By Michael Kim
NASDAQ:HITI
READ THE FULL HITI RESEARCH REPORT
After the markets closed on 1/29/26, High Tide (NASDAQ:HITI) reported F4Q25 and full-year F2025 (Oct) earnings results. For the quarter, HITI reported a net loss of $33.2 million, or $(0.39) per share compared to our $0.01 EPS estimate. That said, excluding an impairment charge (e-commerce segment goodwill written off; segment currently accounts for 2% of consolidated revenue) and a fair value change in derivative liability (mostly a function of higher EBITDA forecasts for the Remexian put option), we put adjusted net income at $0.3 million for the quarter, or essentially breakeven on a per share basis.
Relative to our model, higher operating income (mostly a function of lower-than-forecast operating expense) was offset by less favorable non-operating trends (higher finance costs and FX losses) – Exhibit 1. Focusing on the top line, HITI generated $116.7 million of revenue in F4Q25, or just ahead of our $116.1 million forecast. Strong year-over-year and sequential quarter growth primarily reflected accelerating sales of cannabis and CBD products, with same-store sales growth of 5.5% for the quarter. After factoring in cost of sales of $86.5 million, gross profit totaled $30.3 million for F4Q25 representing a gross margin of 25.9%, or essentially flat on a year-over-year basis.
In aggregate, HITI’s operating expenses totaled $27.1 million (ex impairments) in F4Q25, down from $27.7 million in F4Q24, and meaningfully below our $28.3 million forecast. Much of the favorable variance related to lower salaries, share-based compensation, and interest expenses. Excluding non-cash impairment, loss on fair value change in derivative liability, transaction and acquisition costs, and share-based compensation, Adjusted EBITDA came in at $8.8 million (7.6% margin) for F4Q25, up from $5.9 million in the year-ago quarter.
Turning to the balance sheet, cash and cash equivalents totaled C$47.9 million as of October 31, 2025, essentially unchanged for the year, and down sequentially reflecting the upfront C$12.3 million payment for Remexian. Looking ahead, management maintains ample liquidity (along with accelerating free cash flows) to fund ongoing new store openings and capitalize on accretive M&A opportunities should they arise.
Our updated model calls for EPS of $0.09 for F2026 versus our prior forecast of $0.12, primarily reflecting flatter revenue and gross margin trajectories. Furthermore, we are introducing a F2027 EPS estimate of $0.17 representing 89% year-over-year growth.
Looking ahead, our model calls for consistent revenue growth through F2026 and beyond. More specifically, we forecast total revenues to rise from $423 million in F2025 to $579 million in F2026 and $700 million in F2027. Our optimism primarily reflects continued organic growth (rising same-store sales and ongoing market share gains), a broader retail store footprint, with the company’s store count likely approaching 300 over the next several years (potentially quicker assuming management capitalizes on sizeable M&A blocks coming to market), and accelerating Remexian contributions, particularly as supply chain disruptions in Portugal continue to normalize and the company’s distribution footprint expands beyond Germany.
Focusing on Adjusted EBITDA, which excludes transaction costs, other non-recurring items, and stock-based compensation expenses, we forecast a step up in related growth in F2026 fueled in part by ongoing margin expansion. Beyond strong revenue growth, key drivers likely include a step up in gross margins following the sell-through of older/lower-priced product, rising economies of scale, particularly as it relates to incremental headcount needs, ongoing expense management/resource optimization, and accelerating growth across higher-margin initiatives (white label and ELITE memberships). In fact, management reiterated the company’s long-term EBITDA margin goal of 12% for HITI’s bricks-and-mortar business segment (9.4% in F4Q25).
Turning to valuation, as a result of our lower earnings outlook, we are taking down our DCF-derived price target to $5.00 – still well above the stock’s current levels. Stepping back, absolute/relative performance of most U.S.-based cannabis company stocks remains inextricably linked to the prevailing narrative around regulatory reform in the U.S. In contrast, we look for HITI’s strong/improving fundamental story to increasingly resonate with (generalist) investors, thereby driving a material upward revaluation for the stock.
