Adam Jackson
Chicago-based Verano Holdings Corp. (CSE: VRNO) (OTCQX: VRNOF) released its financial results for the first quarter ending March 31, 2023. The results show growth in spite of a challenging business environment.
Revenue rose 12% from the same period last year and 1% from the previous quarter to $227 million. The company pointed to retail and wholesale adult-use sales in New Jersey and Connecticut, offset slightly by retail declines in Pennsylvania. The company expects $50-75 million in free cash flow and capital expenditure of $35-50 million for 2023.
The net loss for the first quarter was $9 million, compared to a slight loss for the same period last year and a $216 million loss for the fourth quarter of 2022. The increase in net loss was due to higher interest and tax expenses.
CEO George Archos expressed satisfaction with Verano’s performance in the first quarter and is anticipating upcoming adult-use sales in Maryland..
“Our results were bolstered by the launch of adult use sales in Connecticut, expanding our retail footprint across key markets, strengthening our portfolio to satisfy consumers’ evolving preferences, and delivering greater efficiencies that increased output across many key metrics,” he said in a statement.
Despite a challenging market, Archos anticipates continued growth and is monitoring the reintroduction of the SAFE banking legislation in Washington, D.C.
Gross profit for the first quarter was $109 million or 48% of revenue, up from $99 million or 49% of revenue for the same period last year. This increase was primarily due to lack of inventory step up and higher sell-through, offset in part by negative inventory reduction impacts.
Selling, general and administrative expenses were $75 million, or 33% of revenue, down from $90 million, or 44% of revenue for the same period last year. The decrease was driven mainly by optimized headcount, decreased earnouts, and lower employee stock compensation expenses.
Verano commemorated the launch of adult-use sales in Connecticut at its Zen Leaf Meriden dispensary and expanded its retail footprint with new stores in Pennsylvania, Florida, and West Virginia. The company also made progress towards opening six additional social equity joint venture dispensaries across Connecticut.
Verano’s operations spanned 13 states, with 126 dispensaries and 14 cultivation and processing facilities boasting over one million square feet of cultivation capacity.
The company’s current assets were $316 million, including $95 million in cash and cash equivalents. Verano’s total debt, net of issuance costs, stood at $415 million.
