AppHarvest, the ambitious Morehead-based produce company that planned to open twelve huge, high-tech, indoor farms across Central Appalachia by 2025, told investors this month that it’s running out of cash. That according to a report today by the Lexington Herald. The company is also heavily invested in Madison County with a 15-acre facility, and the 60-acre Richmond facility that is still under construction.
The company says it’s removing two top executives as part of a “restructuring” that will cost up to $7 million in severance payments. Projected net sales for 2022, which the company set at $24 million to $32 million earlier this year, have been revised downward to $14 million to $17 million, or barely half the original sum. The company blames supply chain-related delays in opening three new farms. Net losses also will be worse than originally forecast, the company says. “Management believes there is substantial doubt about our ability to continue as a going concern,”
AppHarvest warned investors Nov. 7 in its filing for the third quarter of 2022 that “Absent additional sources of financing, we expect that our existing cash and cash equivalents will only allow us to continue our planned operations into the first quarter of 2023,” the company said.
In its Nov. 7 filing, AppHarvest reported net losses of $83 million for the first nine months of the year and net sales of $10 million, with an accumulated deficit of $270 million. The company has cumulatively spent at least $641 million for operations and fixed assets since 2018, when it incorporated, according to public filings.
AppHarvest is pausing its plan to build a dozen indoor farms. Instead, it will focus on trying to turn a profit over the next few years at its three existing farms, in Morehead, Berea and Somerset, and a fourth, in Richmond. According to a press release today from the company, although still technically under construction, the Richmond facility on Speedwell Road is half planted now with 360,000 tomato plants due for first harvest in January.
“It’s unfortunate,” said Jonathan Webb, AppHarvest’s founder and chief executive officer, in an interview with the Herald-Leader. “It’s not any person’s fault,” Webb said. “Any person who has joined this company has been wildly talented and has put a lot into the company. Sometimes the pieces just don’t fit together as we’re building a team. And we’re just trying to make the hard decisions fast on, how do we get the company set up for success?” To raise the necessary capital for its next 12 months — an estimated $85 million to $95 million — AppHarvest hopes to sell its 15-acre Berea farm to its distributor, Mastronardi Produce Limited, and then lease back the facility.
Groups of shareholders — including a public pension fund in Plymouth, Mass. — have filed five federal lawsuits against AppHarvest in the last 15 months. They’re unhappy about the collapse of its stock price, and they allege fraud. Share prices nosedived from more than $30 in February 2021, when the company went public on the NASDAQ exchange, to about $1.20 this week. If the company’s stock trades below $1 for more than 30 consecutive days, it can be delisted from the NASDAQ exchange. More on that in today’s Lexington Herald Leader.