CANNABIS QUARTERLY UPDATE Q2 2019
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CANNABIS QUARTERLY UPDATE Q2 2019
INDUSTRY OVERVIEW
M&A TRANSACTIONS & PERFORMANCE
CANNABIS M&A TRANSACTIONS*
5,000 70
31
4,500 59
Transaction Volume (Number of Deals)
60
Transaction Value ($ Millions)
4,000
3,500 50
$1,544
3,000
35 34 40
$2,523
2,500
27 30
2,000 23
$3,265
11
1,500 20
1,000
$1,369
7 7 10
5
$1,243
$1,288
$1,472
$2,351
$2,007
$2,080
500
- -
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2017 2018 2019
Transaction Value Deals Greater than $500M Transaction Volume
*All figures are in CAD unless otherwise stated.
M&A MARKET UPDATE FOR Q2 2019
• The second quarter of 2019 saw slightly tapering merger and acquisition activity, with 31 deals announced and/or
closed.
• This quarter has seen several deals greater than $500M in value, mostly focused on the U.S. markets. The Canopy
Growth and Acreage Holdings US$3.4B deal, contingent on US federal legalization, has changed the landscape of the
North American cannabis industry, solidifying the Canadian-based company’s future in the United States market. (this
deal is excluded from all data in the chart, due to the contingent nature of the deal). Markets are embracing the
consolidation of multi-state operators, including two recently announced deals valued at over US$850M, which have
given large cannabis players a more diversified geographic presence and product offering within the United States
(Cresco/Origin House; Harvest Health/Verano Holdings).
• In second quarter 2019, shares continue to be the preferred currency for M&A transactions, with 14.1% percent of all
M&A consideration paid in cash on closing. This compares with the three year total of 14.3% of all transactions paid in
cash on closing.
Source: Capital IQ. Data as of June 30, 2019, based on publicly disclosed information.
Dates are based on deal announcement. Includes announced and closed transactions between $5 million and $500 million. Deals greater than $500mm are shown by the
white stacked bars and excluded from the transaction volume.
Page 2
INDUSTRY OVERVIEW
NEWS
QUARTERLY HIGHLIGHTS
Supply Shortages – The unfinished inventory levels of increased investment in preparation for cannabis 2.0 (i.e.
legal cannabis in Canada – product that is not packaged, the edibles market) has kept them in the red. Investors
labelled or ready for sale – is rising despite supply are becoming impatient with the lack of commitment to
shortages in retail channels. This is due to a number of the bottom line, and this impatience came to a peak
issues. Some point to companies that are not equipped to recently as the largest cannabis company – Canopy
process and package product, as inventory in April was Growth – fired their CEO Bruce Linton.
almost four times the amount of sales of cannabis.
However, some licensed producers have noted that this Constellation Brands partnered with Canopy via a $5
unfinished supply, which in April was recorded as billion investment last summer, which secured
approximately 183,785 kg of dried cannabis and 47,450 Constellation a majority stake in the company. The
litres of cannabis oil, could also be kept in inventory to be investment by a Fortune 500 company was a major
used for edibles upon legalization this fall. breakthrough for the cannabis industry; it added some
legitimacy to the cannabis sector and established
The second half of this year should see a major increase in precedent for future investment.
supply as more licenses are issued and as companies seek
to capitalize on strong consumer demand in preparation Constellation CEO Bill Newlands, who runs a mature
for the new edibles market. Companies are signing beverage conglomerate, is more focused on bottom line
extraction supply agreements daily. Valens GroWorks has achievements than the visionary leader Linton. Canopy
tripled their extraction supply deal with Tilray, providing lost $323 million in its most recent quarter, which was
extraction for 60,000 kilograms of dried cannabis. The four times higher than analyst expectations. Ultimately,
Green Organic Dutchman has entered into a long term investors and strategic partners had had enough of the
deal with Neptune Wellness Solutions to provide increased losses, and the firing of Mr. Linton is the start of
extraction, formulation and packaging services to the a trend toward the importance of profitability. The
cannabis producer. Other major players have made cannabis industry is officially at the stage where
significant investments in facility expansions to boost valuations need to start making sense.
their production capacity. For example, Aurora Cannabis
announced increasing the size of its Aurora Sun facility by Reducing Cost Through Outdoor Cultivation – Outdoor
one third to 1.62 million square feet. grow is a new trend in the industry as companies try to
leverage low-cost cultivation and ramp up production.
