High Tide Inc.

High Tide Inc. Annual Report Summary: Fiscal Year Ended October 31, 2025

High Tide Inc., a leading diversified cannabis company, navigated a dynamic market in fiscal year 2025, achieving significant top-line growth while strategically expanding its retail footprint and international presence. This summary offers potential investors a clear overview of the company's performance and strategic direction for the fiscal year ended October 31, 2025.

Company Overview

High Tide Inc. operates across several key segments:

• Retail Stores (Canna Cabana): This core business operates 211 branded retail cannabis stores across Canada as of October 31, 2025 (growing to 218 post-fiscal year end). This segment drives most of the company's revenue.
• Online Sales (E-commerce): Global sales of consumption accessories and CBD products occur through various platforms like Smoke Cartel, Grasscity, and Daily High Club.
• Medical Cannabis Distribution: A new venture in Germany following the acquisition of Remexian Pharma GMBH.
• Proprietary Brands: High Tide develops and sells "white-label" cannabis brands (e.g., Queen of Bud, Cabana Cannabis Co.) and hemp-derived CBD brands (NuLeaf Naturals, FAB-CBD, Blessed CBD).
• Data Analytics Services: The company provides insights into customer trends and market dynamics.
• Loyalty Programs: High Tide operates the world's largest cannabis loyalty programs, Cabana Club and ELITE, which are crucial for customer retention and engagement.

Financial Performance Highlights (Fiscal Year Ended October 31, 2025)

High Tide Inc. achieved strong top-line growth but encountered profitability challenges during the year.

• Revenue: Total revenue grew by a solid 14% to $594 million, up from $522 million in the prior year.
  • Retail Stores: This segment generated 95% of total revenue, with growth primarily from 27 new store openings ($52.3 million) and increased sales at existing stores ($17.4 million).
  • Medical Cannabis Distribution: The acquisition of Remexian Pharma GMBH in Germany (acquired in August 2025) added nearly $9.8 million in revenue over two months.
  • Data Analytics Services: This segment saw robust growth, contributing $47.7 million, a 30% increase from $36.7 million last year.
  • Online Sales (E-commerce): This segment experienced a significant $19 million decline, now representing only 2% of total revenue ($11.9 million, down from $30.9 million last year).
  • Product Mix: Sales of cannabis and hemp products increased 15% to $521 million, while consumption accessories sales decreased 23% to $25.2 million.
• Gross Profit: Gross profit increased 8% to $153.5 million from $142.5 million. However, the gross profit margin slightly dipped to 26% from 27% in the prior year, indicating potential pricing pressures or shifts in product mix toward lower-margin items.
• Adjusted EBITDA: Adjusted EBITDA remained relatively flat at $38.2 million compared to $38.3 million last year. Consequently, the Adjusted EBITDA margin declined to 6% from 7%, suggesting increased operating expenses relative to revenue growth, despite the core Canadian retail business maintaining an 8% margin.
• Net Loss: The company reported a significantly larger net loss of $51.4 million, compared to a loss of $3.8 million in the prior year. Non-cash charges, such as impairment of goodwill and other intangible assets related to past acquisitions, and increased general and administrative expenses primarily drove this substantial increase.
• Cash Flow:
  • Net cash from operating activities was $23.9 million, down 33% from the prior year.
  • Free cash flow was $12 million, a 45% decrease from $22 million last year. Higher costs associated with acquisitions and increased working capital investments for business expansion primarily caused this reduction.

Operational Highlights & Strategic Progress

• Retail Expansion: High Tide successfully opened 27 new stores in Canada, meeting expansion targets and solidifying its position as one of the largest cannabis retail chains.
• Loyalty Programs: The Cabana Club loyalty program in Canada grew an impressive 45% to over 2.5 million members, with a global reach of over 6.56 million. The paid ELITE membership also saw strong growth, exceeding 151,000 members in Canada. These programs drive customer retention and market share.
• International Expansion: The acquisition of Remexian Pharma GMBH marked a strategic entry into the European medical cannabis market, providing a new growth avenue.
• White-Label Brands: High Tide actively promotes its proprietary "white-label" cannabis brands, which currently represent 1% of retail cannabis sales, aiming for higher profit margins.

