CHICAGO, Nov. 7, 2024 – PRESS RELEASE – Verano Holdings Corp., a leading multistate cannabis company, announced its financial results for the third quarter ended Sept. 30, 2024, which were prepared in accordance with U.S. generally accepted accounting principles (GAAP).
Third Quarter 2024 Financial Highlights
- Revenues, net of discounts, of $217 million, a decrease of 2.6% versus the prior quarter.
- Gross profit of $109 million or 50% of revenue.
- SG&A expense of $92 million or 43% of revenue.
- Net loss of $(43) million or (20)% of revenue.
- Adjusted EBITDA1 of $64 million or 30% of revenue.
- Net cash provided by operating activities of $30 million.
- Capital expenditures of $57 million.
Management Commentary
“During this election season, for the first time in history, cannabis took center stage as a key bipartisan issue for both U.S. presidential candidates and millions of voters across the nation,” Verano founder, Chairman and CEO George Archos said. “Despite the Amendment 3 outcome, it was encouraging to see the measure supported by a majority of Floridians with 56% voting in favor, and we remain optimistic on our growth prospects in the state and our ability to succeed in the current environment.
"With rescheduling proceedings set to commence in December, and additional dispensary openings planned across multiple markets, we are prepared to leverage potential catalysts in the months and years ahead at the state and federal levels. Given his prior supportive comments, we look forward to working with President-elect Trump and his administration to advance the rescheduling process and much-needed reforms, including tax relief and SAFER banking.”
Third Quarter 2024 Financial Overview
Revenue for the third quarter 2024 was $217 million, down from $240 million for the third quarter 2023, and down from $222 million for the second quarter 2024. The decrease in revenue for the third quarter 2024 compared to the third quarter 2023 was driven primarily by declines in Florida retail due to a temporary shift in cultivation output, in addition to expected declines in Illinois and New Jersey retail as dispensaries continue to open across the state.
Gross profit for the third quarter 2024 was $109 million or 50% of revenue, down from $133 million or 55% of revenue for the third quarter 2023, and down from $114 million or 51% of revenue for the second quarter 2024. The decrease in gross profit for the third quarter 2024 compared to the third quarter 2023 was primarily due to declines in revenue.
SG&A expense for the third quarter 2024 was $92 million or 43% of revenue, up from $86 million or 36% of revenue for the third quarter 2023, and up from $87 million or 39% of revenue for the second quarter 2024. The increase in SG&A expense for the third quarter 2024 compared to the third quarter 2023 was driven primarily by an increase in salaries and benefits, due to increased headcounts related to new store openings.
Net loss for the third quarter 2024 was $(43) million, or (20)% of revenue, versus $(18) million, or (7)% of revenue in the third quarter 2023. The increase in net loss for the third quarter 2024 compared to the third quarter 2023 was largely driven by declines in income from operations.
Adjusted EBITDA1 for the third quarter 2024 was $64 million or 30% of revenue.
Net cash provided by operating activities year to date was $69 million, down from $77 million for the prior year period.
Capital expenditures year to date were $85 million, up from $27 million for the prior year period.
2024 Guidance
- The company expects organic trends similar to those seen in the third quarter 2024 to continue into the fourth quarter 2024.
Third Quarter 2024 Operational Highlights
- Expanded the company's retail footprint by opening the following new dispensaries:
- MÜV locations in Melbourne and Okeechobee, elevating the company's Florida retail operations to 79 dispensaries statewide;
- Zen Leaf Fairless Hills in Pennsylvania, which relocated to a prime new Philadelphia area location; and
- Zen Leaf Arcadia in Arizona, featuring an array of new dispensary features and customer conveniences, which relocated to an enhanced Phoenix location.
- Introduced Cabbage Club, the first nationwide proprietary multistate cannabis membership club, in Connecticut, Maryland and Michigan on July 1, following its April debut in the Illinois and New Jersey markets.
- Welcomed adult-use customers at the company's five Ohio Zen Leaf dispensaries on Aug. 6.
- Completed acquisition of Arizona and Virginia subsidiaries of The Cannabist Co. Holdings Inc., confirming the company's position as exclusive cannabis operator for HSA 5 in Eastern Virginia, and strengthening its Arizona footprint.
- In late September, launched "Save the Bits" fundraising campaign featuring BITS edibles and coalition of hundreds of dispensaries across eight states benefiting the Lynn Sage Breast Cancer Foundation.
Subsequent Operational Highlights
- Issued company donation, and launched "Round Up for Relief" fundraising campaign across Florida MÜV dispensaries to support Red Cross hurricane relief efforts.
- Commenced adult-use sales at Zen Leaf Waterbury, completing the conversion of all five existing Connecticut Zen Leaf dispensaries from medical to hybrid sales.
- Current operations span 14 states, comprised of 152 dispensaries and 15 production facilities with more than 1.1 million square feet of cultivation capacity.
Balance Sheet and Liquidity
As of Sept. 30, 2024, the company’s current assets were $322 million, including cash and cash equivalents of $65 million. The company had a working capital deficit of $(114) million and total debt, net of issuance costs, of $420 million.
The company’s total Class A subordinate voting shares outstanding was 356,925,414 as of Sept. 30, 2024.
1Adjusted EBITDA and adjusted EBITDA as a percentage of revenue (“adjusted EBITDA margin”) are non-U.S. GAAP financial measures. Each is derived from EBITDA, another non-U.S. GAAP financial measure, and is defined in this news release in the section below titled “Non-U.S. GAAP Financial Measures.” The most directly comparable U.S. GAAP financial measure to adjusted EBITDA is net income (loss) and the most directly comparable measure to adjusted EBITDA margin is net income (loss) as a percentage of revenue (“net income (loss) margin”). The reconciliation of (i) adjusted EBITDA to U.S. GAAP net income (loss) and (ii) adjusted EBITDA margin to net income (loss) margin is set forth below in the tables included in this news release.
