August 16, 2022 — Verano Holdings Corp. (CSE: VRNO) (OTCQX: VRNOF) (“Verano” or the “Company”), a leading multi-state cannabis company, today announced its financial results for the second quarter ended June 30, 2022 (“Q2 2022″), which were prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). Second quarter 2021 comparable numbers were also prepared in accordance with U.S. GAAP. All financial results for the second quarter ended June 30, 2022 and related comparisons to prior periods included in this release are preliminary, have not been reviewed or audited, are based on the Company’s estimates and were prepared prior to the completion of the Company’s financial statement close process.
2022 Second Quarter Financial Highlights
- Q2 2022 revenue increased 12% to $224 million compared to the second quarter 2021.
- Q2 2022 gross profit was $98 million or 44% of revenue, compared to $69 million or 35% of revenue in the second quarter 2021.
- Q2 2022 SG&A was $100 million or 45% of revenue, compared to $70 million or 35% of revenue in the second quarter 2021.
- Q2 2022 net loss was $(10) million, compared to a loss of $(30) million in the second quarter 2021.
- Q2 2022 EBITDA on an unadjusted basis was $48 million or 22% of revenue, and Adjusted EBITDA1 was $76 million or 34% of revenue.
- Cash flow from operations for the six months ended June 30, 2022 was $44 million.
2022 Second Quarter Operational Highlights
- On April 21, 2022, Verano welcomed New Jersey Governor Phil Murphy at Zen Leaf Elizabeth to celebrate the commencement of adult use sales in the state, and also launched adult use sales at the Company’s Zen Leaf Lawrence Township dispensary.
- Exceeded 100-dispensary milestone by expanding the Company’s retail footprint with new store openings that include:
- five new MÜV dispensaries located in Marco Island, Hobe Sound, Fort Myers Beach, Ocala, and Winter Haven, FL.
- two new Zen Leaf locations in Westover, WV and Wynnewood, PA.
- Announced exclusive partnership with The Weldon Project’s Mission Green to advance cannabis clemency and advocacy initiatives.
- Relocated Zen Leaf dispensaries in Canton, OH and Phoenix, AZ to optimize store locations and amenities.
- Launched mobile applications and exclusive rewards programs for Verano’s flagship Zen Leaf and MÜV dispensaries.
1 Adjusted EBITDA is a non-GAAP financial measure. It is derived from EBITDA, another non-GAAP financial measure, both of which are defined in this news release in the section below titled “Non-GAAP Financial Measures.” The most comparable U.S. GAAP financial measure to Adjusted EBITDA and EBITDA is net income. The reconciliations of Adjusted EBITDA and EBITDA to U.S. GAAP net income is set forth below in the tables included in this news release.
Subsequent Operational Highlights
- Surpassed 50-dispensary retail footprint milestone for MÜV in Florida, bringing the total state footprint to 55.
- Opened new Zen Leaf dispensary in Wheeling, WV; relocated Zen Leaf Jessup to Elkridge in Maryland to optimized location and retail space; maximized New Jersey footprint with the commencement of adult use sales at Zen Leaf Neptune on the Jersey Shore.
- Launched Verano signature flower branded products in four new core markets – Arizona, Florida, Massachusetts and Pennsylvania; Verano signature flower branded products are now distributed to more than 500 dispensaries across nine states, including more than 100 of the Company’s retail locations.
- Announced the upcoming launch of Savvy in September 2022, a new brand featuring larger-format cannabis products that caters to more value-oriented patients and consumers, across seven core markets.
- Active operations span 13 states, comprised of 109 dispensaries and 13 cultivation and processing facilities with more than 1 million square feet of cultivation capacity.
“I am very proud of our performance this quarter alongside the strategic investments we made to ensure our high operational standards touch every part of our business,” said George Archos, Verano Founder and Chief Executive Officer. “Despite ongoing macroeconomic headwinds, we achieved a number of wins throughout the quarter, including the successful launch of adult use sales in New Jersey, exceeding a milestone of operating more than 100 dispensaries following the opening of seven new stores in Florida, West Virginia and Pennsylvania, announced a partnership with Mission Green to advance cannabis clemency and social equity initiatives, and launched mobile applications and rewards programs for our flagship Zen Leaf and MÜV dispensaries. I am proud of what we have accomplished since going public last year and remain confident that the strategy and plans we have in place will drive long term, sustainable growth for Verano.”
Balance Sheet and Liquidity
As of June 30, 2022, the Company’s current assets were $288 million, including cash and cash equivalents of $93 million. The Company had working capital (deficit) of $(299) million and total debt, net of issuance costs, of $403 million.
The Company’s total Class A subordinate voting shares outstanding, including Class B proportionate voting shares on an as-converted to Class A subordinate voting share basis, was 330,818,664 as of June 30, 2022.
Non-GAAP Financial Measures
Verano uses non-GAAP financial information to evaluate the performance of the Company. The terms “EBIT,” “EBITDA,” and “Adjusted EBITDA” do not have any standardized meaning prescribed within U.S. GAAP and therefore may not be comparable to similar measures presented by other companies. Accordingly, this non-GAAP financial information is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP.
The Company calculates EBIT as net earnings from operations before interest expense and tax expenses, EBITDA as net earnings from operations before interest expense, tax expense, depreciation, and amortization and Adjusted EBITDA as EBITDA as adjusted for one-time expenses related to other expenses, employee stock compensation, gain from investment in associates, acquisition, transaction and other non-operating costs and acquisition adjustments and other income (expense), net. The calculations of the non-GAAP financial measures used in this news release and the reconciliations to the most comparable U.S. GAAP financial numbers are included in the tables below.
Management believes that this non-GAAP financial information is useful as a supplement to comparable U.S. GAAP financial information. Management reviews these non-GAAP financial measures on a regular basis and uses them, together with financial measures included in the Company’s financial statements, to evaluate and manage the performance of the Company’s operations. These measures should be evaluated only in conjunction with the comparable U.S. GAAP financial numbers reported by the Company.
Conference Call and Webcast
- The live and archived webcast will be available on the Events and Presentations page of the Company’s investor relations website at investors.verano.com .
Verano is a leading, vertically integrated, multi-state cannabis operator in the U.S., devoted to the ongoing improvement of communal wellness by providing responsible access to regulated cannabis products. With a mission to address vital health and wellness needs, Verano produces a comprehensive suite of premium, innovative cannabis products sold under its trusted portfolio of consumer brands, including Verano™, Avexia™, Encore™, and MÜV™. Verano’s portfolio encompasses 14 U.S. states, with active operations in 13, including 13 cultivation and processing facilities comprising over 1,000,000 square feet of cultivation capacity. Verano designs, builds, and operates dispensaries under retail brands including Zen Leaf™ and MÜV™, delivering a superior cannabis shopping experience in both medical and adult-use markets. Learn more at www.verano.com.