Verano Q3 Revenue Grows 10% YoY Driven By Adult Use Sales In New Jersey

Verano Holdings Corp. VRNOF VRNO released its financial results for the third quarter ended September 30, 2022, revealing revenue increased 2% versus the prior quarter and 10% year-over-year to $228 million. Revenue growth versus the year-ago period was driven by strength from adult use sales in New Jersey.

Q3 Financial Highlights

• Gross profit was $123 million or 54% of revenue, compared to $98 million or 44% of revenue in the prior quarter, and $98 million or 48% of revenue in the Q3 2021.

• Net loss was $(43) million, compared to a loss of $(10) million in the prior quarter, and $(13) million in the year-ago period.

• Adjusted EBITDA was $82 million or 36% of revenue, compared to adjusted EBITDA of $76 million or 34% of revenue in the prior quarter.

Q3 Operational Highlights

• Furthered Florida retail expansion by opening 11 new MÜV dispensaries across the state throughout the quarter.

• Opened new Zen Leaf dispensaries in Wheeling and Clarksburg, WV, and New Kensington, PA; relocated Zen Leaf Jessup to Elkridge in Maryland to optimized location and retail space; maximized New Jersey footprint with the commencement of adult use sales at Zen Leaf Neptune on the Jersey Shore.

• Inked licensing agreement with Mike Tyson's Tyson 2.0 cannabis company to launch legendary wrestler Ric Flair's new cannabis line, Ric Flair Drip Cannabis, across 11 markets.

• Completed acquisition of Sierra Well, bolstering Nevada footprint with addition of two operating dispensaries and an active cultivation facility.

• Initiated second annual Breast Cancer Awareness Month donation effort benefiting the Lynn Sage Breast Cancer Foundation.

Subsequent Operational Highlights

• Opened two new MÜV dispensary locations in Panama City Beach and Port Orange, Florida, raising the company's Florida retail footprint to 61 locations.

• Active operations span 13 states, comprised of 119 dispensaries and 14 cultivation and processing facilities with more than 1 million square feet of cultivation capacity.

“I am very pleased with our performance in the third quarter and how our team demonstrated focus and adaptability in driving our business forward in an increasingly challenging environment,” stated George Archos, Verano founder, chairman and CEO. “In the face of economic headwinds, industry dynamics and legislative uncertainty, we delivered revenue growth and strong adjusted EBITDA margins, underscoring our focus on superior operations and efficiency. We significantly bolstered our growing product portfolio by scaling our signature Verano brand across core markets, introducing our value flower and extract brand Savvy, launching Ric Flair’s Ric Flair Drip Cannabis line in partnership with Tyson 2.0, and most recently, releasing a low-dose, high-function edibles line, BITS, which combine tailored adaptogens with cannabinoids and 5 mg of THC to appeal to a broad base of cannabis consumers.”

“We also continue to see positive results in New Jersey, where we’ve further cemented our position as a market leader, evidenced by our strong retail performance and growing wholesale business. Finally, we are also pleased to have completed the refinancing of our $350 million credit facility, which gives us flexibility in our capital structure and the ability to reduce our cost of capital. I remain optimistic and confident in our business as we continue to maintain focus on driving operational quality and efficiency as we further position Verano for future growth.”

Balance Sheet and Liquidity
As of September 30, 2022, the company’s current assets were $295 million, including cash and cash equivalents of $76 million. The company had working capital deficit of $(89) million and total debt, net of issuance costs, of $392 million.

The company’s total class A subordinate voting shares outstanding, including class B proportionate voting shares on an as-converted to class A subordinate voting share basis, was 336.1 million as of September 30, 2022.

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Photo by Shelby Ireland on Unsplash

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