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MariMed Reports First Quarter 2023 Earnings

Ryan Allway

May 8th, 2023

News, Top News

NORWOOD, Mass., May 08, 2023 (GLOBE NEWSWIRE) — MariMed Inc. (“MariMed” or the “Company”) (CSE: MRMD) (OTCQX: MRMD), a leading multi-state cannabis operator focused on improving lives every day, today announced its financial results for the first quarter ended March 31, 2023.

 

“I am pleased to report another solid quarter,” said Jon Levine, Chief Executive Officer. “We reported our 13th consecutive quarter of positive adjusted EBITDA, and we expect to generate our fourth consecutive year of positive operating cash flow. MariMed is one of the only companies in the cannabis industry to report positive cash flows and positive EBITDA over this extended period of time.”

 

Financial Highlights1

The following table summarizes the Company’s consolidated financial highlights (in millions, except percentage amounts):

  Three months ended
March 31,
    2023       2022  
Revenue $ 34.4     $ 31.3  
GAAP Gross margin   45 %     54 %
Non-GAAP Gross margin   46 %     54 %
GAAP Net (loss) income $ (0.7 )   $ 4.2  
Non-GAAP Net income $ 0.3     $ 6.9  
Non-GAAP Adjusted EBITDA $ 7.1     $ 10.4  
Non-GAAP Adjusted EBITDA margin   21 %     33 %

1 See the reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures and additional information about non-GAAP measures in the section entitled “Discussion of Non-GAAP Financial Measures” below and in the financials information included herewith.

 

CONFERENCE CALL

MariMed management will host a conference call on Tuesday, May 9, 2023, to discuss these results at 8:00 a.m. Eastern time. The conference call may be accessed through MariMed’s Investor Relations website, or by clicking the following link: MRMD Q123 Earnings Call.

 

FIRST QUARTER 2023 OPERATIONAL HIGHLIGHTS

During the first quarter, the Company announced the following developments in the implementation of its strategic growth plan:

  • January 24: Closed a $35 million senior secured credit facility with a $30 million draw down at close and the ability to draw up to an additional $5 million through June 2023. The facility has a three-year maturity and bears interest at a rate of prime plus 5.75%. Funds are expected to be used for capital expenditures, other corporate expenses, and acquisitions.
  • March 13: Closed the acquisition of the operating assets of Ermont, Inc., pursuant to which the Company obtained a vertical cannabis operation in Quincy, MA and rebranded the retail operation to Panacea Wellness Dispensary. MariMed intends to expand the dispensary to accommodate adult use sales, which the company has applied for with the State Cannabis Commission.

OTHER BUSINESS DEVELOPMENTS

Subsequent to the end of the first quarter, the Company announced the following business developments:

  • April 4: The Maryland Medical Cannabis Commission issued approval to once again manufacture and sell high-dose edibles. The Company plans to add 40mg products across its entire edibles portfolio including Betty’s Eddies and Bubby’s Baked.
  • April 25: Opened an adult-use Panacea Wellness Dispensary in Beverly, Massachusetts, marking the Company’s third operational dispensary in the state, and the tenth dispensary it owns or manages. The Company plans to obtain a license for medical sales at this location.

 

“Our financial results for the first quarter were very strong and we are maintaining our positive outlook and guidance for 2023,” said Susan Villare, Chief Financial Officer. “We continue to execute on our plan to improve efficiencies and we were pleased to report a sequential improvement in our non-GAAP gross margins of 100 basis point and a 58% increase in our adjusted EBITDA. Our balance sheet remains conservatively leveraged and our ability to generate positive cash flows from operations remains a core strength of the Company.”

 

2023 FINANCIAL GUIDANCE

MariMed remains committed to its proven strategic growth plan and continues to operate some of the best facilities in the cannabis industry. The Company’s guidance for full year 2023 is unchanged:

  • Revenue of at least $150 million;
  • Gross margin in line with full year 2022, which was about 48%;
  • Non-GAAP Adjusted EBITDA of at least $35 million;
  • Capital expenditures of $30 million.

