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Nabis Holdings Inc.: DEEP DIVE

Nabis Holdings is building out a portfolio of revenue-generating cannabis assets

The Canadian company's investment strategy is simple and focused on EBITDA positive, vertically integrated operators with large addressable markets
OVERVIEW: NAB The Big Picture
Nabis is acquiring a portfolio of vertically integrated operations, including retail dispensaries
  • New cannabis investment company acquiring majority interests in high-quality cash-flowing US cannabis assets and brands

  • Creates synergies through scale by adding investment, operational, and product expertise throughout the corporate structure to drive growth

  • Targeting C$15 million revenue in 2019 and C$168 million in revenue in 2020

Nabis Holdings Inc (CSE:NAB) (OTCMKTS:NABIF) is a new cannabis investment company creating a portfolio of vertically integrated multistate operations in the US and globally.

The Canadian company derives its name from the term “Na bis”, which means ‘repeat performance’ or ‘encore.’ It is focused on investing across all verticals of the cannabis sector, looking at opportunities with strategic revenue generation and growth potential.

The management team have proven experience in capital markets. CEO Shay Shnet and president Mark Krytiuk cofounded MPX Bioceutical (CSE:MPX), the subject of one of the largest takeover offers in the US cannabis space through its C$835 million merger with iAnthus.

Nabis’s investment strategy is simple: focused on EBITDA positive, vertically integrated operators with large addressable markets. It emphasizes operations that add significant earnings within 12 months and have strong brand traction.

READ: Nabis Holdings to buy Desert’s Finest, a California dispensary near Coachella

After Shnet and Krytiuk joined Nabis in November 2018, the team has been blazing a trail of acquisitions and investments. In January 2019 the company announced a series of game-changing transactions, starting with the purchase of properties in Michigan that have municipal approvals for provisioning centres, with the goal of opening weed dispensaries on the site.

It also made a transformational investment into HIVEMIND, an established CBD wellness product line of edibles, water, drops and lotions. With a 70% interest in the company, Nabis anticipates that HIVEMIND will cater to an exponentially growing CBD wellness segment that includes personal health, athletic line, nutraceutical, and beauty products across North America.

Next on the agenda was Washington State, where it signed a letter of intent to purchase extraction & production equipment and rights to lease the current production facility, as well as licensing rights to produce Chong’s Choice Brand CO2 Vape Cartridges, one of the leading brands in the cannabis space.

On the technology front, Nabis executed a strategic deal to acquire Bloombox, one of the world’s first standards-based cannabis software systems. The cannabis company feels that having Bloombox in its arsenal will create a dominating presence in the US cannabis market, featuring an integrated ecosystem of modern, next-generation cannabis software.

READ: Nabis Holdings completes stake in hot Israeli cannabis tech company Cannova Medical

More recently Nabis took a 49% stake in Cannova Medical, which has a patented cannabis delivery technology platform. Israel-based Cannova Medical’s line of cannabis sublingual strips overcome delivery and dosing challenges, providing easy-to-use, non-smoke solutions for consuming different types of cannabis or CBD formulations.

Upcoming catalysts

Nabis has a series of exciting, well-defined catalysts coming up that should drive revenue growth into 2020.

The company is targeting C$15 million revenue in 2019 and C$168 million in revenue in 2020 from the Michigan, Arizona and Washington State assets.

Additionally, Nabis is currently evaluating further expansion opportunities in its pipeline, such as cultivation facilities and vertically integrated operations that would significantly increase the potential 2020 revenue and also improve EBITDA margins.

In Michigan, Nabis has signed binding definitive agreements to acquire eight properties that have municipal approvals for provisioning centers. Four of the eight have closed.

The provisioning centers are expected to generate approximately C$8 million in annual revenue in 2019 and C$105 million revenue in 2020, with gross margins estimated at 55%.

The company also closed a municipally approved property in Bangor City, Michigan which includes 10 cultivation licenses and one processing license. Cultivation at the property is expected to start in Q1 2020 with output of the first harvest cycle expected to produce about 3,750 lbs per harvest and more than 22,000 lbs per year.

In Arizona, where Nabis is acquiring full control of a basket of operating assets, the company expects to generate revenue of C$6 million in 2019 and C$54 million in 2020. Nabis is currently evaluating between five and 10 further investment opportunities in the state across the full cannabis spectrum.

Finally in Washington State, Nabis plans to expand existing operations by constructing a new ISO (International Organization for Standardization) designed extraction clean room and GMP lab facility, with new highly specialized equipment, including two new extraction lines, which could produce up to 20,500 kg of cannabis concentrate on an annual basis at a cost of US$3 million.

What the CEO says

In a statement about the company’s June acquisition of Desert’s Finest, a 6,000 square foot dispensary in California that marks its first entry into the state, CEO Shay Shnet expressed excitement at moving into one of the most dominant cannabis markets in the US.

 “Desert’s Finest has successfully generated material revenue driven in part by their convenient dispensary location in the Palm Springs region and extensive list of registered patients,” Shnet said. “We look forward to adding Desert Hot Springs to the Nabis portfolio and the loyal customer base to the Nabis brand.”

Contact Angela at [email protected]

Follow her on Twitter @AHarmantas

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The Canadian company's investment strategy is simple and focused on EBITDA positive, vertically integrated operators with large addressable markets
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