Verano Holdings’ Q1 Results: Revenue and Profitability Insights
The TDR Three Key Takeaways regarding Verano Holdings’ Q1 Results:
- Verano reports a 3% year-over-year revenue decline in Q1.
- Verano’s gross profit margin improves to 51% in Q1.
- Verano aims for sustainable growth with reduced net losses.
Verano Holdings Corp. (VRNO:CA) (OTCQX: VRNOF), a well-known operator in the multi-state cannabis industry, today disclosed its financial outcomes for the first quarter ended March 31, 2024. Despite a decline in revenue, the company showed resilience with an overall enhancement in profitability metrics.
Verano Holdings recorded revenues of $221 million for the first quarter, marking a 3% decrease from $227 million year-over-year and a 7% drop from $237 million in the preceding quarter. This decline primarily stems from intensified competition in New Jersey’s retail sector, somewhat offset by stronger wholesale operations performance.
“Our financial results for the first quarter reflect our dynamic adjustment to market changes, highlighted by a significant increase in our gross profit margins,” stated George Archos, founder and CEO of Verano. He added, “We have one of the best teams in the industry, which contributes significantly to our capability to manage these challenging times.” The gross profit rose to $113 million, or 51% of total revenue, an improvement from 48% in the same quarter last year.
Despite the challenges, Verano substantially reduced its net losses. The company reported a net loss of $5 million, a considerable improvement from the $9 million loss reported in the first quarter of 2023. “We continue to fine-tune our entire business—retail, wholesale, and even our corporate functions. Our financial systems are improving year over year, quarter over quarter,” Archos explained, emphasizing the comprehensive enhancements across the company. “Our strategic initiatives are beginning to yield results, reducing our net losses and positioning us for sustainable growth,” he added.
Adjusted EBITDA remained strong at $67 million, representing 30% of revenue, indicating sustained operational efficiency. Verano also reported an increase in net cash provided by operating activities, which rose to $31 million from $17 million in the previous year, demonstrating improved cash flow management.
The quarter also saw Verano expand its operational footprint. “We are particularly proud of our strategic retail expansions and the launch of Cabbage Club™, the nation’s first dispensary membership model,” noted Archos. This initiative is expected to foster customer loyalty and boost consumer engagement across its markets. “It’s an opportunity for us to offer something unique, compared to a typical loyalty program,” Archos said, highlighting the innovative approach taken by Verano.
As of March 31, 2024, Verano’s financial health remained solid with current assets totaling $419 million, including $194 million in cash and cash equivalents. The total debt, net of issuance costs, stood firm at $445 million. Following the quarter, Verano took proactive steps to enhance its financial flexibility by prepaying $50 million of its senior credit facility.
Looking forward, the company has issued guidance predicting flat to low single-digit revenue growth for the second quarter of 2024. Archos remains optimistic about the future, stating, “Every year is a monumental year in the industry. But this one for us is a big one, right? Three of our biggest markets transitioning to adult use is tremendous.” He concludes, “With significant legislative milestones on the horizon and our proven operational agility, we are well-equipped to capitalize on the opportunities that 2024 may bring.”
For detailed insights, stakeholders are encouraged to review Verano’s comprehensive quarterly financial report. Want to keep up to date with all of TDR’s research and news, subscribe to our daily Baked In newsletter.
