MariMed Reports Second Quarter 2022 Earnings

Rhea-AI Summary

MariMed, Inc. (CSE: MRMD, OTCQX: MRMD) announced its Q2 financial results for 2022, reporting a revenue of $33.0 million, a slight increase from $32.6 million in Q2 2021. The company faced challenges with a gross margin of 45%, down from 60% YoY, and a GAAP net income of $1.9 million, decreasing from $7.6 million. Non-GAAP Adjusted EBITDA was $8.9 million, down from $13.9 million, with a margin of 27%. The revised 2022 revenue guidance is $135 million to $140 million, lower than the previous estimate of $145 million to $150 million. MariMed expanded its operational footprint with several acquisitions and product launches.

Positive

• Sequential revenue growth from $32.6 million to $33.0 million.
• Expansion through acquisitions including Kind Therapeutics and an Illinois craft grow license.
• New product launches, including Betty's Eddies ice cream in Massachusetts.

Negative

• Gross margin declined from 60% to 45% YoY.
• GAAP net income decreased from $7.6 million to $1.9 million.
• Non-GAAP Adjusted EBITDA fell from $13.9 million to $8.9 million.
• Revised revenue guidance reduced from $145-$150 million to $135-$140 million.

NORWOOD, Mass., Aug. 08, 2022 (GLOBE NEWSWIRE) -- MariMed, Inc. (“MariMed” or the “Company”) (CSE: MRMD) (OTCQX: MRMD), a leading multi-state cannabis operator focused on improving lives every day, today announced its financial results for the second quarter ended June 30, 2022.

“We executed on our strategic plan, growing revenue both year-over-year and sequentially,” said Bob Fireman, Chief Executive Officer of MariMed. “Our growth was driven by increased traffic in our dispensaries despite the headwinds facing the entire industry and inflation in the U.S. being at a 40-year high. We continue to report some of the strongest financial results in the industry¹ and remain poised for reaccelerated revenue and earnings growth in 2023 and beyond.”

Financial Highlights²
The following table summarizes the consolidated financial highlights for the three months ended June 30, 2022 and 2021 (in millions, except percentage amounts):

	Three months ended
	June 30,
		2022				2021
Revenue	$	33.0			$	32.6
Gross Margin		45	%			60			%
GAAP Net income	$	1.9			$	7.6
Non-GAAP Adjusted EBITDA	$	8.9			$	13.9
Non-GAAP Adjusted EBITDA Margin		27	%			43			%
Working Capital	$	8.9			$	13.9

¹ Per company research of public filings of peer companies in the U.S. cannabis industry.
² Please see the reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures and additional information about non-GAAP measures in the section entitled “Discussion of Non-GAAP Financial Measures” in the attached schedules.

CONFERENCE CALL
MariMed management will host a conference call on Tuesday, August 9, 2022, to discuss these results at 8:00 a.m. Eastern time. The conference call may be accessed through MariMed’s Investor Relations website by clicking the following link: MariMed Q222 Earnings Call.

SECOND QUARTER OPERATIONAL HIGHLIGHTS
During the second quarter, the Company executed on multiple facets of its strategic growth plan, including:

• April 27: The Company completed the acquisition of Kind Therapeutics USA, a Maryland cannabis operator specializing in the cultivation, production, and wholesale sales of cannabis flower, concentrates, and other edibles from its 180,000 square foot facility in Hagerstown. MariMed is in the process of opening a dispensary in Annapolis, which will lead to the Company’s operations becoming fully vertical in the state.

• May 5: The Company completed the acquisition and received final approval of an Illinois wholesale “craft grow” license transfer. MariMed subsequently acquired a facility in Mt. Vernon, Illinois and began construction on this new cultivation and processing facility, which will allow the Company to grow, produce and wholesale its award-winning branded products throughout the state of Illinois.

• May 18: MariMed announced it was selected to receive a provisional dispensary license by the Ohio Board of Pharmacy, which allows the Company to build a medical dispensary in Tiffen, Ohio, which will be operational in 2023. Ohio marks the sixth state in which MariMed owns or manages cannabis operations.

