3Q23 Revenue Exceeds Estimates; Adjusted EBITDA In Line
MariMed report 3Q revenue of $38.8 million, which was slightly ahead of our estimate of $38.5 million. This represents a 6.3% increase Q/Q and a 14.4% improvement Y/Y. The revenue increase was driven primarily by Maryland. MariMed has a dispensary in Annapolis that converted to adult-use on July 1 and sales grew 88% Q/Q. It has a cultivation and processing facility in Hagerstown and its wholesale business grew 161% Y/Y. The company also produces edibles in Maryland using its GMP-certified kitchen. Revenue should expand modestly in 4Q due to the opening of MariMed’s fifth dispensary in Illinois and a new Illinois processing facility and kitchen. Growth is expected to accelerate in 2024 as the cultivation facility in Illinois is completed, cultivation expansion in Massachusetts and Maryland is online, and the company begins distributing products in Missouri. 3Q adjusted EBITDA of $6.1 million was in line with our estimate. Adjusted EBITDA declined 3.9% Q/Q and 29.5% Y/Y. The lower numbers were primarily due to gross margins contracting from pricing pressure in Massachusetts and Illinois. The consumer wallet is also stretched, and this is resulting in smaller basket sizes and reduced spending on premium products. Construction challenges, permitting delays, and slow supply chains also affected earnings. Circuit boards that may have previously taken days or weeks to receive may now take months. States can also be slow in making final approvals and allowing occupancy. This is pushing revenue and profits previously expected in 2023 out to 2024. MariMed offered updated guidance of revenue of $148-150 million, gross margins of approximately 45%, and adjusted EBITDA of $27-32 million. Capital expenditure is expected to range from $22-25 million. We hosted an earnings review on X with CEO, Interim CFO, and President Jon Levine. Those interested can listen to the recording using the link in our full report.
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