 

DISCUSSION OF NON-GAAP FINANCIAL MEASURES

MariMed’s management uses several different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of its business, and making operating decisions, planning and forecasting future periods. The Company has provided in this release several non-GAAP financial measures: Non-GAAP Gross margin, Non-GAAP Net income (loss), Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP EBITDA margin and non-GAAP Adjusted EBITDA margin, as supplements to Revenue, Gross margin, Net income (loss) and other financial measures prepared in accordance with GAAP.

 

Management believes these non-GAAP financial measures are useful in reviewing and assessing the performance of the Company, and when planning and forecasting future periods, as they provide meaningful operating results by excluding the effects of expenses that are not reflective of its operating business performance. In addition, the Company’s management uses these non-GAAP financial measures to understand and compare operating results across accounting periods and for financial and operational decision-making. The presentation of these non-GAAP measures is not intended to be considered in isolation or as a substitute for the financial information prepared in accordance with GAAP.

 

Management believes that investors and analysts benefit from considering non-GAAP financial measures in assessing the Company’s financial results and its ongoing business, as it allows for meaningful comparisons and analysis of trends in the business. In particular, non-GAAP adjusted EBITDA is used by many investors and analysts themselves, along with other metrics, to compare financial results across accounting periods and to those of peer companies.

 

As there are no standardized methods of calculating non-GAAP financial measures, the Company’s calculations may differ from those used by analysts, investors and other companies, even those within the cannabis industry, and therefore may not be directly comparable to similarly titled measures used by others.

 

Management defines non-GAAP Adjusted EBITDA as net income, determined in accordance with GAAP, excluding the following items:

  • interest income and interest expense;
  • income taxes;
  • depreciation of fixed assets;
  • amortization of acquired intangible assets;
  • Impairment or write-downs of intangible assets;
  • stock-based compensation;
  • legal settlements;
  • acquisition-related and other;
  • other income and other expense;
  • and discontinued operations.

For further information, please refer to the publicly available financial filings available on MariMed’s Investor Relations website, as filed with the U.S. Securities and Exchange Commission, or as filed with the Canadian securities regulatory authorities on the SEDAR website.

 

ABOUT MARIMED

MariMed Inc., a multi-state cannabis operator, is dedicated to improving lives every day through its high-quality products, its actions, and its values. The Company develops, owns, and manages seed to sale state-licensed cannabis facilities, which are models of excellence in horticultural principles, cannabis cultivation, cannabis-infused products, and dispensary operations. MariMed has an experienced management team that has produced consistent growth and success for the Company and its managed business units. Proprietary formulations created by the Company’s technicians are embedded in its top-selling and award-winning products and brands, including Betty’s Eddies, Nature’s Heritage, InHouse, Bubby’s Baked, K Fusion, Kalm Fusion, and Vibations: High + Energy. For additional information, visit www.marimedinc.com.

 

IMPORTANT CAUTION REGARDING FORWARD-LOOKING STATEMENTS:

The information in this release contains “forward-looking” statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, which are subject to several risks and uncertainties.   All statements other than statements of historical facts contained in this release, including without limitation statements regarding projected financial results for 2023, including management’s belief that it will have its fourth consecutive year of positive operating cash flow, anticipated openings of dispensaries and facilities, timing of regulatory approvals, plans and objectives of management for future operations, are forward-looking statements.   Without limiting the foregoing, the words “anticipates”, “believes”, “estimates”, “expects”, “expectations”, “intends”, “may”, “plans”, and other similar language, whether in the negative or affirmative, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

 

Forward-looking statements are based on our current beliefs and assumptions regarding our business, timing of regulatory approvals, the ability to obtain new licenses, business prospects and strategic growth plan, and other future conditions.   Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict.   Our actual results may differ materially from those contemplated in these forward-looking statements due to various risks, uncertainties, and other important factors, including, among others, reductions in customer spending, our ability to recruit and retain key personnel, and disruptions from the integration efforts of acquired companies.

 

These factors are not intended to be an all-encompassing list of risks and uncertainties that may affect our business and results of operations.   These statements are not a guarantee of future performance and involve risk and uncertainties that are difficult to predict, including, among other factors, changes in demand for the Company’s services and products, changes in the law and its enforcement, and changes in the economic environment. Additional information regarding these and other factors can be found in our reports filed with the U.S. Securities and Exchange Commission.   In providing these forward-looking statements, the Company expressly disclaims any obligation to update these statements publicly or otherwise, whether as a result of new information, future events or otherwise, except as required by law.