• June 29: The Company announced a licensing deal with a partner to sell its award-winning Betty’s Eddies fruit chews into the Maine adult-use cannabis market, beginning later this year. This licensing deal is in addition to a licensing deal already in place to sell Betty’s Eddies into Maine’s medical cannabis market with another partner.
  

OTHER BUSINESS DEVELOPMENTS
Subsequent to the end of the second quarter, the Company announced the following business developments:

• July 12: MariMed announced the dual listing of its common shares on the Canadian Securities Exchange (“CSE”) under the stock symbol MRMD. Management believes a dual listing on the CSE allows easier access for institutional and retail investors in Canada and North America to acquire MariMed stock. The Company has already seen new institutional investors taking equity positions in the Company’s common stock.

• July 18: MariMed announced the approval of its expanded state-of-the-art kitchen in Maryland. The nearly ten-fold expansion allows the Company to produce all its award-winning branded products including Betty’s Eddies fruit chews, Bubby’s Baked, Kalm Fusion, and Vibations drink mixes. The Company also introduced a brand-new line of gummies for the Maryland medical cannabis market.

• August 4: The Company announced the launch of its new Betty’s Eddies ice cream in cooperation with Boston based Emack & Bolio’s^® ice cream company. Betty’s Eddies ice cream is currently available in select cannabis dispensaries in Massachusetts offering both dairy and vegan choices.

• August 8: The Company announced the acquisition of a conditional dispensary license in the central eastern part of Illinois bordering Indiana. Once open, it will mark the fifth Thrive branded dispensary the Company owns and operates in Illinois. MariMed currently owns and operates four adult-use dispensaries in Anna, Harrisburg, Metropolis, and Mt. Vernon.
  

UPDATED 2022 FINANCIAL GUIDANCE

MariMed remains committed to its proven strategic growth plan and continues to operate some of the best cannabis facilities with some of the highest margins and returns in the cannabis industry. The Company’s revised financial targets for 2022 are as follows:

• Revenue of $135 million to $140 million versus the previous range of $145 million to $150 million.
• Gross margin of approximately 50% versus the previous range of 54% to 55%.
• Non-GAAP Adjusted EBITDA of $35 million to $40 million versus the previous range of $47 million to $52 million.
• Capital expenditures of $18 million versus the previous target of $25 million.

“The second quarter brought some challenges to the industry and MariMed that were primarily outside of our control. We took assertive actions that drove additional traffic into our dispensaries and launched multiple new products that are increasing our sales within our wholesale business,” said Susan Villare, Chief Financial Officer of MariMed. “We are confident that the financial and operational decisions we are making positions us for accelerating growth in the near term and beyond.”

DISCUSSION OF NON-GAAP FINANCIAL MEASURES
The Company has provided in this release several non-GAAP financial measures: non-GAAP net income, Non-GAAP Adjusted EBITDA, and non-GAAP Adjusted EBITDA margin, as a supplement to Revenue, Gross margin, and other financial measures prepared in accordance with GAAP.

Management believes these non-GAAP financial measures are useful in reviewing and assessing the performance of the Company, as they provide meaningful operating results by excluding the effects of expenses that are not reflective of its operating business performance. In addition, the Company’s management uses these non-GAAP financial measures to understand and compare operating results across accounting periods and for financial and operational decision-making. The presentation of these non-GAAP measures is not intended to be considered in isolation or as a substitute for the financial information prepared in accordance with GAAP.

Management believes that investors and analysts benefit from considering non-GAAP financial measures in assessing the Company’s financial results and its ongoing business, as it allows for meaningful comparisons and analysis of trends in the business. In particular, non-GAAP adjusted EBITDA is used by many investors and analysts themselves, along with other metrics, to compare financial results across accounting periods and to those of peer companies.

As there are no standardized methods of calculating non-GAAP financial measures, the Company’s calculations may differ from those used by analysts, investors and other companies, even those within the cannabis industry, and therefore may not be directly comparable to similarly titled measures used by others.

