MSO Financial Health: Debt Restructuring Vs. Equity Raises – Analyst Digs Into Spreadsheets
Portfolio Pulse from Nicolás Jose Rodriguez
Zuanic & Associates has analyzed the financial net debt metrics of 20 multi-state operators (MSOs) in the cannabis industry to identify potential candidates for equity raises or debt restructuring. Trulieve and Curaleaf have the highest net debt among the group. The report also includes income tax payables, gross leases, and warrant derivative liabilities in its definition of net debt, revealing that Curaleaf, Cresco, and Trulieve hold the highest absolute 'broad' net financial debt. Several MSOs, including Acreage, Ascend Wellness, AYR, Columbia Care, 4Front, iAnthus, Jushi, StateHouse, and TerrAscend, present a higher probability of needing equity raises.
September 21, 2023 | 2:55 pm
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NEGATIVE IMPACT
Columbia Care has already initiated a $25 million equity raise via private placement, indicating a need to address its capital structure.
Equity raises can dilute existing shareholders, which could negatively impact the stock price.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100
NEGATIVE IMPACT
Cresco holds the second highest absolute 'broad' net financial debt, indicating a potential need for equity raises or debt restructuring.
High net debt can put pressure on a company's financial health, potentially leading to equity raises or debt restructuring. This could dilute existing shareholders or change the company's capital structure, which could negatively impact the stock price.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100
NEGATIVE IMPACT
Curaleaf has the second highest net debt among the group and holds the highest absolute 'broad' net financial debt, indicating a potential need for equity raises or debt restructuring.
High net debt can put pressure on a company's financial health, potentially leading to equity raises or debt restructuring. This could dilute existing shareholders or change the company's capital structure, which could negatively impact the stock price.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100
NEGATIVE IMPACT
Trulieve has the highest net debt among the group, indicating a potential need for equity raises or debt restructuring.
High net debt can put pressure on a company's financial health, potentially leading to equity raises or debt restructuring. This could dilute existing shareholders or change the company's capital structure, which could negatively impact the stock price.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100
NEUTRAL IMPACT
Canopy Growth's recent equity raise has sparked curiosity about which other cannabis MSOs may follow suit.
The company's recent equity raise is already known to the market, so it's unlikely to have a further impact on the stock price. However, it could influence the actions of other companies in the industry.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 50