High Tide Q4 FY2025 Update - $HITI & $HITI.v

A Look Under the Hood

*Disclosure: I own shares in HITI.v. I am not a professional. Please do your own due diligence.*

Price: C$3.08

MC: ~C$273M

EV: ~C$295M

1 year performance: -21.7%

High Tide reported FY2025 and Q4 FY2025 results last night and held a call today. Q4 was strong, with record revenue and record Adjusted EBITDA, driven by continued outperformance in Canadian retail and initial contribution from Remexian in Germany. Detractors where e-commerce (again) and some delays.

The stock was off ~6%.

*All numbers in $CAD unless stated otherwise.

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Quarter Recap

• Q4 F25

  • revenue: $164.0M (+19% YoY; +10% QoQ)

  • gross profit: $42.5M (+19% YoY); gross margin 26% (flat YoY; down from 27% in Q3)

  • Adjusted EBITDA: $12.4M (+51% YoY; +17% QoQ); 22nd consecutive positive quarter

• FY2025

  • revenue: $594.0M (+14% YoY)

  • Adjusted EBITDA: $38.2M (flat YoY)

Business segments

• Bricks-and-mortar retail (Canna Cabana):

  • 92% of revenue; segment revenue +15% YoY in Q4; same-store sales +5.5% YoY.

  • 218 stores across BC/AB/SK/MB/ON.

  • Annualized retail sales per sq. ft. (ex new stores): $1,775.

  • Market share: 12% across the 5 provinces where it operates (up from 11% YoY).

  • Canada Cabana Club members: 2.50M (+45% YoY); ELITE members: 151k (+107% YoY).

  • Global Cabana Club members: 6.56M (+23% YoY); global ELITE: 160.4k (+111% YoY).

• Data/advertising/other (Cabanalytics + other income): $13.1M in Q4 (+20% YoY; +9% QoQ).

• Medical cannabis distribution (Germany – Remexian): first partial-quarter contribution; impacted by Portugal processing delays / older biomass.

• E-commerce (US CBD + online): small (~2% of revenue) and still challenged; resulted in non-cash impairment in Q4.

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Conference Call Notes (paraphrased with AI)

Germany / Remexian Disruption

The operational disruption in Germany was not demand-related, but instead stemmed from a processing and export bottleneck in Portugal. Portuguese authorities slowed exports due to issues caused by a small number of bad actors. When exports resumed, regulators prioritized releasing product closest to expiry, forcing Remexian to sell cannabis that was only three to four weeks from expiry.

At the time of acquisition, Remexian had approximately 16–17 tonnes of biomass stuck in Portugal. Clearing this inventory required selling at single-digit gross margins, resulting in sub-optimal pricing and a temporary working-capital drag. That said, management noted it was still impressive that product could be sold above cost even after roughly ten months, highlighting the strength of Remexian’s distribution network.

Importantly, High Tide has eliminated reliance on Portugal as a single point of failure by diversifying processing routes. New supply channels now include:

• Malta, with a new processing partner and first shipments expected in late February or early March

• Czechia, where shipments have already been successfully rerouted

• Germany (direct processing), expected to come online in March, removing an entire cross-border step

On procurement, management stated that High Tide has already secured biomass at 30–40% lower prices than Remexian previously paid and has sourced approximately 5–6 tonnes to date. Producer interest has been strong, with European partners in markets such as the UK and Poland reportedly “unable to believe the pricing” High Tide is offering.

Inventory levels are now improving. Of the original 16–17 tonnes stuck in Portugal, management indicated that roughly half (or slightly less) remains. December saw 2.6 tonnes sold, the second-highest monthly tonnage in Remexian’s history. January volumes were slightly lower than December but remained materially stronger than September through November.

Looking ahead, management expects:

• Continued pressure in Q1 FY26

• Visible improvement in early Q2

• A materially cleaner operating profile by late Q2 / Q3, as legacy inventory clears and new supply routes normalize

Retail in Germany

Management addressed the German Canna Cabana retail presence directly:

• The existing store sells accessories only

• Revenue expectations are minimal

• The store is primarily symbolic, intended to plant the brand locally

• A temporary permitting issue is being resolved

• Near-term financial focus remains squarely on Remexian distribution, with future retail optionality if regulations evolve

UK and broader Europe

High Tide also confirmed plans to expand beyond Germany. The UK medical cannabis market is growing rapidly, with first sales expected in Q2 FY26 (or earlier), subject to the same qualification process. Over the longer term, management highlighted Poland, France, and Spain as additional potential markets.