Management defines non-GAAP Adjusted EBITDA as net income, determined in accordance with GAAP, excluding the following items:

• interest income and interest expense;
• income taxes;
• depreciation of fixed assets;
• amortization of acquired intangible assets;
• Impairment or write-downs of intangible assets;
• stock-based compensation;
• legal settlements;
• acquisition-related and other;
• other income and other expense;
• and discontinued operations.

For further information, please refer to the Company's Quarterly Report on Form 10-Q for the three month period ended June 30, 2022 available on Marimed's Investor Relations website, on the SEC’s Edgar website in the U.S., or on the Canadian securities regulatory authorities’ SEDAR website in Canada.

ABOUT MARIMED
MariMed Inc., a multi-state cannabis operator, is dedicated to improving lives every day through its high-quality products, its actions, and its values. The Company develops, owns, and manages seed to sale state-licensed cannabis facilities, which are models of excellence in horticultural principles, cannabis cultivation, cannabis-infused products, and dispensary operations. MariMed has an experienced management team that has produced consistent growth and success for the Company and its managed business units. Proprietary formulations created by the Company’s technicians are embedded in its top-selling and award-winning products and brands, including Betty's Eddies, Nature’s Heritage, Bubby’s Baked, K Fusion, Kalm Fusion, and Vibations: High + Energy. For additional information, visit www.marimedinc.com.

IMPORTANT CAUTION REGARDING FORWARD-LOOKING STATEMENTS:
This release contains certain forward-looking statements and information relating to MariMed Inc. that are based on the beliefs of MariMed Inc.'s management, as well as assumptions made by and information currently available to the Company. Such statements reflect the current view of the Company with respect to future events, including consummation of pending transactions, launch of new products, expanded distribution of existing products, obtaining new licenses, estimates and projections of revenue, EBITDA and Adjusted EBITDA and other information about its business, business prospects and strategic growth plan, which are based on certain assumptions of its management, including those described in this release. These statements are not a guarantee of future performance and involve risk and uncertainties that are difficult to predict, including, among other factors, changes in demand for the Company's services and products, changes in the law and its enforcement, and changes in the economic environment. Additional risk factors are included in the Company's public filings with the Securities and Exchange Commission. Should one or more of these underlying assumptions prove incorrect, actual results may vary materially from those described herein as "hoped," "anticipated," "believed," "planned," "estimated," "preparing," "potential," "expected," "looks" or words of a similar nature. The Company does not intend to update these forward-looking statements. None of the content of any of the websites referred to herein (even if a link is provided for your convenience) is incorporated into this release and the Company assumes no responsibility for any of such content.

All trademarks and service marks are the property of their respective owners.

For More Information Contact:

Investor Relations:
Steve West, Vice President, Investor Relations
Email: ir@marimedinc.com

Media Contact:
Trailblaze PR
Email: marimed@trailblaze.co

Company Contact:
Howard Schacter, Chief Communications Officer
Email: hschacter@marimedinc.com

Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
	June 30,				December 31,
		2022				2021
Assets
Current assets:
Cash and cash equivalents	$	7,911				29,683
Accounts receivable, net		5,297				1,666
Deferred rents receivable		737				1,678
Notes receivable, current portion		132				127
Inventory		15,889				9,768
Investments, current		525				251
Other current assets		3,059				1,440
Total current assets		33,550				44,613
Property and equipment, net		69,132				62,150
Intangible assets, net		9,898				162
Goodwill		8,079				2,068
Notes receivable, net of current		9,116				8,987
Operating lease right-of-use assets		5,071				5,081
Finance lease right-of-use assets		541				46
Other assets		491				98
Total assets	$	135,878			$	123,205
Liabilities, mezzanine equity and stockholders' equity
Current liabilities:
Mortgages and notes payable, current portion	$	2,734			$	1,410
Accounts payable		7,624				5,099
Accrued expenses and other		3,473				3,149
Income taxes payable		10,001				16,467
Operating lease liabilities, current portion		1,201				1,071
Finance lease liabilities, current portion		180				27
Total current liabilities		25,213				27,223
Mortgages and notes payable, net of current		20,629				17,262
Operating lease liabilities, net of current		4,420				4,574
Finance lease liabilities, net of current		338				22
Other liabilities		100				100
Total liabilities		50,700				49,181
Commitments and contingencies
Mezzanine equity:
Series B convertible preferred stock		14,725				14,725
Series C convertible preferred stock		23,000				23,000
Total mezzanine equity		37,725				37,725
Stockholders' equity
Common stock		339				334
Additional paid-in capital		139,951				134,920
Accumulated deficit		(91,381	)			(97,392	)
Noncontrolling interests		(1,456	)			(1,563	)
Total stockholders' equity		47,453				36,299
Total liabilities, mezzanine equity and stockholders' equity	$	135,878			$	123,205

