Verano’s revenue jumps in 2023, but warns that first quarter will dip

Chicago-based Verano Holdings Corp. (Cboe CA: VRNO) (OTCQX: VRNOF) announced rising revenue for the fourth quarter and 2023 but cautioned that increased competition in New Jersey would hurt the first quarter’s revenue.

Fourth quarter revenue rose 5% to $237 million over last year’s fourth quarter but declined 1% sequentially. Verano attributed the increase over last year to strength from wholesale adult-use sales in New Jersey, in addition to growth in Maryland and Florida retail.The net cash provided by operating activities was $32 million, up from $29 million for the fourth quarter of 2022.

Verano made improvements in the quarter’s net losses, dropping from a net loss of $216 million in 2022 to $73 million. However, it did increase sequentially from the third quarter net loss of $18 million. Verano said the improvement in the quarter was due to a $229 million impairment charge in the prior year period. The company also said that the net loss for the fourth quarter was primarily driven by the increase in provision for income taxes as the company increased income from operations versus the fourth quarter of 2022.

Looking ahead to the current quarter, Verano estimated that revenue would fall 5-7% as the growing dispensary count in New Jersey continues to normalize.

Full-year results

For the full year of 2023, Verano reported that revenue increased 7% to $938 million. Again, the increase in revenue for the full year 2023 was driven by a full year’s adult use contribution from New Jersey in addition to adult use launches in Connecticut and Maryland.

The company also reported a net loss of $113 million or (12)% of revenue down from $269 million for the full year of 2022. Verano said the decrease in net loss was due to the above-mentioned impairment. In addition to the impairment comparison, there was an increase in the provision for income taxes as the company increased income from operations versus the full year 2022.

“I’m incredibly proud of our performance in 2023, highlighted by key wins across all aspects of the business,” said George Archos, Verano Founder and Chief Executive Officer. “As excitement and anticipation builds in the industry, 2024 has the potential to be a game-changing year, and Verano is well positioned to continue capitalizing on growth opportunities both in the current regulatory environment and from any state or federal reform. While we’ve never been dependent on legislation to drive sustained growth, with adult use imminent in Ohio, on the horizon in Florida and Pennsylvania, and the growing anticipation of a federal rescheduling decision, there is limitless potential for Verano. I’m thankful for all that our team accomplished in 2023, and believe the sky is the limit for what we can achieve in 2024 and beyond.”

At the end of 2023, Verano’s current assets were $394 million, including cash and cash equivalents of $175 million. The company reported it had a working capital deficit of $18 million and total debt, net of issuance costs, of $446 million.

Verano’s footprint spans 13 states with 138 dispensaries, and 14 production facilities. It has more than one million square feet of cultivation capacity.

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