Cannabis Industry Seeks Profitability – The biggest Aleafia Health was the first to receive a license for
question in the cannabis industry is “when will companies outdoor cultivation on their 26 acre plot of land in South-
become profitable?” Cannabis companies in the past have Western Ontario and 48North received a license shortly
been critiqued on their aspirations, such as how much thereafter in the same region. CannTrust is currently
flower they promised to produce or how many countries awaiting licensing of its 81 acre outdoor cultivation facility
they had partnerships with or licences in. However, today in British Columbia (although recent news of CannTrust’s
investors and strategic partners want to see profits. non-compliance with its existing license threatens its
issuance) and WeedMD received Health Canada approval
Originally, many of the top cannabis players indicated to to begin outdoor cultivation on 27 acres in Strathroy, Ont.
investors that they would start to see profitability when Canopy Growth is launching a pilot program in Northern
Canada legalized cannabis. Conversely, this has come to Saskatchewan to see if outdoor grow could be a long-
pass and there is still little to no profitability. Now term option for cost efficient cultivation. Other outdoor
company leadership teams are stating that the increased cultivation initiatives are being pursued by privately held
companies.
Sources: https://www.theglobeandmail.com/cannabis/article-canada-could-hit-pot-oversupply-as-early-as-2019-depending-on-edibles/
https://www.canada.ca/en/health-canada/services/drugs-medication/cannabis/licensed-producers/market-data/supply-demand.html
*All figures are in CAD unless otherwise stated.
Page 3
INDUSTRY OVERVIEW
NEWS
QUARTERLY HIGHLIGHTS
New Opportunities – Boosting production capacity, diversifying market penetration and developing a wider variety of
products seems to be an overarching theme this quarter. According to Statistics Canada, more Canadians say they have
used cannabis recreationally since October 2018 (legalization), particularly those aged 45-64 and males, with almost half
of the population over 15 having reported trying cannabis. Global legal cannabis spending is expected to reach US$40B by
2024, according to BDS Analytics and Arcview Market Research, of which North America will account for 90%. With the
edibles and alternatives cannabis market set to open in October 2019, companies are getting ready to catch a new wave
of growth in the industry.
Edibles Regulations – When it comes to granting licenses for the production of edibles and derivative products, Health
Canada is taking a very risk-averse approach. The amendment to the Cannabis Act, released in June 2019, strictly outlines
the manufacturing, packaging, selling and marketing of cannabis infused food and beverage products. Some of these
requirements are fundamental to keeping children and product-users safe while others make it difficult for companies to
be able to compete or even explore the industry. In order to even begin the application process for a processing license,
companies must prove that they will produce cannabis-infused food and beverages in an entirely separate facility than
other products, and this facility must already be built. With Health Canada licensing historically taking 12-18 months,
theses strict guidelines are preventing companies from preparing for, and being competitive in, the new market. The
government has said that only a limited selection of products are expected to be available for sale in Canada by mid
December.
Cannabis Edibles Regulations –summary as provided by Health Canada
Type of regulation Edibles Extracts Extracts Topical
(eating or drinking) (ingesting) (inhaling) (applying to skin, hair, nails)
THC limit • 10 mg of THC per package • 10 mg of THC per unit (such as • 1000 mg of THC per package • 1000 mg of THC per package
a capsule) or dispensed
amount
• 1000 mg of THC per package
Product rules • No added vitamins or minerals
• No nicotine or added alcohol
• Limits on caffeine • No caffeine • For use only on skin, hair and
nails
• No sugars, sweeteners or colours • Not for use in eyes or on
damaged skin
Packaging • Child-resistant
• Plain
• Maximum package size of 90 • Maximum package size of 90
mL for liquid extracts if under mL for liquid extracts if under
3% THC 3% THC
• Must include dispensing • Maximum package size of 7.5 g
device if not in unit form for solid extracts if over 3%
• Maximum package size of 7.5 g THC
for solid extracts if over 3%
THC
Label • Standardized cannabis symbol for products containing THC
• Health Warning Message
• THC/CBD content
• Equivalency to dried cannabis to determine public possession limit
• Ingredient list
• Allergens • Allergens
• Intended use
• Nutrition Facts Table
Other • Must not be appealing to youth
• Must not make health claims
• No elements that would associate the product with alcoholic beverages, tobacco products, or vaping products
• Must not make dietary claims • Must not make cosmetic
claims
Sources: https://www.canada.ca/en/health-canada/services/drugs-medication/cannabis/resources/regulations-edible-cannabis-extracts-topicals.html
*All figures are in CAD unless otherwise stated.
