You’re reading a copy of this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news.
Friends,
With Trulieve reporting last week, all five of the largest American cannabis operators have now shared Q3 financial updates. Heading into earnings season, we had discussed the fear among investors that these reports would be substantially worse than expected. The slowing sales in many markets over recent months was one factor, but there has been great concern about several markets, especially California, where only Cresco among the largest companies has operations, as well as Florida and Pennsylvania, both of which have become more competitive recently. The actual results among the top five companies weren’t too alarming:
With the exception of Curaleaf and Verano, revenue was very much in line with expectations. Verano reported several one-time factors as well as regulatory delays in several markets, while Curaleaf pointed to challenges in New York and New Jersey due to regulatory delays. On profitability, only Curaleaf was substantially worse than expected. Its gross margin was less than expected and was depressed partially by one-time factors, while its operating expenses were a bit higher than expected. The big upside at Verano was due in part to a change in how the company is accounting for contingent liabilities.
From our perspective, the fears for the worst proved unfounded. While none of the companies provided 2022 outlooks, the analysts did cut the estimates for revenue by an average of 4%, with four of the five names modestly lower. With respect to profitability, the analysts reduced the adjusted EBITDA by an average of 8%, with Curaleaf having a large impact on the average.
These largest cannabis companies, despite strong growth in their revenue and profitability over the past year, have all suffered stock price declines ranging from 8% to 18% in 2021 (Verano didn’t begin trading until February). From our perspective, even with a rally that has left the group up an average of 8% this month, the stocks don’t seem to reflect what is still strong growth projected in 2022 despite the recent reductions. The very lowest revenue growth projected among the five companies is 29%, and four of the five companies are expected to grow adjusted EBITDA at a faster pace than revenue.
New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:
- Exclusive: Canadian Retail Cannabis Sales Increased 38% in September to $355 Million
- Flora Growth Raises $30 Million Selling Units at $3
- Greenlane Generates $41.3 Million Revenue in Q3
- Jushi Q3 Revenue Increases 13% Sequentially to $54 Million
- Schwazze to Acquire Two Colorado Dispensaries for $29 Million
- Exclusive: TerrAscend Is Deepening Its Relationship with Leading Cannabis Brand Cookies
- TILT Holdings Q3 Revenue Increases 10% Sequentially to $53.4 Million
- The Parent Company Q3 Revenue Declines 27% Sequentially to $39.7 Million
- Trulieve Q3 Revenue Increases 4% Sequentially to $224 Million
- Exclusive: urban-gro Looks to Deploy $40M into M&A to Capitalize on Booming Demand for Indoor Cultivation Facilities
- Verano Q3 Revenue Increases 4% to $207 Million
- Exclusive: WM Technology Is Leveraging Weedmaps Success with B2B Software Solutions
To get real-time updates download our free mobile app for Android or Apple devices, like our Facebook page, or follow Alan on Twitter. Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group on LinkedIn.
Get ahead of the crowd! If you are a cannabis investor and find value in our Sunday newsletters, subscribe to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013. Gain immediate access to real-time and in-depth information and market intelligence about the publicly traded cannabis sector, including daily videos, weekly chats, model portfolios, a community forum and much more.
Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index and the Ancillary Cannabis Index.
View the Public Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks.
Stay on top of some of the most important communications from public companies by viewing upcoming cannabis investor earnings conference calls.
Discover upcoming new listings with the curated Cannabis Stock IPOs and New Issues Tracker.
Sincerely,
Alan & Joel