Canada Retail

• Store maturation: New stores are taking longer to ramp due to increased competition, but management expects them to reach historical run-rates as weaker competitors and locations exit the market.

• Margin expansion: Retail gross margins improved for the fourth consecutive quarter, driven by higher ELITE penetration, same-store sales growth, and an expanding white-label mix.

• M&A: Management disclosed active discussions with groups representing blocks of ~40–50 stores (and potentially larger), while still targeting 20–30 organic store openings in calendar 2026.

• White label SKUs are being expanded deliberately

  • Centralized assortment ensures:

    • Faster rollout

    • Cleaner shelf execution

    • Higher-margin contribution over time

  • Management emphasized patience, not forced penetration

United States & E-commerce

• Rescheduling / CBD: Management noted rising inbound interest from large U.S. operators and highlighted potential upside from a proposed Medicare pilot program that could cover up to US$500 per year in CBD products for seniors.

• E-commerce strategy: While previously exploring a JV or sale of U.S. e-commerce assets, High Tide is now delaying major decisions pending greater clarity on U.S. CBD regulation.

Additional Operational Detail

Budtenders

• They do not control ordering

• Licensed producers cannot “influence” individual stores

• This ensures:

  • Consistent customer experience

  • Better purchasing leverage

  • Reduced SKU sprawl and inventory risk

• Budtenders are hired up to one month before their official start date

• Training includes:

  • Multi-store exposure before placement

  • Several days of in-store training at their assigned location

  • A centralized online Cabana learning portal

  • Ongoing quarterly re-certification requirements

BC Strike

• A government employee strike in British Columbia disrupted cannabis distribution province-wide

• Industry-wide sales in BC fell ~55% month-over-month

• High Tide’s BC stores declined only ~5% sequentially

• They attributed this to:

  • Long-standing supplier relationships

  • Ability to “work the supply chain”

  • Inventory planning and execution at the store level

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Valuation

On a ttm basis, HITI is at 7.5x EV/EBITDA. Looking forward for fiscal 2026, we are closer to 6.2x EV/EBITDA. This is the low end of the valuation range over the last 3 years.

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Closing Thoughts

Canada Retail

HITI is a big of a mixed bag to me. Operationally they are going strong in Canada. It does appear that they are hitting some resistance when it comes to scaling new stores in Canada. I do believe they will have their stores hit their internal metrics for revenue and profitability although at a slower pace than in the past. This is important as domestic growth was the largest source of group for HITI up until today.

International

The expansion internationally is not a real concern for me at the moment. I expect delays as these sorts of logistical nuances get sorted out. Such is the risk when purchases Canadian cannabis companies that are reliant on international revenue.

The note around them expanding into the UK later in 2026 was encouraging. They tone is bullish for sure.

E-Commerce

What I am still processing is how I think about their e-commerce segment. They took a large write-down this quarter on the segment. This data point and the continued operating losses demonstrate that it has not been a fruitful endeavor for the business. Having said that, if there was more traction on the US legalizing, HITI had a presence that would have given them an early mover advantage. The CEO stated that he would “do something” if this part of the business doesn’t perform and it hasn’t. So now is the time. I think there can be a balance between keeping the option open vs continued cash burn.

I know that in the past the CEO has minimized the impact of e-commerce as “only 2% of revenue”, but if it was winddown I think there is another 20-40 million CAD (~2-4 million CAD in EBITDA losses at a 10x multiple) in market cap or 0.23-0.45 per share. This may be a simplistic way of looking at things, but it’s a free newsletter so what do you expect?

HITI and the cannabis basket

HITI did give some additional data points around the stability in the domestic marketplace. This did give me some confidence in the other names in my cannabis basket.

I have a small position in HITI, and I may add a bit here. I think it’s a reasonable way to get exposure to the cannabis industry in Canada and internationally.

Thanks for reading my work.

Dean

*long HITI.v*