We highlight the following key takeaways from F4Q25 results:
1. Organic growth remains strong: High Tide remains the largest cannabis retailer in Canada, with 218 Canna Cabana stores across Alberta, Ontario, Saskatchewan, Manitoba, and British Columbia, representing a 12% market share (up from 11% a year ago). The company opened 27 new stores in calendar 2025, and management reiterated guidance of 20-30 new store locations targeted for 2026, with a longer-term goal of operating 350+ locations across Canada. Turning to performance, Same Store Sales (SSS) were up 5.5% in F4Q25 and 4.1% for Fiscal 2025. Longer term, SSS increased 151% since the launch of Cabana Club in October 2021, versus a 14% decline for peers on average. From a revenue perspective, Canna Cabana stores in operation for more than six months generated annualized retail sales per square foot of $1,775 during F4Q25, up 2%+ on a sequential quarter basis (with rising margins and minimal shrinkage rates).
2. Cabana Club remains HITI’s crown jewel: Following the launch in 2021, HITI’s Cabana Club loyalty program continues to flourish. As of 10/31/25, memberships in Canada exceeded 2.5 million, up 45% over the last 12 months (the highest year-over-year growth rate over the past four quarters) and 16% on a sequential quarter basis, with the company on track to exceed 3 million members over time. Moreover, the number of global memberships rose to 6.56 million as of the end of fiscal 2025, representing year-over-year and sequential-quarter growth rates of 23% and 7%, respectively. In Canada, ELITE membership subscriptions (carrying C$35 annual fees) surged by 100%+ year-over-year to 151,000 as of 10/31/25. Importantly, ELITE members typically generate higher-dollar receipts with greater frequency, with related membership fees providing a growing source of recurring/high-margin revenues.
3. Rescheduling dual-track opportunity: In mid-December 2025, President Trump issued an executive order instructing the attorney general to expedite the process of rescheduling marijuana to Schedule III of the Controlled Substances Act. Looking ahead, assuming the Drug Enforcement Administration (DEA) publishes a final rule in the Federal Register following Health and Human Services (HHS) scientific and medical evaluations, a public comment period, and potential hearings, we would expect opponent groups to immediately file a “petition for review” and request a “motion to stay” to suspend the effective date. If a judge denies the motion to stay, rescheduling takes effect. That said, if the stay is granted, the ruling remains suspended pending the outcome of related litigation, which could persist for multiple years.
Stepping back, the rescheduling of marijuana from Schedule I to Schedule III potentially paves the way for several key benefits for cannabis-related businesses in the U.S. First, Internal Revenue Code Section 280E would no longer apply, thereby providing for the deduction of business expenses on federal tax returns. Beyond immediate cash flow benefits on a go-forward basis, cannabis companies likely settle outstanding liabilities with the government. Second, marijuana rescheduling likely improves access to banking/financial services for cannabis companies, thereby lowering costs of capital, all else equal. Third, less onerous tax burdens potentially promote stepped-up spending on marketing and/or research and development, thus enhancing sustainable growth across cycles. More broadly, lower regulatory/financial barriers likely spur growth across the industry, with scale-enabled MSOs seemingly well positioned to gain market share, we believe.
Focusing on HITI, management remains focused on bringing the company’s Canna Cabana brand, unique discount club model, and related intellectual property/systems/technology to the U.S., likely via licensing agreements with scale-enabled MSOs. We would expect any related partnerships to be highly profitable given limited incremental expenses. Separately, senior officials continue to explore strategic initiatives to more fully leverage the company’s NuLeaf Naturals and FAB CBD brands here in the U.S. in light of the inclusion of CBD products under pending pilot programs that provide for up to $500 per year of CBD products at no cost to the 29+ million Medicare beneficiaries enrolled in private Medicare Advantage plans.
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