Emerald Health Therapeutics Inc (OTCMKTS:EMHTF) has been battling to maintain share price levels so far in 2018, along with many other recent high-flyers in the cannabis space. The final run to close out last year was almost surreal in its momentum and magnitude. So, it’s little wonder that we would see some kind of consolidative movement this month as investors pare back to cash in on the monster move. But shareholders can likely take heart in the nature of the pattern during the recent corrective action given that we have not been seeing a typical distributive formation take hold on the chart.
Instead, this has thus far been a very constructive process of consolidation, marked by some sharp shakeouts, but ultimately, little in the way of serious losses. That’s just what you want to see here. The latest from the company comes in the form of a recently closed prospectus sale to a single Canadian institutional accredited investor announced on January 3, 2018. According to the release, pursuant to the Offering, the Company has issued 3,000,000 units at a price per Unit of $5.00, for gross proceeds of $15,000,000.
Emerald Health Therapeutics Inc (OTCMKTS:EMHTF) trumpets itself as a licensed producer of medical marijuana under the Access to Cannabis for Medical Purposes Regulations, which allows the company to produce and sell medical marijuana and cannabis oils to clients and other licensed producers.
Individuals may become clients of the company by registering with the company through its secure online portal or via telephone after the individual has received a medical document signed by a licensed health care practitioner setting out the daily quantity of dried marijuana, in grams, that the practitioner authorized for the person.
According to company materials, “Emerald Health Therapeutics Inc (OTCMKTS:EMHTF) operates through Emerald Health Botanicals Inc., a wholly owned subsidiary and Licensed Producer under the Access to Cannabis for Medical Purposes Regulations. Botanicals is authorized to produce and sell both dried medical cannabis flower and medical cannabis oil in Canada. Botanicals currently operates an indoor facility in Victoria, BC, and is progressing on expansion plans for a 32-acre property in Metro Vancouver and a partnership with Village Farms, called Pure Sunfarms, utilizing a 25-acre existing greenhouse complex in Delta, BC. Botanicals is one of Canada’s most medically focused licensed producers, with a team highly experienced in life sciences product development and large-scale agribusiness. Its vision is to be a leading provider of cannabis products through its production capabilities, proprietary genetics, value-added products and branding, and superb customer experience. Emerald Health Therapeutics is associated with the Emerald Health group, which comprises multiple companies advancing diverse botanical, nutraceutical and pharmaceutical products that may provide wellness and medical benefits by interacting with the body’s endocannabinoid system.”
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As noted above, we like the style of the stock’s recent pullback. It’s doing its job of shaking out the weak hands without sending worrying signals of a major shareholder exodus. Any corrective or consolidative pattern will necessarily be driven by nervousness. The problem is if it’s also driven by steady distribution, which doesn’t appear to be the case here.
At the same time, we have also seen this team go to the market to build up more ammo to launch at the market in form of a $15M funding round via a single large investor.
According to the release. the company intends to use the net proceeds of the Offering for its production and R&D-related growth plans, working capital and general corporate purposes. The Units were offered by way of a shelf prospectus supplement filed in all of the provinces of Canada, except Quebec, pursuant to National Instrument 44-101 – Short Form Prospectus Distributions. “The previously announced purchase by the Investor of 2,000,000 Common Shares (the “Secondary Sale”) from Emerald Health Sciences Inc., a control person of the Company, at a price of $5.00 per share, is expected to close separately.”
Earning a current market cap value of $562M, EMHTF has about $28M in cash on the books, which is balanced by roughly $14M in total current liabilities. The company has pulled in about $470K in TTM revenues. You can bet we will update this one again as new information comes into view. Sign-up for continuing coverage on shares of $EMHTF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $EMHTF, either long or short, and we have not been compensated for this article.