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MariMed Reports Second Quarter 2022 Earnings

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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:

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

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:

“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:

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  
               


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