High Tide (HITI) Q3 2025: Bricks-and-Mortar EBITDA Jumps 42% as German Expansion Reshapes Growth Path
High Tide delivered its strongest quarter ever, fueled by a 42% surge in bricks-and-mortar EBITDA and a transformative entry into Germany’s medical cannabis market. The company’s disciplined capital allocation and operational leverage have driven record profitability, while early integration of Remexion positions High Tide as a global cannabis distribution leader. Investors should watch for continued margin resilience, store expansion cadence, and the evolving European opportunity as catalysts for further upside.
Summary
- Global Platform Assembled: Remexion acquisition vaults High Tide into Germany with instant 16% market share.
- Margin Expansion Engine: Bricks-and-mortar EBITDA margin climbed to a two-year high, propelled by white-label and membership programs.
- Turnaround Focus Intensifies: E-commerce underperformance triggers management action and signals no tolerance for ongoing EBITDA drag.
Performance Analysis
High Tide’s Q3 performance was a clear inflection point, with every major operational and financial metric setting new records. Total revenue reached an all-time high, up 14% year-over-year, with the bricks-and-mortar segment driving the outperformance—growing 18% YoY and now accounting for the overwhelming majority of group EBITDA. Same-store sales growth of 7.4% marks the fastest pace in two years, highlighting the effectiveness of the company’s discount club model, a membership-based pricing strategy that has driven a 137% cumulative increase in same-store sales since 2021.
Gross margin dollars hit a record, and the company posted its highest-ever adjusted EBITDA, up 11% YoY and 32% sequentially. Notably, bricks-and-mortar adjusted EBITDA rose 42% YoY, far outpacing already strong revenue growth and demonstrating operating leverage, where fixed costs are spread over higher sales volumes. Net income swung to positive territory, and free cash flow soared 148% YoY, underscoring the business’s improving cash generation. However, the e-commerce segment remains a drag, representing less than 3% of revenue and underdelivering against expectations.
- Membership Scale Accelerates: Cabana Club members in Canada rose 39% YoY to 2.15 million, with Elite membership doubling, enhancing loyalty and spend per visit.
- Store Expansion Outpaces Peers: High Tide opened 16 new locations YTD, with Ontario stores achieving annual revenue run rates 2.6x the provincial average.
- Cost Efficiency Gains: Salaries and wages fell to 12.2% of revenue, the lowest in seven quarters, demonstrating improved store productivity.
Overall, the quarter showcased High Tide’s ability to scale profitably in Canada while laying the groundwork for European growth. The company’s disciplined approach to capital deployment and margin management is evident, though e-commerce execution remains a watchpoint.
Executive Commentary
"Driven by the continued strength of our bricks and mortar business, every major metric showed meaningful gains this quarter, with many setting new all-time records. Since launching our innovative discount club model in October 2021, same-store sales at Canna Cabana have increased 137%, while the average operator has declined by 2%... With so many licensed producers already lined up to send their production through us, we felt we had sufficiently de-risked our business model, giving us the confidence to enter a larger transaction with a much bigger partner than initially considered."
Raj Grover, President and Chief Executive Officer
"Our core bricks and mortar segment continued to perform exceptionally, posting adjusted EBITDA of $12.7 million, representing an annual run rate over $50 million. We are seeing the power of operating leverage here, as bricks and mortar adjusted EBITDA was up 42% year over year, much higher than even the impressive revenue growth it posted. On the other hand, our e-commerce business continues to underwhelm... We have several contingencies in place, including potential partnerships and outright sales, or maintaining a slimmed-down version of our e-commerce platform."
Mike Mahajan, Chief Financial Officer
Strategic Positioning
1. Canadian Retail Leadership Through Membership and White Label
High Tide’s Canna Cabana chain, now with 207 locations, is the largest cannabis retail brand in Canada and continues to widen its lead through its discount club model and proprietary white-label offerings. The company’s focus on high-traffic locations and operational efficiency has resulted in store revenue run rates that are more than double the provincial average, particularly in Ontario. White-label products, such as Queen of Bud and Cabana Cannabis Co., are contributing higher margins (about 7% incremental), while the Elite membership tier is driving both gross margin and loyalty gains.
