Adam Jackson
Vext Science Inc. (CSE: VEXT) (OTCQX: VEXTF), a U.S.-based cannabis operator in Arizona and Ohio, posted $9.1 million in total sales for the first quarter ended March 31, which is down from $10.8 million the previous year.
According to financial filings, Vext netted $73,059 after taxes.
While all revenue came from Arizona operations last year, only 86% of the recently posted quarterly sales originated from that state, with the remainder from newly launched operations in Ohio.
The cost of goods sold rose dramatically, from $1.5 million in 2022 to roughly $4.4 million in 2023. The cost in Arizona jumped to about $3.7 million from $1.5 million, while the new Ohio market incurred costs of approximately $758,000.
Despite the rising expenses, Vext’s gross profit for Q1 2023 was $4.7 million, down from $9.27 million in the previous year but spread across operations in two states.
CEO Eric Offenberger highlighted the company’s ability to navigate a “challenging environment across the board for consumer-facing businesses.”
Despite a reported 15% decrease in overall sales across Arizona in the first two months of the year, Vext’s dispensaries outperformed the state average.
“Our team has successfully driven higher traffic and maintained a recurring customer base to help compensate for lower average basket sizes, as consumers continue to watch their discretionary spending,” Offenberger said.
The company attributed its resilience to its vertically integrated operations, efficient retail practices, and a consistent focus on driving efficiencies. Vext cultivates cannabis exclusively for sale through its retail outlets, which management believes sets the stage for long-term growth.
Looking forward, Vext plans to strengthen its presence in Arizona and complete the acquisition of vertical operations in Ohio. The company views Ohio as a meaningful growth opportunity, given the state’s limited license structure for its medical market.
Another effort to get adult-use on the November ballot is also underway in Ohio, and renewed bipartisan dealings have brought the issue back to the state’s legislature.
Other highlights:
- The company’s EBITDA for Q1 2023 was $1.6 million, a decrease from $2.5 million over the quarter and $5.6 million in the same period last year.
- Adjusted EBITDA for Q1 2023 fell to $2.9 million from $3.2 million sequentially and $3.8 million in Q1 2022.
- Gross margin, not accounting for the impact of biological assets, stood at 51% in Q1 2023, an increase from 50% in the previous quarter, but a drop from 61% in Q1 2022.
