By Tom Kerr, CFA
NASDAQ: HITI
READ THE FULL HITI RESEARCH REPORT
3rd Quarter Results (period ending July 31, 2026)
On September 14, 2026, High Tide (NASDAQ: HITI) released fiscal 3rd quarter results, which set company records at almost all levels. Both business segments appear to be firing on all cylinders.
Revenue reached a record $198.8 million in the 3rd quarter, increasing 33% year-over-year and 11% sequentially, marking the fifth consecutive quarterly revenue record. Gross profit increased 32% year-over-year to a record $52.7 million, while gross margin remained stable at 27%.
Adjusted EBITDA rose 53% year-over-year and 17% sequentially to a record $16.2 million, with EBITDA margin reaching 8.2%, its highest level in 12 quarters. Operating income also hit a record $8.7 million, up 133% year-over-year and 43% sequentially, while net income reached a record $12.7 million versus $0.8 million a year ago.
The company continued to improve operating efficiency, with G&A expenses declining to 3.9% of revenue from 4.4% a year ago, and salaries, wages, and benefits falling to 11.4% from 12.2%. Revenue and adjusted EBITDA growth also significantly outpaced share-count dilution, growing 2.5x and 3.9x faster than the average basic share count, respectively.
Cash flow from operations before working-capital changes reached a record $11.9 million, up 44% year-over-year and 36% sequentially. Free cash flow was $7.0 million, an increase from $1.5 million sequentially, despite an additional $4.2 million investment in working capital to support growth.
Cash and restricted cash totaled $47.1 million as of July 31, 2026, up from $36.5 million sequentially but below $63.8 million a year earlier. Net working capital was $48.4 million, and the current ratio was 1.5x. The company has $25 million in availability on its new Bank of Montreal credit line.
Segment & Operational Review – Retail
Canna Cabana remains Canada’s largest cannabis retail chain with 232 locations and a 14% market share (excluding British Columbia), up from 13% a year ago. Cabana Club membership surpassed 2.73 million, up 27% year-over-year, while ELITE membership increased 62% to more than 186,000. We believe the average Canna Cabana store generates 1.8x the revenue of its peers.
3rd quarter same-store sales were roughly flat year-over-year, although sales turned positive in June and July, while same-store transaction volume increased 1.1%. Since launching its discount club model in 2021, Canna Cabana’s same-store sales have risen 171%, compared with a 1% decline for the average operator. Over the 12 months through June 2026, industry sales in its five provinces grew 3%, versus 10% growth for Canna Cabana.
Operational performance also remained strong, with shrink at just 0.2%. Excluding newer stores still ramping, annualized sales reached $1,721 per square foot, highlighting Canna Cabana’s strong store productivity and positioning it among leading international retailers.
Segment & Operational Review – Medical Cannabis
Remexian delivered record performance in the 3rd quarter, distributing 10.2 tonnes of medical cannabis into Germany, up 62% year-over-year and 35% sequentially. Revenue reached a record $38.2 million, up from $31.6 million in Q2, with a 26% gross margin.
Valuation
We are maintaining our DCF derived price target of US$5.00 per share, which still represents meaningful upside from current price levels. While many cannabis stocks do tend to move together in response to major industry-wide catalysts (such as rescheduling), we believe there can be major divergence in specific companies based on specific fundamentals. High Tide is likely one of those positive outliers due to a potential recovery of Canadian same-store sales growth to normal levels, successful new store openings, continued margin improvement, and a successful expansion into European markets.
We also look at peer multiples to provide a secondary valuation methodology. Although it’s difficult to find exact comparisons due to a variety of business models, country location, and financial data, we believe a set of cannabis related stocks are trading at an EV/EBITDA ratio of approximately 8.5x currently.
With HITI trading at only approximately 5.5x annualized run-rate EBITDA, there appears to be material upside from a peer perspective.
In addition, Canadian-based Organigram Global recently acquired Germany-based Sanity Group, a competitor to Remexian. The Sanity Group acquisition is roughly the same size as High Tide’s purchase of Remexian in terms of revenue (Remexian is more profitable), but Organigram is paying substantially higher multiples than High Tide did (believed to be over 12x). This demonstrates High Tide’s European business is truly an undervalued and unrecognized asset.
Summary and Outlook
Physical Retail
Canna Cabana is the largest cannabis retail chain in Canada with 232 locations. Canna Cabana also owns and operates a location in Berlin, Germany, selling consumption accessories. The company reiterates its long-term goal of surpassing 350 locations across Canada and opening over 20 locations in calendar 2026, mostly through organic growth, while also evaluating tuck-in acquisitions of various sizes.
White Label Initiatives
High Tide continues to expand its white label cannabis product portfolio under its flagship Queen of Bud and Cabana Cannabis brands, increasing SKUs from 41 to 48 compared to Q2. The company is also developing several new offerings to further develop its white label portfolio. Currently, white label cannabis SKUs represent approximately 1.9% of physical retail cannabis sales. Over the long term, the company anticipates significant growth in its white label portfolio.
Cabana Club & ELITE
The Cabana Club and ELITE loyalty programs remain the largest cannabis loyalty programs in the world and continue to expand at a rapid pace across Canada. Cabana Club membership has now surpassed 2.73 million members in Canada, which is up 27% in the past year. Over the long term, the company anticipates exceeding 3 million Cabana Club members in Canada. ELITE, the paid membership tier, now exceeds 186,000 members in Canada after growing by 62% compared to last year, with additional members being onboarded daily.
Europe
High Tide’s German medical cannabis subsidiary, Remexian Pharma GmbH, has continued to gain momentum since the company acquired a majority stake, with market share rising from 6.5% to 10.5% in the first six months post-transaction. While industry data is unavailable, Remexian’s shipments have increased 44% since the three months ended March 31, 2026. Management believes Remexian is well positioned to sustain and potentially expand its German market share, supported by strong Canadian supply relationships and continued growth in Germany’s medical cannabis sector. Record Q3 distribution volumes further demonstrate this momentum and, assuming the regulatory framework remains largely unchanged, could signal the business’s growth potential in coming quarters. The company is also evaluating opportunities in other European markets while remaining strategic about expansion to maximize shareholder value. The company disclosed it has been having conversations with operators in the U.K.
United States
The company's conviction in the long-term opportunity for its U.S. hemp-derived CBD subsidiaries continues to be reinforced by evolving federal policy. As a founding member of the U.S. National Compassionate Care Council, the company and NuLeaf Naturals remain focused on shaping medical cannabis policy and expanding access to cannabinoid therapies. Federal reform accelerated on April 23, 2026, when the DOJ and DEA moved FDA-approved cannabis drugs and state-licensed medical marijuana from Schedule I to Schedule III, marking the most significant shift in U.S. federal cannabis regulation in decades. The DEA subsequently held a June 29–July 15 hearing to consider broader cannabis rescheduling.
Broader rescheduling, if implemented, could significantly impact the U.S. cannabis industry and the listing policies of major North American exchanges. High Tide is assessing whether it could enable exchange-listed companies to enter the U.S. state-legal adult-use market while maintaining their listings. The company has engaged Nasdaq and the TSX Venture Exchange regarding potential policy changes and continues to explore U.S. adult-use opportunities with multiple counterparties.
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