Page 4
SELECT RECENT M&A TRANSACTIONS
• The $3.4 billion contingent acquisition of Acreage, a leading multi-
state operator (MSO) in the U.S., has changed the landscape of the
Announced Apr 18, 2019 North American cannabis industry and has solidified Canopy’s
future south of the border.
announced the pending • The deal is contingent on the U.S. federally legalizing marijuana.
acquisition of
C$3.4 billion • The deal combines Canopy Growth’s global footprint, intellectual
TEV property, infrastructure, and brands with Acreage’s licenses and
infrastructure across 20 U.S. states.
• Canopy Growth has already made a $300 million down payment
on Acreage and will complete the rest of the acquisition upon
required approvals and US legalization.
• Curaleaf, a U.S. cannabis operator on the American east coast, is
set to acquire Cura Partners and its Select brand, a wholesaler on
Announced May 1, 2019 the American west coast, in an all-stock transaction worth C$1.27
billion.
announced the acquisition of
• The deal combines Curaleaf’s retail stores, wellness products and
C$1.3 billion strong brand strength on the east coast with the wholesale model
TEV and strong west coast footprint of Select, creating significant
operational efficiencies and a leading cannabis brand in California,
Arizona, Oregon and Nevada.
• This complementary acquisition will diversify Curaleaf’s domestic
market penetration in the U.S. and expand its product range.
• Cresco Labs’ acquisition of Origin House will accelerate Cresco
Labs entrance into California, given Origin House’s established
Announced Apr 1, 2019 distribution platform, making them the leading American MSO.
announced the acquisition of • Upon consummation of the transaction, Cresco Labs will be in over
725 dispensaries in the U.S. and have the biggest footprint in the
country, providing the foundation for significant distribution and
TEV C$1.1 billion brand development capabilities.
• At the time of announcement, the transaction was the largest
public company acquisition in the history of the U.S. cannabis
industry, valued at C$1.1 billion or $12.68 per share, resulting in
Origin House shareholders holding an approximate 20% ownership
in the pro forma entity.
Source: Capital IQ. Page 5
SELECT RECENT M&A TRANSACTIONS
• Flowr has announced that it has entered into an agreement to
acquire the remaining 82% interest in Holigen Holdings that it
Announced Jun 24, 2019 does not already own, solidifying the company's global strategy.
announced the acquisition of • Flowr's cultivation experience and Holigen's global presence
the remaining interest in together will allow Flowr to leverage opportunities in European
and Australian-Asian markets.
TEV C$361 million • The purchase price is a combination of 32 million series 1 Voting
Convertible Redeemable Preferred shares, €4.2 million in cash and
up to C$2 million as loan consideration as well as a €1.37 million
payment to creditors subject to closing.
• The acquisition combines Canopy Growth's medical platform with
Europe's largest cannabinoid-based pharmaceuticals company and
Announced May 2, 2019 leading manufacturer and distributor of dronabinol, a cannabis
product.
closed the acquisition of • C3 will add an established distribution and marketing platform in
C3 – Cannabis Compound Closed May 2, 2019
the European pharmaceuticals market as well as access to a
Company GmbH wealth of intellectual property, allowing Canopy to strengthen
from
their presence and further their medical product offerings.
TEV C$342 million
• Neptune Wellness has agreed to acquire substantially all of the
assets of SugarLeaf Labs LLC and Forest Remedies LLC (collectively
Announced May 9, 2019 “SugarLeaf”) for US$18 million (US$12 million in cash and US$6
announced the acquisition of million in common shares) and additional consideration of up to
substantially all assets of US$132 million paid over three years for a maximum purchase
price of up to US$150 million.
US$150
TEV • SugarLeaf’s presence in the North Carolina market and its
million expertise in extraction and formulation for hemp-based products
will allow Neptune Wellness to establish a U.S.-based hemp
extract supply chain.
• Operating out of a 24,000 sq ft facility with a hemp processing
capacity of 1,500,000 kg, SugarLeaf is a prime target for Neptune
to capitalize on increased growth in the U.S. market for hemp.
