Verano Holdings Corp. (VRNOF) Reports Q3 Revenue Decline Amid Market Challenges
Verano Holdings Corp., the Chicago-based cannabis operator, reported its financial results for the third quarter ended September 30, 2024, revealing a decrease in revenue. The company’s net revenue (excluding discounts) came in at $216.68 million, compared to $240.09 million in the same period last year.
The decline in revenue was primarily attributed to challenges in the Florida market due to a temporary shift in cultivation output. Verano also noted expected decreases in retail sales in Illinois and New Jersey, as more dispensaries continue to open in these states.
Despite the revenue dip, Verano remains optimistic about its future prospects. In a statement, George Archos, Verano’s founder, chairman, and CEO, highlighted the growing acceptance of cannabis as a bipartisan issue, particularly during the recent U.S. presidential election. He pointed to the support for Amendment 3 in Florida, where 56% of voters cast ballots in favor, indicating a positive outlook for the company’s growth in the state.
Financial Highlights for the Third Quarter
Here are some key financial highlights from Verano’s third-quarter earnings report:
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Gross Profit:
$109.1 million, compared to $133.22 million in the same period of 2023.*
Net Loss:
$42.57 million, compared to $17.84 million in the corresponding period a year ago.*
Adjusted EBITDA:
$64.46 million, compared to $89.35 million in the same quarter last year.*
SG&A Expense:
$92 million, representing 43% of revenue.*
Net Cash Provided by Operating Activities:
$30 million.*
Capital Expenditures:
$57 million.Looking Ahead: Federal Reform and Expansion
Verano remains optimistic about the potential for federal cannabis reform, particularly in light of the upcoming rescheduling proceedings set to begin in December. The company also plans to expand its operations by opening additional dispensaries across various markets.
Archos expressed confidence in working with the incoming administration to advance the rescheduling process and implement necessary reforms, including tax relief and banking accessibility for the cannabis industry.
2024 Guidance
Verano expects the organic trends observed in the third quarter to persist into the fourth quarter of 2024.
Price Action
Verano shares closed Wednesday’s trading session at $2.23 per share, down 31.17% from the previous day’s close.
In Conclusion
While Verano faced challenges in certain markets during the third quarter, the company remains focused on navigating those obstacles while capitalizing on the growing momentum behind cannabis reform. The company’s optimistic outlook for its future growth and its commitment to working with policymakers on federal legalization will likely be key factors in its future success.
