Cannabis Lender Safe Harbor Q2: Net Income Hits $0.9M Amid Cost Cuts, Adjusted EBITDA Up 14.5%

SHF Holdings, Inc. (NASDAQ:SHFS), doing business as Safe Harbor Financial, a provider of financial services and credit solutions for the cannabis industry, announced its financial results Wednesday for the second quarter and six months ended June 30, 2024.

Q2 2024 Financial Highlights

• Revenue was $4 million, compared to $4.6 million for the second quarter of 2023.
• Net Income increased to $0.9 million, from a net loss of $17.6 million in the same period of 2023.
• Adjusted EBITDA increased 14.5% to $0.97 million, compared to $0.85 million for the same quarter last year.
• Gross profit was not included in the report.

Net Income Rises Despite Lower Revenue

Despite the lower revenue, Safe Harbor's robust net income recovery was accomplished primarily due to a sharp reduction in operating expenses, which dropped to $3.7 million from $22.5 million in the prior year, reflecting a decline in non-recurring impairment charges and other cost optimizations.

Operational Efficiency Fuels EBITDA Gains

Adjusted EBITDA also showed positive momentum, increasing by 14.5% to $0.97 million and for the six-month figures, it surged by 63.5% to $2.06 million. These improvements are attributed to significant operational refinements and a focus on higher-margin financial products.

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First-Half Earnings Show Major Turnaround

Over the six-month period, Safe Harbor's recovery was even more pronounced, with net income climbing to $3 million compared to a net loss of $19 million in the first half of 2023. The company's revenue for the first six months stood at $8.1 million, down slightly from $8.8 million in the previous year. However, operating expenses were considerably lower at $7.5 million compared to $28.3 million in the first half of 2023.

CEO Highlights Strategic Shifts

CEO Sundie Seefried attributed the improved results to strategic shifts towards higher-margin products and efficiencies gained from the company’s lending platform, which saw a record quarterly loan income of $1.8 million, up over 203% year-over-year. 

“During the quarter, we experienced strength across our business, as well as operated more efficiently, both of which contributed meaningfully to our strong results,” stated Seefried in a press release.

Additionally, Seefried highlighted the launch of the Small Business Line of Credit Program, aiming to support the capital needs of small to mid-sized cannabis businesses and diversify income streams.

Successful Loan Recovery And New Partnership To Empower Minorities

Safe Harbor’s operational highlights include the successful exit from a $3.1 million defaulted loan, fully recouping the principal, and a new partnership with BIPOCann to empower minority-owned cannabis businesses.

SHFS Price Action
SHFS's shares traded 2.44% higher at $0.6249 per share at market close Wednesday.

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