Source: Capital IQ. Page 6
SELECT RECENT M&A TRANSACTIONS
• ECD Inc., which operates as Northern Emeralds, is a leader in the
cultivation, processing and distribution of cannabis in California.
Announced May 16, 2019 • Along with the ECD transaction, SOL also announced the
acquisition of six other licensed dispensaries operating under
announced the acquisition of
“One Plant”, a brand that SOL intends to use to open dispensaries
throughout California, Florida and Michigan.
TEV C$120 million • The transaction further establishes SOL Global’s MSO strategy as
they intend to combine the Northern Emeralds and six dispensary
transactions with other acquisitions to establish a new MSO.
• The purchase price of $120 million will be made through the
issuance of common shares in CannCure Investments Inc., an
affiliated entity to SOL Global.
• The transaction puts PharmaCielo on track to become a global
powerhouse in the medicinal cannabis market, with the deal
Announced Jun 6, 2019 quadrupling the company’s global footprint.
announced the acquisition of • Creso has several years of experience in Pharma, Food, and
Cannabis and has a significant Good Manufacturing Processes
(“GMP”) compliant, pharma grade pipeline of branded products
TEV A$122 million with sales in 12 countries.
• Pursuant to the agreement, PharmaCielo and Creso Pharma have
agreed to implement a share scheme and an option scheme, with
the total transaction value aggregating to A$122 million.
• Supreme Cannabis’s growing brand portfolio will be well
complemented by Blissco, given their full spectrum of premium
Announced Mar 18, 2019 wellness cannabis products, established brand recognition and
significant production facilities.
announced the acquisition of
• Upon closing, Supreme will establish itself as Canada’s only
cannabis company focused on premium products and producing at
TEV C$48 million scale.
• Supreme Cannabis will acquire all of the issued and outstanding
common shares of Blissco at a total transaction value of C$48
million. Supreme has already secured 52% support from Blissco
shareholders.
Source: Capital IQ. Page 7
PUBLIC COMPARABLE ANALYSIS
TRADING MULTIPLES & OPERATING STATISTICS
Figures in CAD Millions, except percentages and ratios.
Operating Figures Revenue EBITDA EV/EBITDA
Annual- Revenue
Market Ent.
Company Cash ized Growth 2019 2020 2021 2019 2020 2021 2020 2021
Cap. Value
Qrt. Rev. Y/Y
The CND Top 10
Canopy Growth Corporation 18,287 16,752 2,481 376 263% 544 1,226 1,923 (388) (102) 306 nmf 54.7x
Aurora Cannabis Inc. 10,433 10,725 347 261 240% 441 800 1,860 (56) 162 566 66.0x 19.0x
Tilray, Inc. 5,922 6,106 393 115 124% 233 478 716 (62) 26 167 232.2x 36.6x
Cronos Group Inc. 7,019 4,603 2,418 26 91% 50 177 333 (34) 53 98 87.3x 46.8x
Aphria Inc. 2,309 2,279 108 292 507% 424 811 n/a (47) 142 184 16.1x 12.4x
HEXO Corp. 1,795 1,655 173 52 945% 152 440 631 (19) 102 177 16.2x 9.4x