Financial Health & Capital Structure

• Liquidity: Despite the increased net loss, the company generated $12 million in free cash flow, demonstrating its ability to fund operations and internal growth. High Tide anticipates remaining free cash flow positive in 2026.
• Working Capital: The new German medical cannabis business requires significant working capital due to longer payment cycles, which the company actively manages.
• Capital Raising Flexibility: High Tide accesses capital markets through an 'at-the-market' (ATM) program, established in August 2023, which allows it to sell up to $30 million in shares. A base shelf prospectus from August 2025 further enables the potential issuance of up to $100 million in various securities over 25 months, offering flexibility for future growth initiatives and acquisitions.

Key Risks & Opportunities

• Regulatory Environment: The cannabis industry remains highly regulated. Legislative changes in Canada, Germany, or other potential markets present ongoing risks and opportunities.
• E-commerce Decline: The significant drop in e-commerce revenue concerns the company, which currently evaluates strategic options for this segment.
• Integration Risk: Successful integration and performance of newly acquired businesses, such as Remexian Pharma GMBH, are crucial to realizing strategic benefits.
• Dilution Risk: Future capital raises through the ATM program or shelf prospectus could dilute existing shareholders' ownership.
• Competition: High Tide operates in a highly competitive landscape, particularly in Canadian retail and global e-commerce, which demands continuous innovation and efficient operations.
• US Market Opportunity: The US President's Executive Order in December 2025 presents a significant opportunity, advancing cannabis rescheduling and a CBD pilot program for Medicare beneficiaries. This could unlock substantial growth for High Tide's US CBD businesses (NuLeaf Naturals, FAB CBD). However, it also introduces temporary regulatory uncertainty, prompting the company to pause major US e-commerce transactions until a clearer framework emerges.

Competitive Position

High Tide Inc. maintains its competitive position through several strategic advantages in the evolving cannabis market:

• Scale and Market Presence: As one of Canada's largest cannabis retailers with 211 stores, High Tide leverages economies of scale in purchasing, marketing, and distribution. This extensive footprint enhances brand recognition and customer accessibility across key Canadian markets.
• Differentiated Retail Model: The company's discount club model, anchored by the Cabana Club and ELITE loyalty programs, serves as a key differentiator. These programs foster strong customer loyalty, drive repeat business, and yield valuable data insights into consumer preferences, which High Tide leverages for targeted marketing and product development. The loyalty programs are noted as the world's largest in the cannabis sector.
• Vertical Integration and Proprietary Brands: High Tide strategically focuses on developing and promoting its "white-label" cannabis brands to capture higher profit margins and offer unique product differentiation from third-party offerings. This strategy reduces its reliance on external suppliers for certain product categories.
• Diversified Business Segments: Beyond its core retail operations, High Tide's involvement in global e-commerce for consumption accessories, medical cannabis distribution in Europe, and data analytics services provides multiple revenue streams and reduces its dependence on any single market or product category.
• Strategic International Expansion: Proactive entry into the German medical cannabis market through Remexian Pharma GMBH positions High Tide to capitalize on emerging European market opportunities, diversifying its geographic risk and growth potential.
• Operational Efficiency: The company's ability to generate free cash flow despite a highly competitive and regulated environment suggests it focuses on operational efficiency and disciplined capital allocation.

Outlook & Strategic Priorities (2026 and Beyond)

High Tide Inc. outlines ambitious plans for continued growth and profitability:

• Canadian Retail Expansion: High Tide aims to open another 20-30 new stores in Canada in 2026, working toward a long-term goal of over 350 locations.
• White-Label Growth: Strategically, High Tide focuses on increasing the contribution of higher-margin white-label cannabis products from 1% to a target of 20% of retail cannabis sales. The company did not provide a specific timeframe for achieving this 20% target.
• Loyalty Program Growth: High Tide expects continued growth in its loyalty programs, targeting over 3 million Cabana Club members in Canada.
• European Medical Cannabis: High Tide will accelerate growth and market penetration in the German medical cannabis market through Remexian Pharma GMBH.
• US Market Re-engagement: High Tide closely monitors US regulatory developments to strategically re-engage and capitalize on potential opportunities for its US CBD businesses.
• Financial Stability: The company anticipates remaining free cash flow positive for 2026, which will support its growth initiatives.