 

All trademarks and service marks are the property of their respective owners.

 

For More Information Contact:

Investor Relations:
Steve West, Vice President, Investor Relations
Email: ir@marimedinc.com
Phone: (781) 277-0007

Company Contact:
Howard Schacter, Chief Communications Officer
Email: hschacter@marimedinc.com
Phone: (781) 277-0007

Media Contact:
Grasslands
Email: marimed@mygrasslands.com

 

MariMed Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
  March 31,
2023		   December 31,
2022
Assets      
Current assets:      
Cash and cash equivalents $ 21,595     $ 9,737  
Accounts receivable, net   4,334       4,157  
Deferred rents receivable   686       704  
Notes receivable, current portion   2,639       2,637  
Inventory   22,723       19,477  
Investments, current   104       123  
Due from related parties   49       29  
Other current assets   7,244       7,282  
 Total current assets   59,374       44,146  
Property and equipment, net   73,714       71,641  
Intangible assets, net   19,480       14,201  
Goodwill   12,004       8,079  
Notes receivable, net of current   7,523       7,467  
Operating lease right-of-use assets   10,122       4,931  
Finance lease right-of-use assets   871       713  
Other assets   1,303       1,024  
 Total assets $ 184,391     $ 152,202  
       
Liabilities, mezzanine equity and stockholders’ equity      
Current liabilities:      
Term loan $ 3,300     $ —  
Mortgages and notes payable, current portion   2,773       3,774  
Accounts payable   4,665       6,626  
Accrued expenses and other   2,968       3,091  
Income taxes payable   8,683       11,489  
Operating lease liabilities, current portion   1,798       1,273  
Finance lease liabilities, current portion   322       237  
 Total current liabilities   24,509       26,490  
Term loan, net of current   20,803       —  
Mortgages and notes payable, net of current   26,610       25,943  
Operating lease liabilities, net of current   8,837       4,173  
Finance lease liabilities, net of current   538       461  
Other liabilities   100       100  
 Total liabilities   81,397       57,167  
       
Commitments and contingencies      
       
Mezzanine equity:      
Series B convertible preferred stock   14,725       14,725  
Series C convertible preferred stock   23,000       23,000  
 Total mezzanine equity   37,725       37,725  
       
Stockholders’ equity      
Common stock   348       341  
Common stock subscribed but not issued   2       39  
Additional paid-in capital   151,052       142,365  
Accumulated deficit   (84,569 )     (83,924 )
Noncontrolling interests   (1,564 )     (1,511 )
 Total stockholders’ equity   65,269       57,310  
    Total liabilities, mezzanine equity and stockholders’ equity $ 184,391     $ 152,202  

 

MariMed Inc.
Condensed Consolidated Statements of Operations
(in thousands, except percentages and per share amounts)
(unaudited)
 
  Three months ended
  March 31,
    2023       2022  
       
Revenue $ 34,380     $ 31,282  
Cost of revenue   18,992       14,306  
Gross profit   15,388       16,976  
       
Gross margin   44.8 %     54.3 %
       
Operating expenses:      
Personnel   4,656       3,042  
Marketing and promotion   1,146       643  
General and administrative   4,305       6,228  
Acquisition-related and other   190       —  
Bad debt   (44 )     14  
 Total operating expenses   10,253       9,927  
       
Income from operations   5,135       7,049  
       
Interest and other (expense) income:      
Interest expense   (2,505 )     (313 )
Interest income   99       163  
Other (expense) income, net   (900 )     1,002  
 Total interest and other (expense) income   (3,306 )     852  
       
Income before income taxes   1,829       7,901  
Provision for income taxes   2,493       3,660  
       
Net (loss) income   (664 )     4,241  
Less: Net (loss) income attributable to noncontrolling interests   (19 )     53  
Net (loss) income attributable to common stockholders $ (645 )   $ 4,188  
       
Net (loss) earnings per share attributable to common stockholders:      
Basic $ (0.00 )   $ 0.01  
Diluted $ (0.00 )   $ 0.01  
       