OrganiGram Holdings Inc. 1,316 1,366 12 108 623% 145 244 328 56 91 125 15.1x 10.9x
CannTrust Holdings Inc. 926 939 3 67 86% 136 249 347 (0) 74 112 12.6x 8.4x
The Green Organic Dutchman Holdings 889 717 174 10 nmf 44 273 517 (34) 84 151 8.5x 4.7x
TerrAscend Corp. 610 649 9 58 nmf n/a n/a n/a n/a n/a n/a n/a n/a
Median 174 252% 16.1x 12.4x
Mean 612 360% 56.7x 22.5x
Large Multi-State Operators ("MSO's")
Curaleaf Holdings, Inc. 4,313 4,253 231 188 145% 414 942 n/a 112 319 n/a 13.3x n/a
Green Thumb Industries Inc. 2,904 2,788 156 149 108% 275 610 1,021 68 165 276 16.9x 10.1x
Harvest Health & Recreation Inc. 2,487 2,413 155 103 86% 253 1,095 1,409 34 342 504 7.1x 4.8x
Acreage Holdings, Inc. 1,871 1,813 86 69 344% 290 713 n/a (15) 200 n/a 9.1x n/a
Trulieve Cannabis Corp. 1,587 1,631 28 238 94% 308 509 615 131 199 246 8.2x 6.6x
Cresco Labs Inc. 1,598 1,522 142 109 156% 364 949 1,327 65 290 399 5.2x 3.8x
iAnthus Capital Holdings, Inc. 748 846 57 51 3724% 227 471 737 36 132 n/a 6.4x n/a
MedMen Enterprises Inc. 587 824 29 196 27% 275 717 n/a (163) 220 n/a 3.7x n/a
Median 114 126% 7.6x 5.7x
Mean 110 586% 8.7x 6.3x
Canadian Licenced Producers
Village Farms International, Inc. 738 789 8 170 -23% 245 297 481 40 89 151 8.8x 5.2x
The Flowr Corporation 547 544 16 6 nmf 28 49 147 2 12 55 45.7x 9.9x
Zenabis Global Inc. 382 474 26 46 nmf 100 292 478 (17) 54 121 8.8x 3.9x
The Supreme Cannabis Company, Inc. 458 459 75 40 181% 68 157 n/a 7 40 n/a 11.6x n/a
Aleafia Health Inc. 363 347 37 6 34% 21 167 297 (20) 37 84 9.3x 4.1x
Emerald Health Therapeutics, Inc. 356 345 16 9 649% 26 42 86 (28) (14) 9 nmf 38.3x
Heritage Cannabis Holdings Corp. 224 221 4 - nmf 16 67 n/a (2) 16 n/a 13.4x n/a
FSD Pharma Inc. 226 209 17 0 nmf n/a n/a n/a n/a n/a n/a n/a n/a
WeedMD Inc. 180 198 17 13 60% 42 133 162 (4) 47 37 4.3x 5.4x
VIVO Cannabis Inc. 168 182 18 20 380% 34 89 231 (14) (2) 19 nmf 9.8x
Wayland Group Corp. 176 178 14 1 nmf n/a n/a n/a n/a n/a n/a n/a n/a
AgraFlora Organics International Inc. 194 164 29 - nmf n/a n/a n/a n/a n/a n/a n/a n/a
Sproutly Canada, Inc. 128 131 10 - nmf n/a n/a n/a n/a n/a n/a n/a n/a
48North Cannabis Corp. 136 118 18 3 nmf 47 106 126 (2) 10 20 11.9x 6.0x
Rubicon Organics Inc. 110 115 2 - nmf n/a n/a n/a n/a n/a n/a n/a n/a
Harvest One Cannabis Inc. 134 105 30 12 488% 23 117 n/a (6) 35 n/a 3.0x n/a
Benchmark Botanics Inc. 103 104 1 - nmf n/a n/a n/a n/a n/a n/a n/a n/a
Eve & Co Incorporated 100 103 1 7 nmf 13 65 115 (2) 17 33 6.0x 3.1x
Delta 9 Cannabis Inc. 93 100 8 23 687% 66 98 n/a 17 31 n/a 3.2x n/a
Median 16 280% 8.8x 5.4x
Mean 18 307% 11.5x 9.5x
Source: Capital IQ. Data as of June 30, 2019.
Estimates based on Capital IQ calendar year consensus.
Page 8
PUBLIC COMPARABLE ANALYSIS
TRADING MULTIPLES & OPERATING STATISTICS
Figures in CAD Millions, except percentages and ratios.
Operating Figures Revenue EBITDA EV/EBITDA
Annual- Rev.
Market Ent.
