August 8, MariMed, Inc.. MRMD released second-quarter 2022 financial results around the start of U.S. cannabis earnings season. While industry results have generally been lackluster across the board, MariMed’s post-earnings conference call revealed that future revenue prospects have significant growth potential for material expansion simply by utilizing its existing footprint. .
The reveal came courtesy of MariMed co-founder and CEO Jon Levine. Speaking about the company’s growth potential, investors got a glimpse of the latent revenue generating capacity MariMed’s footprint can produce once existing assets are operational, and in addition to the construction of their asset base to the maximum permitted by law. . Jon Levin:
Assuming Mr. Levine makes his (annual) forecast of $350 million comparable to current market realities (i.e. excluding inflation), this would represent a 188% increase in revenue from the 121.46 million generated in 2021 ($128.52 million over four quarters revenue) and this can be done by investing existing operating cash flow. His comments imply that MariMed currently has a low ability utilization rate.
Capacity utilization refers to the manufacturing and production capacities utilized by a country or company at a given time. It is the relationship between the output produced with the given resources and the potential output that can be produced if the capacity were fully utilized. The statistic is usually benchmarked against the US economy, which has been tracked by the Federal Reserve since 1967.
However, capacity utilization metrics can be tailored by individual companies, although the final statistics are usually left to investors and analysts. Low capacity utilization is not unusual for early-stage startup industries with high CAPEX spend, especially in highly-regulated industries where asset integration must clear many regulatory hurdles before discounting.
Asset pipeline under development to drive revenue growth in Q3 2022 and beyond
With approximately $128.52 million in revenue recorded over the last four quarters compared to Mr. Levine’s estimate of $350 million in revenue generation potential using the existing footprint, there is a significant chasm. between MariMed’s current effectiveness and its latent exploitation potential. While MariMed’s revision of 2022 revenue guidance to $135-140 million from the previous range of $145-150 million was disappointing, we expect additional assets to become P&L accretive over the course of the year. of the next year. Essentially, MariMed is not yet recording revenue with a full list of assets.
Kind Therapeutics USA, LLC acquisition: On April 27, 2022, Marimed announced the closing of its acquisition of Kind Therapeutics, which propelled the company into Maryland for vertical licensed cannabis operations. In addition to cultivation and production facilities and wholesale distribution, Kind holds a provisional license for a medical dispensary. However, this dispensary has yet to open and generate revenue for the business. Once this is done, revenues will immediately become accretive to MariMed’s income statement. On the conference call, Levine described Maryland as “soon” going vertical.
MariMed is licensed to operate up to four total dispensaries in Maryland under current state regulations.
On July 18, Kind Therapeutics received approval from the Maryland Medical Cannabis Commission to operate its modern expanded production kitchen at its cultivation and production facility in Hagerstown, Maryland.
MariMed expects a second outlet in Massachusetts: On March 8, 2022, the Company announced a definitive agreement to acquire an interim dispensary license from Green House Naturals, LLC. The dispensary will be in Beverly, a suburban city of 42,000 located on the North Shore of the Boston metro area, and branded Wellness panacea.
According to Chief Operating Officer Timothy Shaw on the post-earnings conference call, “The Beverly Dispensary is online…we’re just awaiting regulatory approval. Once that happens, we will also have another point of sale where we will have a full vertical from seed to sale for our products. We expect approval to occur in the 2022 calendar.
MariMed is licensed to operate up to three total adult dispensaries in Massachusetts under current state regulations.
Ohio Medical Dispensary under construction: On May 18, 2022, MariMed announced that it had been granted a Provisional Dispensary License by the Ohio Pharmacy Board. The license allows the company to develop a medical dispensary in Tiffin, Ohio, located south of Toledo and home to the University of Bucharest and Tiffin University.
MariMed is currently developing the new medical dispensary in Tiffen and plans to open in early 2023. Under Ohio regulations, MariMed must complete construction and pass final inspection by next February.
MariMed is licensed to operate up to five total dispensaries in Ohio under current state regulations.
5th prosper planned Illinois adult clinic: On August 8, 2022, MariMed announced a definitive agreement to acquire the interests in a conditional adult cannabis dispensary license in Illinois. Upon closing of the acquisition, MariMed will commence operations of its fifth Blossom an adult dispensary in Illinois, slated for 2023. In addition, the company is building a modern cultivation and artisanal processing facility in Mt. Vernon, Illinois, making MariMed a full vertical operator in the state a once finished.
MariMed is licensed to operate up to ten total dispensaries in Illinois0 under current state regulations.
Betty’s Eddies expands to Maine: On June 29, 2022, MariMed announced a licensing agreement with East Coast Cannabis Company, a vertical cannabis producer and distributor in the Maine cannabis market. The license agreement provides for the distribution for adult use of MariMed’s top-selling brand, Betty’s Swirls full-spectrum fruit chews and other best-selling SKUs in the line. As the agreement was reached at the end of the second quarter, little or no revenue was recognized in the income statement.
So, as we can see, MariMed has a slew of revenue-generating assets under control that have not been accretive to the income statement over the past quarter. But over the next 3-4 quarters or so, expect these assets to make a strong contribution to revenue. Along with an expected increase in organic growth of current assets and margin expansion, MariMed believes it is well positioned to generate substantial revenue growth without having to take on debt to purchase additional assets.
This article originally appeared on The Dales Report and appears here with permission.