Schwazze Records 8% Revenue Growth In Q4 2023 Amid Competitive Cannabis Retail Landscape (CORRECTED)

Editor’s Note: The headline has been updated for accuracy. Schwazze reported an 8% revenue growth in Q4 2023, not a drop.

Medicine Man Technologies, Inc. SHWZ, operating as Schwazze, announced its financial and operational results on Thursday for the fourth quarter and full year ended Dec. 31, 2023.

“This past year, the Schwazze team delivered solid top-line growth in two highly competitive markets with 31% adjusted EBITDA margins and improved operating cash flow,” said Forrest Hoffmaster, interim CEO of Schwazze. “We continued to sharpen our retail strategy while expanding our store footprint by more than 50% to 63 dispensaries across our two markets.”

“Although the Colorado and New Mexico markets were pressured in 2023, we have built a solid foundation with best-in-class service for our patients and customers. Internally, we are also relentlessly focused on maximizing the operating efficiencies of our manufacturing and cultivation facilities to drive higher yields, improved flower quality, and greater output,” he added.

Fourth Quarter 2023 Financial Results

Total revenue in the fourth quarter of 2023 increased 8% to $43.3 million compared to $40.1 million for the same quarter last year.

Gross profit for the fourth quarter of 2023 was $7.0 million or 16.2% of total revenue, compared to $21.7 million or 54.1% of total revenue for the same quarter last year.

Operating expenses for the fourth quarter of 2023 were $23.3 million, compared to $24.2 million for the same quarter last year. The decrease was primarily due to a lower impairment charge in the fourth quarter of 2023.

Loss from operations for the fourth quarter of 2023 was $16.2 million compared to $2.5 million in the same quarter last year. The decrease was driven by lower gross profit, primarily related to the non-cash inventory adjustment. Net loss was $33.9 million for the fourth quarter of 2023 compared to $27.3 million for the same quarter last year.

Fierce Competition In Colorado

“With strong demand and over 680 recreational retail stores at year-end, the competitive landscape in Colorado is fierce, underscoring the importance of our investments in and attention to elevating the customer experience. We significantly outpaced the market in Q4 on a sequential and year-over-year basis and expect to bolster our growth through improvements in customer acquisition, retention, and loyalty, as well as in the overall retail experience,” stated Hoffmaster, adding that they’re beginning to see wholesale pricing stabilize.

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Looking Ahead

Hoffmaster said that in New Mexico, the proliferation of new licenses has increased the competition and that cannabis sales were up 18% across a store base that was over 50% higher year-over-year in Q4, leading to lower average revenue per store. This, he added, has led to a slow-down in new store openings and what he anticipates as a challenging market in the future.

Nevertheless, he is optimistic.  “Looking ahead, we are optimistic about the regulatory momentum in the industry at large. In the meantime, we will continue to elevate the customer experience, improve our loyalty program, increase our cost efficiencies, and enhance our retail assets.”

Price Action: Schwazze was trading down 9.1% at $0.80 at the time of publication Thursday.

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Now Read: Lowell Farms Navigates Challenging Terrain With 35% Revenue Dip: A Look At 2023’s Financial Outcomes

Photo: Courtesy of C.Aphirak via Shutterstock