Company Cash ized Growth 2019 2020 2021 2019 2020 2021 2020 2021
Cap. Value
Qrt. Rev. Y/Y
US/Int'l Focused
Charlotte's Web Holdings, Inc. 1,862 1,775 92 116 28% 180 455 581 55 157 199 11.3x 8.9x
Pyxus International, Inc. 181 1,699 257 3,161 106% 2,376 n/a n/a 226 n/a n/a n/a n/a
PharmaCielo Ltd. 652 629 25 - nmf 7 88 192 (16) 37 115 17.2x 5.5x
Flower One Holdings Inc. 523 588 8 3 nmf 128 310 n/a 34 113 n/a 5.2x n/a
Green Growth Brands Inc. 464 464 - 30 nmf 137 376 519 22 112 175 4.2x 2.6x
Cansortium Inc. 405 437 13 30 nmf 90 235 297 21 92 113 4.8x 3.9x
Elixinol Global Limited 474 433 41 43 48% 53 93 109 3 18 24 24.1x 18.2x
Planet 13 Holdings Inc. 349 335 27 74 218% 105 141 n/a 18 43 n/a 7.9x n/a
Cannex Capital Holdings Inc. 277 282 14 14 -14% 184 434 n/a 58 120 n/a 2.4x n/a
Vireo Health International Inc. 271 240 54 31 63% 81 214 261 14 55 89 4.3x 2.7x
Liberty Health Sciences Inc. 224 222 13 14 204% 80 145 212 17 45 74 4.9x 3.0x
Chemesis International Inc. 181 181 - 15 nmf n/a n/a n/a n/a n/a n/a n/a n/a
Sunniva Inc. 106 149 2 57 217% 63 104 n/a (7) 25 n/a 6.0x n/a
ICC International Cannabis Corp. 144 148 1 - nmf n/a n/a n/a n/a n/a n/a n/a n/a
Body and Mind Inc. 131 135 3 5 58% n/a n/a n/a n/a n/a n/a n/a n/a
1933 Industries Inc. 128 124 15 18 40% 24 n/a n/a (6) n/a n/a n/a n/a
Median 14 60% 5.2x 3.9x
Mean 35 97% 8.4x 6.4x
Technology, Data, Retail and Ancillary Markets
MariMed Inc. 562 594 6 19 22% n/a n/a n/a n/a n/a n/a n/a n/a
KushCo Holdings, Inc. 589 568 24 185 176% 220 341 449 (27) 14 37 40.0x 15.2x
Alcanna Inc. 222 544 22 600 -7% 752 851 922 34 59 82 9.2x 6.7x
SLANG Worldwide Inc. 374 366 13 0 nmf 137 429 408 8 97 114 3.8x 3.2x
MJardin Group, Inc. 115 243 19 43 82% 51 123 n/a 4 53 n/a 4.6x n/a
Fire & Flower Holdings Corp. 135 162 25 38 nmf 54 139 265 (8) 11 54 14.3x 3.0x
National Access Cannabis Corp. 113 126 14 65 2961% n/a n/a n/a n/a n/a n/a n/a n/a
Namaste Technologies Inc. 193 124 69 18 13% n/a n/a n/a n/a n/a n/a n/a n/a
Cannabix Technologies Inc. 119 108 11 - nmf n/a n/a n/a n/a n/a n/a n/a n/a
Choom Holdings Inc. 84 86 10 - nmf n/a n/a n/a n/a n/a n/a n/a n/a
High Tide Inc. 73 82 9 25 322% n/a n/a n/a n/a n/a n/a n/a n/a
Westleaf Inc. 88 73 20 0 nmf 15 101 178 (2) 12 33 6.2x 2.2x
Inner Spirit Holdings Ltd. 42 53 2 5 3% n/a n/a n/a n/a n/a n/a n/a n/a
Leviathan Cannabis Group Inc. 44 45 3 0 nmf n/a n/a n/a n/a n/a n/a n/a n/a
MYM Nutraceuticals Inc. 34 32 2 - nmf n/a n/a n/a n/a n/a n/a n/a n/a
Alternate Health Corp. 22 25 2 0 nmf n/a n/a n/a n/a n/a n/a n/a n/a
CannaOne Technologies Inc. 19 19 0 0 nmf n/a n/a n/a n/a n/a n/a n/a n/a
Lift & Co. Corp. 18 18 2 10 13% n/a n/a n/a n/a n/a n/a n/a n/a
Median 10 22% 7.7x 3.2x
Mean 14 398% 13.0x 6.1x
Extraction, Pharma, Food and Beverage Development
MediPharm Labs Corp. 753 750 8 88 nmf 111 199 295 26 64 91 11.6x 8.2x
Valens GroWorks Corp. 499 499 0 9 nmf 47 149 213 18 75 109 6.7x 4.6x
Neptune Wellness Solutions Inc. 464 457 10 23 10% 40 122 195 6 45 80 10.1x 5.7x
Khiron Life Sciences Corp. 259 249 13 8 nmf 10 61 209 (33) (15) 64 nmf 3.9x
Radient Technologies Inc. 222 191 38 - nmf n/a n/a n/a n/a n/a n/a n/a n/a
Abacus Health Products, Inc. 201 187 17 20 175% 39 110 n/a 11 34 n/a 5.4x n/a
Cannara Biotech Inc. 111 111 13 2 nmf n/a n/a n/a n/a n/a n/a n/a n/a
Dixie Brands Inc. 112 104 8 12 176% n/a n/a n/a n/a n/a n/a n/a n/a
Lexaria Bioscience Corp. 89 86 3 0 nmf 0 n/a n/a (5) n/a n/a n/a n/a
Pivot Pharmaceuticals Inc. 67 71 0 - nmf n/a n/a n/a n/a n/a n/a n/a n/a
Median 9 175% 8.4x 5.2x
Mean 11 120% 8.5x 5.6x
Source: Capital IQ. Data as of June 30, 2019.
