Verano’s Q1 revenue improves 67% YoY, what about the net loss?

Verano Holdings Corp. VRNOF VRNO released its financial results for the first quarter ended March 31, 2022, revealing revenue of $202 millionan increase of 67% compared to the first quarter of 2021.

First Quarter 2022 Financial Highlights Under U.S. GAAP

  • Q1 2022 gross profit was $100 million i.e. 49% of revenue, compared to $54 million in the first quarter of 2021; excluding M&A inventory growth and amortization expense, gross margin was 61%, up 1% from Q4 2021 on a like-for-like basis.

  • General and administrative expenses for the first quarter of 2022 were $80 million or 40% of revenue, compared to $37 million or 30% of revenue in the first quarter of 2021; excluding amortization and earn-outs on mergers and acquisitions, general and administrative expenses represented 27% of sales, up 2% compared to the fourth quarter of 2021 on a comparable basis.

  • Net loss in the first quarter of 2022 was $7 millioncompared to a loss of $2 million in the first quarter of 2021.

  • Adjusted EBITDA was $81 million i.e. 40% of turnover.

  • Cash flow from operations for the first quarter of 2022 was $53 million, and free cash flow was $6 million.

First Quarter 2022 Operational Highlights

  • On January 31, 2022, entered into an arrangement agreement to acquire Goodness Growth Holdings, Inc. establish a solid base in the attractive markets of New York, Minnesota and New Mexico.

  • Attracted an additional $100 million under the company’s senior secured credit agreement, with an additional option to request financing of up to $175 million.

  • Strengthening of the company’s retail footprint, including the opening of two new stores in Florida MÜV dispensaries in the Tampa area; and the company’s first West Virginia Zen Leaf cannabis dispensary in Morgantown.

Subsequent Operational Highlights

  • Beginning of adult sales in the company Zen sheet Lawrence Township location, also April 21, 2022, with adult sales at Verano’s Zen Leaf Neptune Township location slated to begin summer 2022.

  • Further expanded the company’s business footprint with the opening of four new MÜV dispensaries in Florida in Marco Island, Hobe Sound, Fort Myers Beach and Ocala.

  • Launched mobile apps and exclusive rewards programs for Verano’s flagship Zen Leaf and MÜV dispensaries.

  • Conducting active operations spanning 13 states, including 98 dispensaries and 13 cultivation and processing facilities, with over one million square feet of cultivation capacity.

Management commentary

“I am proud of the financial and operational performance we have achieved this quarter, including maintaining our industry-leading margins, despite the significant headwinds that have affected our industry and the broader economy,” said George Archos, founder and CEO of Verano. “We remain focused on execution, as evidenced by our continued expansion of our business footprint, where we added seven locations in the first quarter, including our first Zen Leaf dispensary in West Virginia. Additionally, the April launch of adult sales in New Jersey has generated significant and immediate growth in the state, which is representative of similar opportunities we are poised to capitalize in future transitioning markets from our portfolio. This summer, we are excited to add Zen Leaf Neptune as an additional adult dispensary in a prime Jersey Shore location, and throughout 2022 we will continue to invest in our business through a number of crop construction and expansion projects. . Overall, we are pleased with our progress in strategically positioning Verano to capitalize on the expected growth in the second half and beyond.

As of March 31, 2022, the company’s current assets were $340 million., including cash and cash equivalents of $140 million. The company had working capital of ($111) million and total debt, excluding lease liabilities and net of issue costs, of $384 million.

Photo: Courtesy of Marco Mackenzie on Unsplash

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