shareholders to participate in any upside in the stock. Canopy has the option to buy these shares if they so decide.

Retail investors seem to prefer the "fixed" share class because

• they know that Canopy will buy these shares while the "floating" shares are only an option to buy and if Canopy decided not to buy the "floating" shares they would become much less valuable.

That being said, however, analysts have been using the "floating" shares for their basis of valuation - not the "fixed" shares. Given this confusion, the "fixed" and "floating" shares prices are added together in the munKNEE Pure-Play Pot Stock Index, of which Acreage is a constituent, to better highlight and record the price trend of  Acreage within the pure-play market sector.

As of today, the two Acreage stocks are -77.4% from their collective high in 2021 but have improved by +40.3% from their collective 52-week low with a +6.3% gain YTD and up +19.3% in the last week.