Vext Science Q2 Revenue Grows 4.8% YoY, What About Income?

Vext Science, Inc. VEXTF VEXT released its financial results for the period ended June 30, 2023, revealing revenue of $9.2 million, an increase of 4.8% compared to $8.8 million in Q2 2022, and an increase of 0.8% compared to $9.1 million in Q1 2023.

Q2 2023 Financial Highlights

• Gross profit was $2.7 million, a decrease of 56.4% compared to $6.1 million in Q2 2022.

• Gross margin was 29.1% compared to 69.9% in Q2 2022.

• Net income after taxes was $535,454, a decrease of 72.6% compared to $2 million in Q2 2022.

• Adjusted EBITDA was $1 million compared to $4.8 million in Q2 2022.

• Adjusted EBITDA margin was 11% compared to 55% in Q2 2022.

• Cash at the end of the period was $4.3 million.

Eric Offenberger, CEO of Vext, stated, "During Q2, our team's efforts to drive more traffic with targeted promotions and a broad selection of value-based products were successful and led to gains in market share in a challenging environment. We made the strategic choice to accept lower gross margins in Q2, in order to generate a return on the product from our recently idled outdoor grow as pricing remains under pressure due to overcapacity in the market. We are well positioned from a vertical perspective, with indoor capacity from our Eloy facility picking up the slack and ensuring we are matching demand at our owned retail locations with our own internal supply. We expect gross margins to progressively recover through the second half of Q3 and in Q4 on the way back to more normalized levels. This quarter marked our thirteenth consecutive quarter of reporting positive EBITDA and positive Adjusted EBITDA, demonstrating our ongoing commitment to generating profitability, while prudent working capital management contributed to robust cash flow from operations of $3.4 million through the quarter."

Update on Ohio Acquisition

The has received the approval of the Ohio Department of Commerce for the ownership transfer of Appalachian Pharm Processing, LLC, an Ohio limited liability company, together with its subsidiaries and affiliated companies (collectively, "APP"), pursuant to the company's acquisition of APP for a total consideration of approximately $12.5 million, with $11 million paid in cash or promissory notes and $1.5 million through the issuance of common shares of Vext. The company is working with APP to satisfy the remaining conditions of closing and currently expects that closing of the acquisition will occur prior to the end of August 2023, subject to the terms of the definitive purchase agreements.

As a result of closing of the acquisition, Vext will also obtain the right to acquire ownership of a cannabis dispensary in Columbus, Ohio. The company has applied to the Ohio Board of Pharmacy for an ownership transfer of such dispensary and expects to receive approval this year and to close promptly after receipt of regulatory approval.

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