HARV stock is trading higher despite Harvest Health and Recreation Inc (CSE:HARV) (OTCQX:HRVSF) deciding to scale back from its previously announced acquisition of CannaPharmacy.
It is now a well-known fact that the cannabis industry has been going through a pretty tough period over the course of the past few months, and that has led to a wide range of problems for a number of companies. The problems have forced many companies to pull out from previously agreed deals, and in a new development, Harvest Health and Recreation Inc today announced that it has had to go down that path as well.
Harvest Health announced today that its deal with CannaPharmacy Inc, which would have seen the company acquire licenses in Delaware, Maryland, and New Jersey, has been terminated.
The deal in question would have been worth $88 million, and the entire transaction was supposed to take place in cash. Although the original deal is terminated, the two companies have actually structured a new deal involving different assets.
However, HARV stock is trading higher by 6% at $3.60 on the CSE market.
Harvest Health and Recreation announced that it has reached an agreement to acquire the CannaPharmacy unit called Franklin Labs LLC in a deal worth $26 million. It has also been announced that Harvest Health is going to pay $15 million in cash, while a promissory note worth $11 million has been issued for the residual amount. However, the whole deal is eligible to be altered in the future, and new assets might be added into the mix.
Harvest Health’s Chief Executive Officer Jason Vedadi said that such a deal will help the company meet its goal with regards to both profits and revenue.
The cannabis market’s tough period has seen announcements from certain companies about scaling back investment temporarily, and the latest move from Harvest Health is further proof of the difficulties in the market at this point. Experts, however, believe that the current problems are temporary in nature.
Moreover, the company reported a loss of $39.1 million, or 14 cents a share in the third quarter, compared to the $453,000 loss posted in the year-earlier period.
Revenue soared to $33.2 million from $11.2 million. Harvest said it has also received loan proceeds of $35 million CAD and $27.5 million CAD.
HARV stock is one of the biggest losers this year, with a fall of 75% since the beginning of this year due to broader sell-off in the cannabis sector.
Featured image: DepositPhotos © Fotofabrika