With Cannabis Earnings Season Complete, MariMed’s Performance Stands Out From Its Peers
With Tier-1 cannabis earnings season in the books, a fresh dataset of current financials is available to investors to peruse and analyze. As always, the subject of growth is paramount in an industry that is still building out. With numbers in-hand, TDR parsed some key metrics of all the major operators, wth MariMed standing out in several discernable categories.
In the following analysis, we break down key MariMed topline and performance ratios relative to its peers in the industry.
By The Numbers: Topline Revenue Growth
| MSO | Q/Q Revenue Growth | Y/Y Revenue Growth | Retail Revenue Mix |
| Acreage Holdings (ACRHF) | 4% | -5% | 77% |
| Ascend Wellness (AAWHF) | 8% | 26% | 73% |
| Ayr Wellness (AYRWF) | -1% | 6% | |
| Cresco Labs (CRLBF) | 2% | -9% | 58% |
| Curaleaf Holdings (CURLF) | 1% | 0% | 82% |
| Green Thumb Industries (GTBIF) | 2% | -1% | 75% |
| Jushi Holdings (JUSHF) | -5% | -9% | 90% |
| MariMed Inc. (MRMD) | 6% | 11% | 67% |
| Trulieve Cannabis (TCNNF) | -3% | -12% | 96% |
| Verano Holdings (VRNOF) | 3% | 5% | |
| Peer Average | -1% | 1% | 79% |
As expected, the industry produced a relatively flat growth profile this reporting quarter. Overall, the primary cause of moribund industry growth is essentially tethered to two factors: a constrained consumer and weak pricing power—otherwise known as ‘price compression’. The latter was cited by many of the top operators during most of the requisite post-earnings conference calls, including Trulieve Cannabis CFO Ryan Blust, who noted that an increase in traffic and volume was “partially offset by price compression,” which lead to subdued growth overall (see table above).
Despite operating in similar industry dynamics in its jurisdictions of operation, MariMed was able to deliver above average revenue growth. In the second quarter, Marimed delivered solid 6% topline number, driven by monthly and quarterly sales records in its wholesale business. On an annual basis, growth is even more apparent, as Marimed grew revenue 11%—the only company aside from Ascend Wellness to deliver double-digit YoY performance.
A higher company peer growth rate relative to industry competitors is a good thing. It generally indicates that a company is experiencing faster growth in key performance metrics compared to its direct competitors within the same industry. In turn, this can be a positive sign for the company’s financial health, market position, and overall business strategy.
And we note that MariMed’s second quarter financial performance did not include adult-use results from Maryland, which began on July 1st—the beginning of the third quarter. Currently, MariMed has one operating dispensary and cultivation & processing facility in the state, with long-term plans to expand towards the state’s four dispensary cap.
The strong performance of its branded products and Annapolis, MD, dispensary were cited as a reason for MariMed increasing its revenue outlook for both the retail and the wholesale business within the state by almost $10 million, and ultimately, a reiteration of previously-stated full year revenue and EBITDA guidance for 2023.
By The Numbers: Profitability Ratios
| MSO | Adj. Gross Margin | Adj. Operating Margin | Adj. EBITDA Margin |
| Acreage Holdings (ACRHF) | 44% | -3% | 12% |
| Ascend Wellness (AAWHF) | 37% | -1% | 17% |
| Ayr Wellness (AYRWF) | 51% | -4% | 25% |
| Cresco Labs (CRLBF) | 47% | -1% | 20% |
| Curaleaf Holdings (CURLF) | 44% | 4% | 21% |
| Green Thumb Industries (GTBIF) | 50% | 16% | 30% |
| Jushi Holdings (JUSHF) | 46% | 5% | 18% |
| MariMed Inc. (MRMD) | 46% | 14% | 17% |
| Trulieve Cannabis (TCNNF) | 56% | -81% | 28% |
| Verano Holdings (VRNOF) | 57% | 22% | 31% |
| Peer Average | 49% | -7% | 24% |
While the ability to generate revenue is an important metric, it only tells one side of the story. Without the ability to operate efficiently, a company may still encounter deterioration on the balance sheet despite strong sales growth. Thus, profitability ratios provide valuable insights of granularity into a company’s ability to generate profits relative to its various financial inputs, such as revenue, assets, equity, and costs.
Although MariMed’s Adj. gross margin and Adj. EBITDA margin remains slightly below the industry average, Adj. operating margin continues to shine—3rd on our comp table at 17% in Q2 2023. This is one of our key metrics of interest because it delivers a true representation of a company’s core operating profitability without the noise of one-time or non-operational items.
The adjusted operating margin is calculated by taking the operating income and adjusting it for specific items that may distort the company’s operational performance. Such adjustments usually include normal one-time charges, such as non-recurring expenses or gains such as legal fees and real estate divestitures, respectively. It may also include such items as amortization & depreciation, which are accounting methods used to allocate the cost of certain assets over their useful lives.
So while accounting for the aforementioned items is obviously warranted, adj. operating margin stands the test as a key metric in which to decipher the true profitability of core business operations. To that end, MariMed has proven once again that it is operating more efficiently than just about anyone in the industry and in tough industry conditions.
High CAPEX To Sales Ratio
| MSO | CAPEX:Sales Ratio |
| Acreage Holdings (ACRHF) | 0.02 |
| Ascend Wellness (AAWHF) | 0.07 |
| Ayr Wellness (AYRWF) | 0.06 |
| Cresco Labs (CRLBF) | 0.09 |
| Curaleaf Holdings (CURLF) | 0.03 |
| Green Thumb Industries (GTBIF) | 0.26 |
| Jushi Holdings (JUSHF) | 0.02 |
| MariMed Inc. (MRMD) | 0.16 |
| Trulieve Cannabis (TCNNF) | 0.04 |
| Verano Holdings (VRNOF) | 0.03 |
| Peer Average | 0.08 |
Now that we’ve looked into common topline and profitability metrics, we turn our attention to the Capital Expenditure to Sales Ratio (CAPEX:Sales). This is a financial metric that measures the proportion of a company’s sales revenue being invested back into the business as capital expenditures. We believe this often-overlooked ratio is important, because it provides good foresight into the future growth prospects of a company. After all, if a company isn’t forward-looking and reinvesting back into its own business, future growth will likely suffer due to lack of innovation or production/sales constraints.
In the end, a higher CAPEX:Sales Ratio is indicative that a company is allocating a larger portion of its revenue towards capital investments, which could include expanding production capacity, upgrading facilities, purchasing new equipment, or investing in research and development. It is calculated by dividing the company’s capital expenditures by its total sales revenue. The higher the ratio, the more reinvestment that is occurring.
With a CAPEX:Sales ratio approximately double its peer average, MariMed is verifiably reinvesting back into its own operations. Of all the companies in our purview, only Green Thumb Industries has a higher ratio. So while the temptation may be to pull back on all spending possible during these challenging times, MariMed continues to reinvest in its future at an above-industry clip.
In our estimation, this bodes well for MariMed’s future growth prospects, while giving investors confidence that the company is building towards a growing future.
To view the latest post-earnings interview with MariMed CEO Jon Levine, click here.
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