GrowGeneration Corp., a Denver-based chain of hydroponic retail stores, planted some East Coast roots Wednesday by snapping up a hydroponic equipment supplier in Rhode Island.
GrowGeneration bought the assets of East Coast Hydroponics Warehouse, a 10,000-square-foot hydroponic products warehouse and retail store in Warwick, R.I., for $1.8 million in cash and 300,000 shares of stock, according to regulatory filings made Wednesday with the U.S. Securities and Exchange Commission. Shares of GrowGeneration (OTCQX: GRWG) on Wednesday closed at $7.67, down 53 cents, or 6.5 percent.
The acquisition of East Coast Hydroponics is expected to add $5 million in annual revenue and continues GrowGeneration’s strategy of purchasing large hydroponic retail operations in key markets — positioning the company’s brand in legal cannabis states, officials said.
“The company believes that, with this acquisition, it can increase sales through market penetration into the adjacent states of Massachusetts, Maine, Vermont, and New Hampshire,” Darren Lampert, GrowGeneration’s co-founder and chief executive officer, said in a statement. “We have a strong acquisition pipeline and look forward to continuing our rapid expansion plan. The company anticipates expanding its US model into Canada in 2018.”
This acquisition brings GrowGeneration’s operations base to 15 locations: nine in Colorado, two in California, two in Las Vegas, one in Rhode Island, and one in Washington.
GrowGeneration officials could not be immediately reached Wednesday for comment.
In GrowGeneration’s most recent quarter, which ended on Sept. 30, 2017, the company reported nearly $4.03 million in revenue and a net loss of $460,887. Nine months through 2017, GrowGeneration’s revenue totaled $10.72 million and the company recorded a net loss of $1.08 million.