Weighted average common shares outstanding:      
Basic   342,794       334,763  
Diluted   342,794       378,890  
MariMed Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
  Three months ended
  March 31,
    2023       2022  
Cash flows from operating activities:      
Net (loss) income attributable to common stockholders $ (645 )   $ 4,188  
Net (loss) income attributable to noncontrolling interests   (19 )     53  
Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities:      
Depreciation and amortization of property and equipment   986       702  
Amortization of intangible assets   557       140  
Stock-based compensation   208       2,471  
Amortization of original issue discount   55       —  
Amortization of debt discount   328       —  
Payment-in-kind interest   118       —  
Present value adjustment of notes payable   719       —  
Bad debt (income) expense   (44 )     14  
Obligations settled with common stock   1       274  
Write-off of disposed assets   906       —  
Gain on finance lease adjustment   (13 )     —  
Loss (gain) on changes in fair value of investments   20       (48 )
Other investment income   —       (954 )
Changes in operating assets and liabilities:      
 Accounts receivable, net   (132 )     (1,810 )
 Deferred rents receivable   18       92  
 Inventory   (3,246 )     (2,470 )
 Other current assets   639       (739 )
 Other assets   19       —  
 Accounts payable   (1,961 )     3,212  
 Accrued expenses and other   (207 )     (227 )
 Income taxes payable   (2,806 )     3,592  
    Net cash (used in) provided by operating activities   (4,499 )     8,490  
       
Cash flows from investing activities:      
Purchases of property and equipment   (3,052 )     (4,015 )
Business acquisitions, net of cash acquired   (2,995 )     —  
Advances toward future business acquisitions   (300 )     (100 )
Purchases of cannabis licenses   (601 )     (305 )
Proceeds from notes receivable   43       43  
Due from related party   (20 )     —  
    Net cash used in investing activities   (6,925 )     (4,377 )
       
Cash flows from financing activities:      
Proceeds from issuance of term loan   29,100       —  
Principal payments of mortgages and promissory notes   (212 )     (176 )
Repayment of promissory notes   (5,503 )     —  
Proceeds from exercise of stock options   —       3  
Principal payments of finance leases   (69 )     (55 )
Distributions   (34 )     (101 )
    Net cash provided by (used in) financing activities   23,282       (329 )
       
Net increase in cash and cash equivalents   11,858       3,784  
Cash and equivalents, beginning of year   9,737       29,683  
Cash and cash equivalents, end of period $ 21,595     $ 33,467  

 

MariMed Inc.
Reconciliation of Non-GAAP and GAAP Financial Measures
(in thousands, except percentages)
(unaudited)
 
  Three months ended
  March 31,
2023
    2023       2022  
Non-GAAP Adjusted EBITDA      
GAAP Income from operations $ 5,135     $ 7,049  
Depreciation and amortization of property and equipment   986       702  
Amortization of acquired intangible assets   557       140  
Stock-based compensation   208       2,471  
Acquisition-related and other   190       —  
Adjusted EBITDA $ 7,076     $ 10,362  
       
Non-GAAP Adjusted EBITDA Margin (Non-GAAP adjusted EBITDA as a percentage of revenue)      
GAAP Income (loss) from operations   14.9 %     22.5 %
Depreciation and amortization of property and equipment   2.9 %     2.2 %
Amortization of acquired intangible assets   1.6 %     0.4 %
Stock-based compensation   0.6 %     8.0 %
Acquisition-related and other   0.6 %     — %
Adjusted EBITDA margin   20.6 %     33.1 %

 

GAAP Gross margin   44.8 %     54.3 %
Amortization of acquired intangible assets   0.8 %     — %
Non-GAAP Gross margin   45.6 %     54.3 %

 

GAAP Net income (loss) $ (664 )   $ 4,241  
Stock-based compensation   208       2,471  
Amortization of acquired intangible assets   557       140  
Acquisition-related and other   190       —  
Non-GAAP Net income $ 291     $ 6,852  

 

MariMed Inc.
Supplemental Information
Revenue Components
(in thousands)
(unaudited)
 
  Three months ended
  March 31,
  2023   2022
Product revenue:      
Product revenue – retail   23,183     21,441
Product revenue – wholesale   10,376     6,062
Total product revenue   33,559     27,503
Other revenue   821     3,779
Total revenue $ 34,380   $ 31,282

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

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