Estimates based on Capital IQ calendar year consensus. Page 9
PUBLIC COMPARABLE ANALYSIS
GROWTH, CASH & MULTIPLES
Median LTM Revenue Growth Median
(y/y) Cash
Canadian LP's 280% The CND Top 10 $174
The CND Top 10 252% Large MSO's $114
Extraction, Pharma, F&B 175% Canadian LP's $16
Large MSO's 126% US/Int'l Focused $14
US/Int'l Focused 60% Technology, Retail, Ancillary $10
Technology, Retail, Ancillary 22% Extraction, Pharma, F&B $9
Avg. $56 million
Avg. 153%
Median 2020 EV/EBITDA Median 2021 EV/EBITDA
Multiple Multiple
The CND Top 10 16.1x The CND Top 10 12.4x
Canadian LP's 8.8x Large MSO's 5.7x
Extraction, Pharma, F&B 8.4x Canadian LP's 5.4x
Technology, Retail, Ancillary 7.7x Extraction, Pharma, F&B 5.2x
Large MSO's 7.6x US/Int'l Focused 3.9x
US/Int'l Focused 5.2x Technology, Retail, Ancillary 3.2x
Avg. 9.0x Avg. 5.9x
Source: Capital IQ. Data as of June 30, 2019.
Valuation details provided on page 8 and 9.
* LTM refers to last twelve month
Page 10PUBLIC COMPARABLE ANALYSIS
PERFORMANCE ANALYSIS
140 MARKET RETURNS
130 Market Capitalization Weighted Index Method
120
110
100 100
90
84
80
73
70
73
71
71
60
The CND Top 10 Large MSO's
Canadian Licenced Producers US/Int'l Focused
Technology, Data, Retail and Ancillary Markets Extraction, Pharma, Food and Beverage Development
20.0x
EV / 2021 EBITDA
Based on Median Values
18.0x
16.0x
14.0x
12.0x 12.4x
10.0x
8.0x
5.7x
6.0x 5.3x
5.1x
4.0x 3.9x
3.2x
2.0x
0.0x
The CND Top 10 Large MSO's
Canadian Licenced Producers US/Int'l Focused
Technology, Data, Retail and Ancillary Markets Extraction, Pharma, Food and Beverage Development
Source: Capital IQ. Data as of June 30, 2019.
Constituent companies are the same as those provided on page 8 and 9.
Page 11MNPCF – LEADERSHIP TEAM
TRANSACTION LEADERSHIP
Brett Franklin Erik St-Hilaire Aleem Bandali Dale Antonsen
President Managing Director Managing Director Managing Director
brett.franklin@mnp.ca erik.st-hilaire@mnp.ca aleem.bandali@mnp.ca dale.antonsen@mnp.ca
204.336.6190 204.336.6200 778.374.2140 250.979.2578
Mike Reynolds Mark Regehr Dan Porter Stephen Shaw
Managing Director Managing Director Managing Director Managing Director
mike.reynolds@mnp.ca mark.regehr@mnp.ca dan.porter@mnp.ca stephen.shaw@mnp.ca
587.702.5909 780.969.1404 416.515.3877 416.515.3883
Kevin Tremblay Jason Burgess Patrick Khouzam Craig Maloney
Managing Director Managing Director Managing Director Managing Director
kevin.tremblay@mnp.ca jason.burgess@mnp.ca patrick.khouzam@mnp.ca craig.maloney@mnp.ca
647.943.4051 905.225.1324 514.228.7874 902.493.5430
DUE DILIGENCE LEADERSHIP
John Caggianiello Johnny Earl
Managing Director Managing Director
john.caggianiello@mnp.ca johnny.earl@mnp.ca
416.513.4177 604.637.1514
Page 12MNPCF – RECENTLY CLOSED DEALS
NATIONAL
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