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Here’s What You Missed in Cannabis, Psychedelics This Week
The Fly

Here’s What You Missed in Cannabis, Psychedelics This Week

Cannabis, psychedelics firms report earnings as BZAM receives EU GMP certification approval

In this week’s "Rising High," The Fly’s recurring series focused on cannabis and psychedelic stock news, The Fly looks back on cannabis earnings, psychedelics earnings and an EU GMP certification approval.

CANNABIS EARNINGS: On Wednesday, Village Farms (VFF) reported first quarter loss per share of (6c) on revenue of $64.66M, which compared to analyst estimates of a loss per share of (5c) on revenue of $71.11M. “The first quarter was a solid start to 2023 as continued strong growth in our Canadian Cannabis business and steady sequential performance in our US Cannabis business were complemented by another quarter of significantly improved results in our Fresh Produce business,” said CEO Michael DeGiglio.

Following the report, Alliance Global Partners lowered the firm’s price target on Village Farms to $2.50 from $3 and kept a Buy rating on the shares. The firm said that despite the top-line earnings miss, it is encouraged with the quarter from Village Farms as the company beat on EBITDA, with a number of other "encouraging signs." In cannabis, the company maintained its number two position in the category, and management is encouraged by early signs of price increases in Canada, the analyst said.

Verano (VRNOF) also reported Q1 earnings on Wednesday with a loss per share of (3c) on revenue of $227.1M, which compares to earnings per share of 0c on revenue of $202.2M for the same period last year. “I’m very pleased with our first quarter results which validate the effectiveness of our strategy, highlighted by revenue growth, positive Free Cash Flow and strong Adjusted EBITDA margins,” said CEO George Archos. “Our results were bolstered by the launch of adult use sales in Connecticut, expanding our retail footprint across key markets, strengthening our portfolio to satisfy consumers’ evolving preferences, and delivering greater efficiencies that increased output across many key metrics. We remain confident in our ability to continue growing the business in a challenged environment, will closely monitor developments in Washington D.C. on the reintroduction of SAFE banking legislation, and look forward to leveraging our deep experience in transitioning markets as we approach the forthcoming launch of adult use sales in Maryland.”

Additionally, NewLake Capital Partners (NLCP) reported Q1 adjusted funds from operations on Wednesday of 46c on revenue of $11.4M, which compared to AFFO of 38c on revenue of 12.2M for the same period last year. CEO Anthony Coniglio said, “For the first quarter we delivered results in-line with our revenue guidance and maintained our quarterly dividend of 39c per share of common stock, resulting in a conservative AFFO payout ratio of 86%. Our team acquired a Missouri property for expansion of an existing facility and took the opportunity to enhance shareholder value by repurchasing nearly 50,000 shares of our common stock at an attractive valuation.”

Also on Wednesday, Trulieve (TCNNF) reported Q1 adjusted loss per share of (11c) on revenue of $289M, which compared to EPS of 1c on revenue of $318M for the same period last year. "Our team is laser focused on cash preservation and generation as we set the stage for the next phase of accelerated growth," said CEO Kim Rivers. "Trulieve’s scale and service, operational flexibility, and strong balance sheet are essential for success in the current environment."   Rivers continued, "With increasing adoption and expanding state level access to cannabis, the industry is well beyond the tipping point. Tremendous opportunities lie ahead for companies that can successfully adapt within evolving landscapes."

Alliance Global Partners lowered the firm’s price target on Trulieve Cannabis to C$16 from C$24 and kept a Buy rating on the shares after the company reported Q1 sales and EBITDA below the firm’s and Street estimates, while also guiding Q2 sales to be down by a low-single digit percentage amid continued promotions in Florida. However, the firm contended that the ramping of cultivation at its Jefferson facility and the company’s revamped loyalty program "could bear fruit" ahead of the potential of adult-use sales in Florida with Trulieve confirming yesterday that the 2024 ballot initiative has received an adequate amount of signatures. Meanwhile, Canaccord lowered the firm’s price target on Trulieve Cannabis to C$33 from C$40 and kept a Buy rating on the shares.

MORE CANNABIS EARNINGS: On Wednesday, Cronos Group (CRON) reported Q1 loss per share of (5c) on revenue of $20.14M, which compared to analyst estimates of a loss per share of (5c) on revenue of $24.18M. The company also guided to FY23 revenue of $100M-$110M, which compares to analyst estimates of $102.93M. “I am encouraged by our results across categories in Canada as we are defending our leading position in edibles and climbing market share ranks in other critical product categories,” said CEO Mike Gorenstein. “We intend to build off the strength of our number one position in edibles and utilize our borderless gummy platform for new innovative introductions, including additional rare cannabinoids and flavor profiles throughout 2023. The pre-roll category is a top focus for our team this year, and we are pleased by the early results of our infused pre-rolls and the encouraging progression of our base business. What you see on the market today from us in pre-rolls is just the beginning.”

Following the report, Canaccord lowered the firm’s price target on Cronos Group to C$4 from C$4.25 and kept a Buy rating on the shares.

On Tuesday, Chicago Atlantic (REFI) reported Q1 adjusted EPS of 62c on revenue of $14.9M, which compares to analyst estimates of EPS of 50c on revenue of $14.87M. John Mazarakis, Executive Chairman, noted, “The better-than-anticipated results reflect the benefit of four principal paydowns during the quarter and the timing of our redeployment of the proceeds. We are entering what we believe will be a period of favorable demand for capital from a proven lending platform such as ours. With our fortress balance sheet, we have purposefully reined in our originations to continue to focus on higher yielding investments and funding vertically integrated operators with the strongest credit profile.”