Condensed Consolidated Statements of Operations
(in thousands, except percentages and per share amounts)
(unaudited)
	Three months ended								Six months ended
	June 30,				June 30,				June 30,				June 30,
		2022				2021				2022				2021
Revenue	$	32,986			$	32,569			$	64,268			$	57,212
Cost of revenue		17,981				13,163				32,287				24,620
Gross profit		15,005				19,406				31,981				32,592
Gross margin		45.5	%			59.6	%			49.8	%			57.0	%
Operating expenses:
Personnel		3,382				2,058				6,424				3,785
Marketing and promotion		809				270				1,452				495
General and administrative		5,565				4,282				11,793				7,453
Acquisition-related and other		754				-				754				-
Bad debt		-				794				14				1,819
Total operating expenses		10,510				7,404				20,437				13,552
Income from operations		4,495				12,002				11,544				19,040
Interest and other income (expense):
Interest expense		(440	)			(265	)			(753	)			(1,777	)
Interest income		318				36				481				70
Other (expense) income, net		(727	)			(371	)			275				(417	)
Total interest and other (expense) income		(849	)			(600	)			3				(2,124	)
Income before income taxes		3,646				11,402				11,547				16,916
Provision for income taxes		1,750				3,813				5,410				5,017
Net income		1,896				7,589				6,137				11,899
Net income attributable to noncontrolling interests		73				96				126				186
Net income attributable to common stockholders	$	1,823			$	7,493			$	6,011			$	11,713
Net income per share attributable to common stockholders:
Basic	$	0.01			$	0.02			$	0.02			$	0.04
Diluted	$	0.00			$	0.02			$	0.02			$	0.03
Weighted average common shares outstanding:
Basic		337,497				324,267				336,137				321,741
Diluted		379,626				370,257				379,225				365,324

Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
	Six months ended
	June 30,				June 30,
		2022				2021
Cash flows from operating activities:
Net income attributable to common stockholders	$	6,011			$	11,713
Net income attributable to noncontrolling interests		126				186
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization of property and equipment		1,552				963
Amortization of intangible assets		425				346
Stock-based compensation		5,024				1,600
Amortization of warrants attached to debt		-				539
Amortization of beneficial conversion feature		-				177
Amortization of original issue discount		-				52
Bad debt expense		14				1,819
Fees paid with stock		274				-
Loss on obligations settled with equity		-				3
Loss on changes in fair value of investments		679				415
Other investment income		(954	)			-
Changes in operating assets and liabilities:
Accounts receivable, net		(3,554	)			(3,230	)
Deferred rents receivable		99				125
Inventory		(1,795	)			(2,398	)
Other current assets		(1,267	)			(1,373	)
Other assets		(392	)			(17	)
Accounts payable		2,024				1,699
Accrued expenses and other		180				4,973
Income taxes payable		(6,467	)			-
Net cash provided by operating activities		1,979				17,592
Cash flows from investing activities:
Purchases of property and equipment		(7,854	)			(7,976	)
Business acquisitions, net of cash acquired		(12,746	)			-
Purchases of cannabis licenses		(330	)			(638	)
Advances toward future business acquisitions		73				-
Interest on notes receivable		-				119
Net cash used in investing activities		(20,857	)			(8,495	)
Cash flows from financing activities:
Proceeds from issuance of preferred stock		-				23,000
Equity issuance costs		-				(387	)
Proceeds from issuance of promissory notes		-				35
Principal payments of mortgages and promissory notes		(611	)			(16,098	)
Proceeds from exercise of stock options		3				9
Proceeds from exercise of warrants		-				61
Repayment of loans from related parties		-				(1,158	)
Principal payments of finance leases		(102	)			(18	)
Redemption of minority interests		(2,000	)			-
Distributions		(184	)			(183	)
Net cash (used in) provided by financing activities		(2,894	)			5,261
Net (decrease) increase in cash and cash equivalents		(21,772	)			14,358
Cash and equivalents, beginning of year		29,683				2,999
Cash and cash equivalents, end of period	$	7,911			$	17,357

