The Highlights
Global equities slipped this week, with the MSCI World Index down 0.28% and the S&P 500 down 0.26%. The MSCI World and S&P 500 are down 2.85% and 2.65% in August, respectively. After a strong rally from March through July, markets are taking a breather. The small-cap Russell 2000 dropped 1.64% last week, while the NASDAQ fell 1.80%. The Russell 2000 is now down 3.88% MTD, while the NASDAQ has dropped 4.88% in August. The “Magnificent Seven” that drove the rally are now down more than 5% MTD. Cannabis stocks hit new lows and the MSOS ETF ended the week down 6.88%. There was significant dispersion this week, with TerrAscend (TSX: TSND, OTCQX: TSNDF) leading the way (+19.05%), while Cresco (CSE: CL, OTCQX: CRLBF) and MariMed (CSE: MRMD, OTCQX: MRMD) were hit the hard, down 24.84% and 18.48%, respectively. Earnings dominated the news this week. The four Tier 1 MSOs that have reported showed average quarterly revenue growth of 1.00% and an average quarterly AEBITDA decline of 0.93%. Fatigued investors have been quick to sell stocks that have not met expectations. Below are summaries of some of the key reports from last week. MariMed Revenue Expands, AEBITDA Temporarily Declines MariMed (CSE: MRMD, OTCQX: MRMD) reported second-quarter revenue of $36.5 million, which was modestly above our estimate of $36.0 million. This is a 10.6% Y/Y increase in revenue and a 6.2% improvement Q/Q. Higher revenue was driven by the opening of the adult-use Panacea Wellness Store in Beverly Massachusetts on April 25 and the Thrive Wellness medical dispensary in Tiffin, Ohio that opened on June 12. 2Q adjusted EBITDA of $6.3 million fell short of our estimate of $8.0 million. Adjusted EBITDA declined 29.2% Y/Y and 11.2% Q/Q. Lower adjusted EBITDA was driven primarily by higher personnel and marketing and promotion expenses associated with the two new stores opening and preparing for Maryland to begin adult-use sales on July 1.
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