Verano Q1 Revenue Improves 67% YoY, What About Net Loss?

Verano Holdings Corp. VRNOF VRNO released its financial results for the first quarter ended March 31, 2022, revealing revenue of $202 million, an increase of 67% compared to the first quarter 2021.

Q1 2022 U.S. GAAP Financial Highlights

• Q1 2022 gross profit was $100 million or 49% of revenue, compared to $54 million in the first quarter 2021; excluding an M&A inventory step up and depreciation and amortization, gross margin was 61%, up 1% from Q4 2021 on a comparable basis.

• Q1 2022 SG&A was $80 million or 40% of revenue, compared to $37 million or 30% of revenue in the first quarter 2021; excluding depreciation, amortization and M&A earnouts, SG&A was 27% of revenue, up 2% from Q4 2021 on a comparable basis.

• Net loss in the first quarter 2022 was $7 million, compared to a loss of $2 million in the first quarter 2021.

• Adjusted EBITDA was $81 million or 40% of revenue.

• Cash flow from operations for the first quarter 2022 was $53 million, and free cash flow was $6 million.

2022 First Quarter Operational Highlights

• On January 31, 2022, entered into an arrangement agreement to acquire Goodness Growth Holdings, Inc. to establish a strong foundation in the attractive markets of New York, Minnesota and New Mexico.

• Drew an additional $100 million under the company’s senior secured credit agreement, with an added option to request funding of up to $175 million.

• Bolstered the company’s retail footprint, including the opening of two new Florida MÜV dispensaries in the Tampa area; and the company’s first West Virginia Zen Leaf cannabis dispensary in Morgantown.

Subsequent Operational Highlights

• Commenced adult-use sales at the company’s Zen Leaf Lawrence Township location, also on April 21, 2022, with adult-use sales at Verano’s Zen Leaf Neptune Township location expected to begin in summer 2022.

• Further expanded the company’s retail footprint with the opening of four new Florida MÜV dispensaries in Marco Island, Hobe Sound, Fort Myers Beach, and Ocala.

• Launched mobile applications and exclusive rewards programs for Verano’s flagship Zen Leaf and MÜV dispensaries.

• Achieved active operations spanning 13 states, consisting of 98 dispensaries and 13 cultivation and processing facilities, with more than one million square feet of cultivation capacity.

Management Commentary

“I am proud of the financial and operational performance we achieved this quarter, including sustaining our signature industry-leading margins, despite facing substantial headwinds that have affected our industry and the broader economy,” stated George Archos, Verano founder and CEO. “We remain focused on execution, evidenced by our continued retail footprint expansion, where we added seven locations in the first quarter, including our first Zen Leaf dispensary in West Virginia. Further, the April launch of adult-use sales in New Jersey generated significant and immediate growth in the state, which is representative of similar opportunities we are poised to capitalize on in future transitioning markets in our portfolio. This summer, we are excited to add Zen Leaf Neptune as an additional adult-use dispensary in a prime Jersey Shore location, and throughout the course of 2022, we will continue to invest back in our business through a number of cultivation construction and expansion projects. Overall, we are pleased by our progress in strategically positioning Verano to capitalize on anticipated growth in the second half of the year and beyond.”

As of March 31, 2022, the company’s current assets were $340 million, including cash and cash equivalents of $140 million. The company had working capital of ($111) million and total debt, not including lease liabilities and net of issuance costs, of $384 million.

Photo: Courtesy of Mackenzie Marco on Unsplash

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