2. Transformational Entry into Germany
The Remexion acquisition gives High Tide an immediate 16% share of the German medical cannabis import market, with a platform to expand sourcing from Canada and deepen relationships with global licensed producers. Remexion’s annualized revenue and EBITDA are highly accretive, and the deal structure—with a majority acquired at 3.6x EBITDA and an option for the remainder—balances risk and upside. The company is already leveraging its Canadian supply chain to secure exclusive supplier agreements, positioning itself as the preferred conduit for North American producers entering Europe.
3. Disciplined Capital Allocation and Balance Sheet Management
The $30 million junior subordinated loan from Kronos (a major licensed producer) not only validates High Tide’s retail leadership but also funds both the Remexion acquisition and future working capital needs. With consolidated gross debt at 1.5x pro-forma adjusted EBITDA, management views leverage as manageable and flexible for future growth. The acquisition is structured to be self-funding, with principal repayments planned from Remexion dividends.
4. E-Commerce Underperformance and Strategic Response
Despite initial optimism, e-commerce has failed to scale and is now under strategic review. Management has brought in a new VP and consultants, expanded into hemp-derived cannabinoids in the US, and is actively considering partnerships, divestitures, or a slimmed-down platform. The segment’s performance will be closely monitored, with management signaling no tolerance for ongoing EBITDA drag.
Key Considerations
This quarter marks a pivotal moment as High Tide transitions from Canadian retail leader to global cannabis distributor. Management’s narrative and operational results reinforce several critical watchpoints for investors:
Key Considerations:
- German Integration Pace: Early execution in Germany, including supply chain optimization and exclusive supplier agreements, will determine the speed and scale of international earnings contribution.
- Membership Model Durability: Sustained growth in Cabana Club and Elite tiers is key to driving repeat business and margin stability amid competitive retail dynamics.
- Margin Management Amid Expansion: The ability to hold or grow gross margins while opening new stores and integrating Remexion will test operational discipline.
- E-Commerce Turnaround or Exit: Progress on digital sales recovery or decisive action to stem losses will be a major determinant of consolidated profitability.
Risks
Key risks include supply chain volatility in Europe (notably temporary slowdowns in Portugal impacting German imports), ongoing e-commerce underperformance, and the inherent uncertainties of regulatory change in both North America and Europe. While leverage is currently manageable, additional debt or integration missteps could strain the balance sheet. The company’s international strategy hinges on successful execution in unfamiliar markets, where competitive and regulatory risks remain significant.
Forward Outlook
For Q4 2025, High Tide expects:
- Continued strength in same-store sales, with no signs of deceleration entering the quarter.
- Acceleration of Remexion’s contribution to consolidated results, pending normalization of Portugal supply flows by November.
For full-year 2025, management reiterated confidence in reaching the upper end of its store opening guidance (20-30 new locations) and signaled the potential for further margin gains as exclusive supply deals and white-label penetration deepen.
- Ongoing integration of Remexion and expansion of Canadian supply sourcing for the German market.
- Active monitoring and intervention in the e-commerce segment, with a willingness to divest or restructure if turnaround efforts do not yield results.
Takeaways
High Tide’s Q3 results confirm the company’s emergence as a multinational cannabis retail and distribution platform with strong operating leverage and disciplined capital management.
- Canadian Market Share and Margin Outperformance: Store-level economics and membership-driven loyalty underpin sector-leading profitability, with further upside from white-label and Elite tier expansion.
- European Growth as a New Earnings Lever: The Remexion acquisition is a strategic pivot, offering immediate scale and a template for further international expansion.
- Execution on E-Commerce and Integration: Decisive management action is required to address digital underperformance and to ensure smooth integration of European operations.
Conclusion
High Tide’s record Q3 cements its position as a dominant player in Canadian cannabis retail while its German entry opens a new era of international growth. The balance of margin discipline, membership-driven loyalty, and a pragmatic approach to underperforming segments sets the stage for continued outperformance—if integration risks are managed and digital execution improves.
Industry Read-Through
High Tide’s results highlight the growing importance of scale, operational leverage, and global sourcing in cannabis retail and distribution. The company’s success with membership models and white-label margins offers a blueprint for peers facing margin compression. The Remexion deal signals that cross-border consolidation is accelerating, with established Canadian operators leveraging domestic relationships to win in Europe. E-commerce challenges are not unique to High Tide, pointing to broader sector headwinds in digital cannabis retail absent regulatory clarity and differentiated offerings. The focus on disciplined capital allocation and self-funding acquisitions will likely become a sector benchmark as capital markets remain selective.