OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS
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Chart of the Week
Chart of the Week
The Viridian Capital Chart of the Week highlights key investment, valuation and M&A trends taken from that week’s Deal Tracker that we believe are impactful for investors, companies and acquirers.
Week ended 10/20/2023
Viridian Capital Chart of the Week: Most MSO Revenue Growth is New Market Related
- The Viridian Chart of the Week shows analyst estimates for MSO revenue for the third quarter of 2023 relative to the second quarter of 2023 and the third quarter of 2022.
- The green bars depict estimated sequential quarter growth for Q3:23, while the orange bars show year-over-year growth.
- Analysts expect weak Q3 revenue growth, with a few bright spots based on acquisitions and entrances of new markets, chiefly Maryland. The seventeen companies on the chart are expected to register a sequential revenue growth of only 0.6% and a year-over-year growth of 0.0%.
- Eleven of the seventeen companies shown have projected sequential quarterly growth either negative (5 companies) or below 3%.
- 4Front (FFNT: CSE), down 18.5% sequentially, is suffering from delays in completing its Illinois cultivation facility and building out its dispensary network in the state. The company entered a $10M loan agreement this week to fund the dispensary buildout. The overall expansion has the potential to double sales.
- Cresco Labs (CL: CSE), down 7.2% sequentially, is heavily exposed to Pennsylvania and Illinois, two states that appear to have experienced flat to slightly down sales for the quarter.
- Trulieve (TRUL: CSE), down 4.4%, was impacted by market share loss in its core Florida market and double-digit declines in Arizona state revenues.
- Seven companies had greater than 3% sequential growth including Verano (VRNO: NEO), TILT (TILT: OTCQX), Ascend Wellness (AAWH: OTCQX), Jushi (JUSHF: OTCQX), MariMed( MRMD: CSE), TerrAscend (TSND: TSX), and Schwazze (SHWX: OTCQX). Of these, TILT and Jushi rebounded off weak q2 results, while Schwazze’s results primarily reflect the acquisitions that added 17 stores to the company’s footprint.
- Maryland is the key factor behind the outsized growth of Ascend, MariMed, and TerrAscend. Ascend and TerrAscend both have the maximum of four stores, while MariMed has one. Verano, GTI, and Curaleaf also have the maximum number of stores in Maryland; however, their size and diversification make the addition of Maryland barely perceptible.
- Year-over-year revenue growth generally followed a similar pattern except for Glass House Brands (GLASF: OTCQX), which is up 61% yoy. Glass House has made significant gains in its greenhouse production capacity, and the company is also expected to have 55% higher revenues for the second half of 2023 compared to the 1st half.
- Luckily, investors are focused on cash flows and balance sheet repair because revenue growth through the end of 2023 is expected to remain anemic, totaling less than 2%.
