Financial woes surface in investor report, but AppHarvest says it's ramping up
Kentucky-based indoor farm operator AppHarvest is heading into its third season of tomato harvest with questions about its financial stability.
SEC filing statements released Nov. 7, along with several key leadership changes, raised concerns with a local Kentucky newspaper. According to the Lexington Herald Leader, AppHarvest is pausing its plan to build a dozen indoor farms to shift focus on turning a profit quickly over the next few years at its three existing farms in Morehead, Berea and Somerset, along with a soon-to-be-operating fourth farm in Richmond. The farms grow tomatoes, leafy greens for salads, and berries.
The SEC investor statement detailed net losses of $83 million in the first nine months of 2022. Coupled with net sales of $10 million and accumulated deficit of $270 million, altogether AppHarvest has spent at least $641 million since 2018, according to public filings.
Related news: Mastronardi funds AppHarvest to grow greens, expand farms in Appalachia
Additionally, recent leadership changes at AppHarvest bolstered concerns. Two executives stepped down from the company in November; former president David Lee “mutually agreed” that he would leave the company but stay on as a member of AppHarvest’s board of directors, and former chief operating officer Julie Nelson left earlier in the month.
AppHarvest Director of Corporate Communications Darla Turner told The Packer that the Herald Leader story caused a lot of misunderstanding.
“The article was based on an SEC filing statement that we released on Nov. 7 along with our quarterly earnings report. That filing regarding the financial status of the company is based on a formula that doesn’t take into account any of the upcoming revenue streams that we anticipate or the potential financing options that we’re actively working on—such as the sale-leaseback of our Berea, Ky., salad greens farm that could provide significant cash for ongoing operations,” Turner said.
Turner said that the company had solid plans to deliver long-term value for Appalachia and all its stakeholders.
“During a pandemic, we’ve been able to undertake what we believe is the largest-ever build-out of controlled environment agriculture in U.S. history,” she said.
“Also—because we went public while still in hypergrowth mode making significant capital investments in the four farms we have—the article portrayed those investments purely as losses instead of explaining that the cash has gone into assets that hold long-term value (our high-tech farms and equipment) that are just now ramping up to deliver millions of pounds of fruits and vegetables and revenue,” Turner added.
Looking toward 2023 tomato harvest
While the fourth farm in Richmond, a 60-acre facility, is still under construction, half of the farm has been planted with Campari and Maranice varieties of tomatoes on the vine, with an expected harvest in January 2023, according to a news release.
AppHarvest’s Moreland farm is heading into its third harvest season with a more diversified range of tomatoes, adding snacking tomatoes sold under the Sunset brand to the mix. The crop set is 50% beefsteak tomatoes, 25% tomatoes on the vine and 25% snacking tomatoes, according to the release.
“With the experience of two seasons of harvests, the Morehead farm is seeing significantly improved quality and yield, which largely can be attributed to task completion rates of crop care specialists meeting and sometimes exceeding 100% of goal,” AppHarvest founder and CEO Jonathan Webb said in the release. “We’re developing a tenured workforce and seeing benefits of promoting from within to help drive efficiency and quality from folks who have grown the business with us from the ground up.”