Reconciliation of Non-GAAP and GAAP Financial Measures
(in thousands, except percentages)
(unaudited)
	Three months ended								Six months ended
	June 30,				June 30,				June 30,				June 30,
		2022				2021				2022				2021
Non-GAAP Adjusted EBITDA
GAAP net income	$	1,896			$	7,589			$	6,137			$	11,899
Interest expense, net		122				229				272				1,707
Income tax provision		1,750				3,813				5,410				5,017
Depreciation and amortization of property and equipment		850				501				1,552				963
Amortization of acquired intangible assets		285				169				425				346
Non-GAAP EBITDA		4,903				12,301				13,796				19,932
Stock-based compensation		2,553				1,244				5,024				1,600
Acquisition-related and other		754				-				754				-
Other expense (income), net		727				371				(275	)			417
Non-GAAP adjusted EBITDA	$	8,937			$	13,916			$	19,299			$	21,949
Non-GAAP Adjusted EBITDA Margin
GAAP net income		5.7	%			23.3	%			9.5	%			20.8	%
Interest expense, net		0.4	%			0.7	%			0.4	%			3.0	%
Income tax provision		5.3	%			11.8	%			8.5	%			8.7	%
Depreciation		2.6	%			1.5	%			2.4	%			1.7	%
Amortization of acquired intangible assets		0.9	%			0.5	%			0.7	%			0.6	%
Non-GAAP EBITDA margin		14.9	%			37.8	%			21.5	%			34.8	%
Stock-based compensation		7.7	%			3.8	%			7.7	%			2.9	%
Acquisition-related and other		2.3	%			0.0	%			1.2	%			0.0	%
Other (income) expense, net		2.2	%			1.1	%			(0.4	%)			0.7	%
Non-GAAP adjusted EBITDA margin		27.1	%			42.7	%			30.0	%			38.4	%
Supplemental Information
Revenue Components
(in thousands)
(unaudited)
	Three months ended								Six months ended
	June 30,				June 30,				June 30,				June 30,
		2022				2021				2022				2021
Product revenue:
Product sales - retail		23,087				20,552				44,528				35,776
Product sales - wholesale		7,958				8,178				14,020				13,903
Total product sales		31,045				28,730				58,548				49,679
Other revenue		1,941				3,839				5,720				7,533
Total revenue
	$	32,986			$	32,569			$	64,268			$	57,212

FAQ

What were MariMed's Q2 2022 financial results?

MariMed reported Q2 2022 revenue of $33.0 million, a gross margin of 45%, and a GAAP net income of $1.9 million.

How has MariMed's revenue guidance changed for 2022?

The revised revenue guidance for MariMed in 2022 is $135 million to $140 million, down from the previous range of $145 million to $150 million.

What operational expansions did MariMed announce in Q2 2022?

During Q2 2022, MariMed completed several acquisitions and received new licenses, including the acquisition of Kind Therapeutics and a craft grow license in Illinois.

What new products did MariMed launch recently?

MariMed launched Betty's Eddies ice cream in collaboration with Emack & Bolio's, and expanded its product range with new gummies.