Verano Holdings Corp. (OTCQX:VRNOF) (CSE:VRNO) released its 2021 financial results which were prepared in accordance with U.S. GAAP.
In connection with the audit of its 2021 full year financial statements a change in consideration valuation resulted in a revaluation and reclassification of certain assets and liabilities related to acquisitions. Accordingly, the company restated and refiled on SEDAR its first, second and third quarter 2021 unaudited interim financial statements prepared in accordance with IFRS. As a result, shareholders equity reflects a favorable increase of $706,322. There is no impact to previously audited financials from 2019 and 2020.
2021 Financial Highlights
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2021 revenue increased by 223% to $738 million, compared to 2020.
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On a proforma basis, revenue increased to $760 million, up by 233% compared to 2020.
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2021 gross profit increased by 147% to $335 million, or 45% of revenue, compared to $136 million or 59% of revenue in 2020; excluding a one-time inventory step up as well as the adoption of the amortization of licenses totaling $140 million, 2021 gross margin would have improved slightly over 2020.
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Net loss for the year was $15 million, compared to a net income of $38 million in 2020, driven primarily from depreciation and amortization of acquisitions and expansion capex.
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Adjusted EBITDA was $323 million or 44% of revenue, compared to $107 million or 47% of revenues in 2020.
2021 Q4 Financial Highlights
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Revenue of $211 million.
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Gross profit for the quarter was $115 million, or 54% of revenue.
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Net income was $27 million, or 19% of revenue.
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Adjusted EBITDA for the quarter was $84 million or 40% of revenue.
2021 Q4 Operational Highlights
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Added non-dilutive funding of $120 million under the company’s senior secured credit facility.
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Appointed Destiny Thompson as chief people officer
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Bolstered the company’s retail footprint, including:
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Entered the Connecticut market ahead of adult-use sales with the acquisition of two active dispensaries and one 217,000 square foot cultivation and production facility;
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Opened three new Florida MÜV dispensaries in Melbourne, Orange Park, and Stuart;
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Opened a third Nevada Zen Leaf dispensary in Las Vegas;
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Opened a new Zen Leaf dispensary in West Chester, Pennsylvania; and
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Relocated Zen Leaf St. Charles, Illinois dispensary to a new prime location.
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2022 Recent Operational Highlights
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Appointed as CFO Brett Summerer, former vice president, head of supply chain finance and CFO of The Kraft Heinz Company’s (NASDAQ:KHC) U.S . Operations.
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$100 million funded under the company’s senior secured credit agreement resulting in aggregate outstanding borrowings under the credit facility of $350 million, with an added option to request funding of up to $175 million on terms to be determined if the company exercises the option.
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Entered into an arrangement agreement on January 31, 2022, to acquire Goodness Growth Holdings, Inc. (OTCQX:GDNSF) to establish a strong foundation in the attractive markets of New York, Minnesota, and New Mexico upon closing the proposed transaction.
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Active operations spanning 13 states, consisting of 96 dispensaries and 13 cultivation and processing facilities, with more than one million square feet of cultivation capacity.
“2021 was a transformational year for Verano, our first as a public company. I am very proud of what we accomplished and remain confident in our ability to build upon this strong foundation to achieve long-term, sustainable growth,” stated George Archos, Verano founder and CEO. “Growth across all our key financial metrics was driven organically, from our core operations and by accretive acquisitions we made throughout the year. We have always focused on driving profitability, which we believe sets us apart in the industry. I was pleased to report results in line with guidance by maintaining our signature, industry-leading margin profile for 2021.”
Balance Sheet and Liquidity
As of December 31, 2021, the company’s current assets were $274 million, including cash and cash equivalents of $99 million. The company had working capital of ($196) million and total debt, not including lease liabilities and net of issuance costs, of $290 million. These figures do not include the $100 million impact of the upsize to the company’s credit facility in the first quarter of 2022.
The company’s total class A subordinate voting shares outstanding, including class B proportionate voting shares on an as-converted basis, was 327.86 million as of April 22, 2022.
Exemptive Relief Request
Under applicable Canadian securities laws, the company is obligated to file with the Canadian Securities Administrators annual and interim financial statements prepared in accordance with International Financial Reporting Standards and with respect to the annual financial statements, audited in accordance with Canadian auditing standards. The company has applied to the Canadian Securities Administrators for exemptive relief to permit it to:
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file in Canada its annual financial statements for the year ended December 31, 2021 and interim financial statements for the period ended March 31, 2022 in accordance with U.S. GAAP;
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have its annual financial statements audited in accordance with U.S. PCAOB;
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prepare its related management discussion and analysis in accordance with the requirements for SEC issuers. This exemptive relief has not yet been granted, and there can be no assurance that this exemptive relief will be granted.
Conference Call and Webcast
The company will hold a conference call and audio webcast with analysts and investors on April 27, 2022, at 8:30 a.m. ET / 7:30 a.m. CT to discuss the results and answer investor and participant questions.
Photo: Courtesy of Tim Foster on Unsplash
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