MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) reported first fiscal quarter revenue of $44 million, up 105% year-over-year and 5% sequentially. The company also reported an eye-popping net loss of $82 million. MedMen delivered an Adjusted EBITDA loss of $22.2 million for the quarter.
Approximately $7.4 million of rent expense was not included in Adjusted EBITDA for the quarter due to the application of IFRS 16 Leases. Adjusted EBITDA loss under the previous methodology would have been $29.6 million compared to a $39.4 million loss in the previous quarter.
“We entered Fiscal 2020 on a mission to build a more nimble and financially flexible MedMen,” said Adam Bierman, MedMen co-founder and chief executive officer. “As we right-size our organization and implement an intensified focus on free cash flow generation, our business will become more efficient, in turn allowing us to better serve our stakeholders. Through the successful execution of these goals, we expect MedMen will be EBITDA positive by the end of calendar year 2020.”
“Since 2016, MedMen has aggressively executed on a plan to become the most recognizable brand in cannabis. The company’s focus on profitability will provide greater flexibility to navigate near term market fluctuations, as they continue to capitalize on the sector’s overall opportunity. We have supported the business since 2016 and are supportive of the vision going forward,” said Ben Rose, executive chairman of the Board and chief investment officer of Wicklow Capital.
Gross margins across retail operations were 52% compared to 50% in the prior quarter. The increase in gross margins reflects increased leverage with suppliers and favorable vendor terms.
Corporate SG&A totaled $30.6 million, a 21% decrease from fiscal second quarter 2019, representing $31.6 million in annualized savings since the initial cost-cutting efforts began.
More Money From Gotham Green
As part of the amendment to the company’s $250 million senior secured credit facility, Gotham Green Partners has an obligation to fund the $10 million tranche by November 29, 2019.