Schwazze's Q1 2024 Financial Results: Takes A Hit In Colorado, Overall Cannabis Sales Up By 9%

Medicine Man Technologies, Inc., operating as Schwazze SHWZ, announced its financial results for the first quarter ended March 31, 2024.

Schwazze's interim CEO, Forrest Hoffmaster, commented on the results. "We delivered another period of revenue growth in Q1 as we further refined our retail strategy while contending with the prolonged competitive challenges in Colorado and New Mexico."

Operational And Strategic Developments

Schwazze has focused on enhancing its retail and wholesale strategies, including pricing, promotions and improving the in-store experience. The company reported that its Colorado sales were down 10% year-over-year due to lower volumes, but overall sales were up 9%, outperforming the market.

In New Mexico, despite the rapid increase in store counts, the company concentrated on high-quality products and customer experience, leading to strong performance.

"Over the past four years we have rapidly scaled our footprint through 13 acquisitions, building a leading retail presence in both Colorado and New Mexico. We believe these initiatives, coupled with our operating playbook and strict cost controls, will enable us to return to stronger levels of profitability moving forward," Hoffmaster noted.

Key Financial Metrics

• Total Revenue: $41.6 million in Q1 2024, up 4% from $40.0 million in Q1 2023.
• Gross Profit: $17.9 million (43.1% of total revenue) in Q1 2024, down from $21.8 million (54.6% of total revenue) in Q1 2023.
• Income (loss) from Operations: Loss of $2.7 million in Q1 2024, compared to income of $5.6 million in Q1 2023.
• Net Loss: $16.1 million in Q1 2024, compared to net income of $1.7 million in Q1 2023.
• Adjusted EBITDA: $7.3 million in Q1 2024, down from $14.5 million in Q1 2023.
• Operating Cash Flow: Negative $3.7 million in Q1 2024, compared to negative $0.88 million in Q1 2023.
• Operating Expenses: $20.6 million in Q1 2024, up from $16.2 million in Q1 2023.

Financial Position

As of March 31, 2024, Schwazze reported cash and cash equivalents of $13.2 million, down from $19.2 million on December 31, 2023. Total debt increased to $159.7 million from $156.8 million during the same period.

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Recent Operational Highlights

• Expansion: Opened a new dispensary under the Everest Apothecary banner in Las Cruces, New Mexico, increasing its retail footprint to 34 stores.
• Wholesale Growth: Achieved over 30% door penetration in Colorado and New Mexico.
• Product Performance: Lowell Herb Co. pre-roll sales increased more than threefold quarter-over-quarter in Colorado, and Wana gummy sales doubled in New Mexico.

Photo: AI-Generated Image.