Rural Farms Expands Presence with Acquisition of Rose LifeScience

Three key takeaways from TDR for Rural Farms and Rose LifeScience:

1. Village Farms increased its stake in Rose LifeScience Inc. based in Quebec by 10%.
2. Village Farms leverages greenhouse expertise through the Rose LifeScience partnership.
3. Village Farms was recognized at the TDR Small Cap Sunday event two weeks ago.

Village Farms International (NASDAQ: VFF) announced yesterday that it has increased its stake in Rose LifeScience Inc. based in Quebec by 10% and currently holds 80% of the shares. Michael DeGiglio, president and CEO of the company, shared his view on the increased ownership: “The initial 70% acquisition of Rose stands out as one of the most complementary business combinations in the history of the Canadian cannabis industry to date. Since the end of 2021, the combination of the experienced Rose and Pure Sunfarms teams has propelled Village Farms to the number two share position in the country as rose sales have increased over 300% to reach second place in share rankings in Quebec, with each narrowing the gap to number one.”

This investment is part of the company’s strategy to leverage its extensive experience in low-cost, large-scale greenhouse operations for growing in the cannabis industry. By increasing its stake, Village Farms intends to leverage Rose LifeScience’s market position and operational strengths. “We have the opportunity to continue to grow our business as part of Village Farms while focusing on and supporting our home market in Quebec,” added Davide Zaffino, co-founder, president and CEO of Rose.

By the way, we highlighted Village Farms earlier on Small Cap Sunday, highlighting its potential as a promising investment. The company released an earnings report showing net sales increased 49% in the first quarter of 2024 to $37.4 million, up from $25.1 million in the prior quarter. Total sales, including both agricultural and cannabis products, increased 21% year-over-year to $78.1 million. The company’s three-year cumulative growth rate is 18.9%, which means consistent revenue growth.

The shift from agricultural products to cannabis is strategic and aimed at higher gross margins. The combined company’s gross margin is 18.6%, but its cannabis business segment is 32%, indicating higher gross profit margins for cannabis. This transition increases profitability and aligns the company with the growing cannabis industry.

Village Farms strategic partnerships to optimize production, distribution and market penetration. As the cannabis market is expected to grow significantly, the company’s proactive steps allow it to gain significant market share.

For investors, this move signals Village Farms’ strong growth strategy and commitment to maximizing shareholder value through strategic acquisitions and market expansion. Want to stay up to date with everything related to psychedelia, cannabis, artificial intelligence and cryptocurrencies? Sign up for our Daily Baked in newsletter!