Verano Holdings Reports Q4 and Full Year 2022 Financial Results
Verano Holdings Corp., a tier-1 multi-state cannabis company, announced financial results for the fourth quarter and full year ended December 31, 2022, all in accordance with U.S. Generally Accepted Accounting Principles (GAAP).
Q4 2022
In the fourth quarter of 2022, Verano Holdings saw revenue in of 7%, reaching $226 million compared to $211 million in the same quarter of the previous year. Although revenue dropped 1% on a sequential basis (QoQ), the fourth quarter’s revenue growth was largely driven by adult-use cannabis sales in New Jersey and boosted retail contributions from new store openings in Florida.
Gross profit was $103 million, representing 46% of revenue, which declining from the previous year’s fourth quarter gross profit of $109 million, or 52% of revenue. This dip can be attributed to increased discounting and cost hikes related to expansion activities.
On the expense side of the ledger, selling, general and administrative (SG&A) expenses totaled $81 million, accounting for 36% of revenue—down from $82 million or 39% of revenue for the fourth quarter of 2021. The decrease was largely driven by lower stock-based compensation and decreased M&A activities, offsetting the increased costs associated with additional stores.
Net loss was substantial $(216) million, a significant increase from $(7) million in the same quarter of 2021, and down from $(43) million in the third quarter of 2022. The increase was primarily driven by a $229 million impairment charge related to the Arizona cultivation license and Pennsylvania and Arizona retail reporting units.
Adjusted EBITDA was reported to be $79 million, which accounted for 35% of revenue, down from $82 million, or 39% of revenue, in the same quarter of 2021, and also down from $82 million, or 36% of revenue, in the third quarter of 2022.
Verano Holdings cash flow from operations for the fourth quarter of 2022 was $29 million, a decline from $63 million in the same quarter of the previous year. Meanwhile, capital expenditures for the fourth quarter of 2022 totaled $9 million, a considerable drop from $49 million in the fourth quarter of 2021.
Free cash flow for the fourth quarter of 2022 was $20 million, an increase from $14 million in the same quarter of the previous year.
Full Year 2022
For full year of 2022, the company’s revenue was $879 million, a 19% increase from the previous year, driven primarily by adult-use sales in New Jersey and boosted retail contributions from new store openings in Florida.
Gross profit was $423 million, accounting for 48% of revenue, an increase from $331 million or 45% of revenue for the full year of 2021. The increase in gross profit can be attributed to increased revenues and lack of prior year inventory step-up.
SG&A expense totaled $357 million, accounting for 41% of revenue, up from $271 million or 37% of revenue for the full year of 2021. The increase in SG&A expense was largely driven by increased headcount to service 29 additional retail locations.
Verano Holdings net loss for the full year of 2022 was $(269) million, up from $(58) million for the full year of 2021. Again, the increase can be attributed to the $229 million impairment charge related to the Arizona cultivation license and Pennsylvania and Arizona retail reporting.