Vireo Health Raises $10M In Private Offering, Says It's Made Cost Cuts

Vireo Health International Inc VREOF VREO , a science-focused, multistate cannabis company, said Tuesday it has closed the first tranche of a non-brokered private placement offering of 13,651,574 units of the company.

The offering was coordinated by Bruce Linton, Vireo's executive chairman and the former CEO of Canopy Growth Corp CGC. The offering was authorized at a price per Unit of C$0.77 (56 cents) for up to a total amount of $10 million, according to Vireo. 

"This financing reflects the confidence of the capital markets in the potential growth of sales and margin for Vireo," Linton said in a statement.

"There are significant opportunities across our existing footprint to leverage increasing scale to improve sales growth and operating performance, especially considering that we anticipate as many as seven of our medical-only state markets could enact recreational-use legislation over the near- to mid-term future."

Vireo is a smaller, nimbler U.S. cannabis operator that takes a disciplined approach to capital allocation, Kyle Kingsley, M.D., the compay's founder and CEO, said in a statement. 

"Our recent focus on building production capacity to meet increasing demand positions us to drive stronger sell-through of higher-margin retail sales, which will remain a key area of focus for our team in 2020 in addition to advancing scientific innovation."

Vireo's Cost Cuts

Vireo also said Tuesday that it has rolled out strategic initiatives since Dec. 2 that have cut corporate overhead and SG&A costs by about 25% on annualized basis. 

The goal of these actions, which the company did not describe in detail, is to create sustainable value with changing market conditions and to improve the company's operating performance, according to Vireo.

Vireo's fourth-quarter and full-year 2019 earnings call is scheduled for April 30.

Vireo Price Action 

The stock was down 4.79% at 49 cents at the time of publication Tuesday. 

Vireo Health Executive Chairman Bruce Linton speaks at the Benzinga Cannabis Capital Conference in February in Miami Beach. Benzinga file photo by Shelby Jones.