GrowGeneration (GRWG) also reported Q1 earnings on Tuesday with a loss per share of (10c) on revenue of $56.8M, which compared to analyst estimates of a loss per share of (11c) on revenue of $55.9M. The company also guided to FY23 revenue of $250M-$270M, which compares to estimates of $256M. CEO Darren Lampert stated, "I am pleased that GrowGen is off to a strong start in 2023 and we are seeing incremental signs of stabilization in our business. We generated net revenue of $56.8 million in the first quarter, which was at the high-end of our guidance range. Encouragingly, gross margins of 28.7% were above our expectations for the first quarter. While we maintain a degree of cautious optimism, we expect to invest for growth in a disciplined manner this year. Our entire organization is focused on building and growing our private brands, executing upon accretive and complementary acquisitions, and putting profitable growth at the forefront. We believe that the vast majority of our cost cutting initiatives are behind us, the benefits of which will continue to flow through our margins in 2023.”

Following the report, Craig-Hallum upgraded GrowGeneration to Buy from Hold with a price target of $4.75, up from $4.25.

Innovative Industrial Properties (IIPR) reported Q1 earnings Monday with adjusted funds from operations of $2.25 on revenue of $76.1M, which compared analyst estimates of $2.04 on revenue of $70.7M. Rent collection for IIP’s operating portfolio was 98% for the three months. Following the report, Craig-Hallum downgraded Innovative Industrial Properties to Hold from Buy with a price target of $80, down from $125.

PSYCHEDELICS EARNINGS: on Thursday, Compass Pathways (CMPS) reported a Q1 loss per share of (57c), which compared to analyst estimates of a loss per share of (68c). CEO Kabir Nath said, “Our phase 3 pivotal trials in treatment-resistant depression are now underway and on track, with treatment being administered to patients across numerous sites. This is significant progress, indicating that with the necessary approvals and licenses in place, these sites can now focus completely on training and recruitment. We have also made important progress in laying the commercial groundwork for COMP360, with the recent acceptance by the American Medical Association of a CPT III code to describe the support services required in its administration. It has been a quarter of steady, strong progress, including productive, ongoing dialogue about the design of our pivotal trials with FDA.”

BZAM RECEIVES EU GMP CERTIFICATION APPROVAL: BZAM (BZAMF) announced Thursday that its subsidiary, The Green Organic Dutchman, has received EU GMP certification for the company’s facility located in Ancaster, Ontario. This certification permits the company to export certain medicinal cannabis products to numerous global markets and is valid for a three-year period from inspection, with a renewal date of August 31, 2025. This certification allows BZAM to execute on existing strategic distribution partnerships which have already been established, including partnerships in Germany and the UK. With regard to the UK, the Company anticipates launching multiple strains under The Green Organic Dutchman brand in Q4. With Germany’s recent moves toward legalizing cannabis for recreational use, BZAM is now well positioned to benefit from regulatory changes as they unfold. The Company expects to see a positive impact on revenue from international sales resulting from EU GMP certification by Q4, if not sooner.

SAFE HARBOR, FIVE STAR PARTNER FOR CANNABIS BANKING: SHF Holdings, d/b/a Safe Harbor Financial (SHFS) and Five Star Bank (FISI) announced Thursday a partnership to expand crucial access to cannabis banking nationwide.

The companies said, “Safe Harbor’s fintech platform provides a single point of access for commercial deposit bank accounts, access to payment services and treasury management for licensed cannabis businesses through its network of partner financial institutions. Backed by Five Star Bank’s ability to dedicate up to $1B in deposit capacity through its relationship with Safe Harbor, cannabis businesses of all sizes will be afforded greater access to credit facilities along with a robust suite of cannabis banking services. The collaboration will also enable multi-state operators to consolidate their financial operations and realize normalized commercial banking services.”

CANNABIS/PSYCHEDELIC STOCKS: Publicly-traded companies in the space include Aleafia Health (ALEAF), Acreage (ACRHF), Audacious (AUSAF), Aurora Cannabis (ACB), Avant Brands (AVTBF), Awakn Life Sciences (AWKNF), Ayr Wellness (AYRWF), Body and Mind (BMMJ), Cannara Biotech (LOVFF), Canopy Growth (CGC), Clever Leaves (CLVR), CordovaCann (LVRLF), Cresco Labs (CRLBF), Columbia Care (CCHWF), Curaleaf (CURLF), CURE Pharmaceutical (CURR), CV Sciences (CVSI), Cybin (CYBN), Delic Holdings (DELCF), Delta 9 (DLTNF), Entourage Health (ETRGF), Fire & Flower (FFLWF), Flora Growth (FLGC), General Cannabis (CANN), Greenlane (GNLN), Green Thumb (GTBIF), Goodness Growth (GDNSF), Hemp (HEMP), HEXO (HEXO), High Tide (HITI), India Globalization Capital (IGC),  Indiva (NDVAF), InterCure (INCR), IM Cannabis (IMCC), Wellbeing Digital (KONEF), Khiron Life Sciences (KHRNF), Lowell Farms (LOWLF), Lotus Ventures (LTTSF), MediPharm Labs (MEDIF), MedMen (MMNFF), Organigram (OGI), Planet 13 (PLNHF), Reunion Neuroscience (REUN),  Revitalist (RVLWF), RIV Capital (CNPOF), Relmada (RLMD), RYAH Group (RYAHF), Small Pharma (DMTTF), SNDL (SNDL), Sproutly (SRUTF), Skye Biosciences (SKYE), Stem Holdings (STMH), Sunniva (SNNVF), TerrAscend (TRSSF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Tryp Therapeutics (TRYPF), Wesana Health (WSNAF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).

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