HempFusion Signs Definitive Agreement to Acquire Pioneering CBD Brand Apothecanna

Rhea-AI Summary

HempFusion Wellness Inc. (US:CBDHF) has entered a Purchase Agreement to acquire 100% of APCNA Holdings LLC, the parent company of Apothecanna. Established in 2009, Apothecanna is a leader in cannabis-powered body care and topicals, known for its innovative CBD products. This acquisition is projected to double HempFusion's historical revenue with over $4 million in 2020 and will expand its retail distribution by adding 1,800 stores, including CVS. Apothecanna's strong eCommerce presence accounts for 50% of its revenues, driving high gross profit margins of approximately 70%.

Positive

• Acquisition expected to double HempFusion's revenue with Apothecanna's $4 million in 2020 sales.
• Immediate increase in retail distribution footprint by 1,800 stores, including CVS.
• Expansion of distribution channels from 5 to 6, enhancing sales capabilities.
• Strong eCommerce platform contributing to high gross profit margins of approximately 70%.

Negative

• None.

HempFusion Wellness Inc. (TSX:CBD.U) (US:CBDHF) (FWB:8OO) (“HempFusion” or the “Company”), a leading health and wellness Company offering premium probiotic supplements and products containing CBD, is pleased to announce it has entered into a Purchase Agreement (as defined below) to acquire 100% interest in APCNA Holdings LLC (“Apothecanna”). Established in 2009, Apothecanna pioneered cannabis-powered body care and topicals, and was the first topicals brand to expand nationally and obtain a Federal Trademark. Focused on the premium recovery, pharmacy, and spa segments, Apothecanna has established itself as an industry leader in the development of innovative, all-natural CBD products.

Apothecanna Products (Photo: Business Wire)

Apothecanna is an established brand in the premium CBD topicals space with significant distribution in the North American market, most notably though CVS and 7^th Sense. The company also has access to the Canadian marketplace though a strategic business relationship, giving it significant market share in the Canadian topicals space (#1 topical in 2020 on the OCS).

A key advantage in the current business environment is a strong ecommerce focus and Apothecanna embodies this with approximately 50% of revenues being generated from this channel. The focus on this higher margin, Direct-to-Consumer business drives corporate gross profit margins of approximately 70%.

Strategic Rationale

• Revenue of over $4 million in 2020 doubles HempFusion’s historical revenue with significant expansion planned for 2021 and beyond, making it immediately accretive to the Company at closing.
• Immediate distribution to an additional 1,800 stores, including CVS, materially increases HempFusion’s retail distribution footprint.
• In addition to FDM and e-commerce, this transaction provides added distribution channels, increasing HempFusion’s 5 channel strategy to 6 channels, and bolstering topical product distribution sales.
• Robust eCommerce platform drives over 17,000 average monthly sessions, and nearly $2.0MM in gross sales per year with 76% gross margin historically.
• Product efficiencies across topicals line while providing a near term opportunity for expansion into ingestible products supported by HempFusion’s proprietary formulations.
• HempFusion’s substantial investment into regulatory compliance will help solidify Apothecanna’s leadership position in the CBD industry.

“We are incredibly excited to enter into this agreement with Apothecanna, which, on closing, will have an immediate impact on HempFusion’s revenue while significantly bolstering our distribution and eCommerce platforms,” stated Jason Mitchell, N.D., Hem

FAQ

What is the value of the acquisition of Apothecanna by HempFusion?

The exact financial details of the acquisition are not disclosed in the press release.

How will the acquisition of Apothecanna affect HempFusion's revenue?

The acquisition is expected to immediately double HempFusion's historical revenue with Apothecanna's sales of over $4 million in 2020.

When was the acquisition of Apothecanna announced?

The press release announcing the acquisition was issued on May 17, 2021.

How does Apothecanna contribute to HempFusion's business?

Apothecanna enhances HempFusion's retail distribution, eCommerce capabilities, and product offerings in the CBD market.

What market segments does Apothecanna focus on?

Apothecanna focuses on premium recovery, pharmacy, and spa segments with its cannabis-powered body care and topicals.