MariMed Stock: Is Overlooked U.S. Pot Stock Poised for 175% Rally?

MariMed Inc Expects to Report That Earnings & Revenue Doubled in 2021

MariMed Inc (OTCMKTS:MRMD), a seed-to-sale cannabis multistate operator, is one of the best-kept secrets in the legal marijuana sector. But it won’t stay that way for long. The company has found a greater audience for its products, it has been expanding its U.S. footprint, and—so far in 2022—it has announced two strategic acquisitions.

MariMed Inc has reported some of the best revenue, earnings, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) growth in the cannabis industry.

In fact, the company has reported 11 consecutive quarters of revenue growth. It has also reported positive EBITDA growth in six of the past seven quarters. Furthermore, MariMed Inc doubled its revenues and earnings in fiscal 2020 and is on track to report the same for fiscal 2021.

Despite this, MRMD stock’s price hasn’t moved much over the past year. As of this writing, it’s actually down by four percent year-over-year.

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When you consider how the broader cannabis stock market has been doing, though, MariMed Inc’s share-price performance has been pretty decent. Over the last year, AdvisorShares Pure US Cannabis ETF (NYSEARCA:MSOS) has fallen by 53% and ETFMG Alternative Harvest ETF (NYSEARCA:MJ), which is the world’s largest cannabis ETF, has fallen by 56%.

Further out, MariMed stock’s performance has been much more stellar. Over the last year and a half, which slightly predates the last U.S. presidential election (one in which the Democrats promised to get federal marijuana legalization over the finish line), MRMD stock has rallied by 315%.

Over the same time frame, the S&P 500 went up by 32%. Meanwhile, ETFMG Alternative Harvest ETF went down by 12.5% and AdvisorShares Pure US Cannabis ETF went down by less than one percent.

On the plus side, the outlook for MariMed Inc is bullish. Wall Street analysts’ average 12-month price target for MariMed stock is $2.25, which points to potential gains of 175%.

Chart courtesy of StockCharts.com

About MRMD Stock

MariMed Inc is one of the largest seed-to-sale marijuana multistate operators in the U.S. With a market cap of just $294.0 million, the company stands out as one of the best acquisition targets in the land.

MariMed offers a full range of cannabis products and operates state-of-the-art facilities in five states (Delaware, Illinois, Maryland, Massachusetts, and Nevada). Its MariMed Hemp division focuses on industrial hemp-derived cannabidiol (CBD) products. (Source: “Investor Presentation,” MariMed Inc, December 20, 2021.)

In the U.S., MariMed runs seven marijuana dispensaries and has three more under development. It also has four cultivation and production facilities. Moreover, the company’s branded products can be found in thousands of dispensaries.

MariMed Inc’s top-selling house brands include the award-winning “Betty’s Eddies” vegan-friendly fruit chews, “Bubby’s Baked” baked goods, “Kalm Fusion” chewable tablets, and “Nature’s Heritage” premium cannabis strains.

Thanks to a slew of new developments, the company expects to see its revenue grow significantly over the coming years.

In Massachusetts, MariMed Inc has plans for a 140,000-square-foot cultivation building (starting with 70,000 square feet). It’s also contemplating opening two new dispensaries in the state.

MariMed Inc has been building its portfolio of consumer brands and licensing its products in other states and territories that have legal cannabis, including Maine and Puerto Rico.

The company is about to get bigger, too.

On January 5, MariMed announced that it had entered a definitive agreement to acquire Kind Therapeutics U.S.A., LLC, a leading vertically integrated marijuana company in Maryland. (Source: “MariMed Announces Agreement to Acquire Kind Therapeutics USA, LLC, A Maryland Licensed Vertically Integrated Cannabis Business,” MariMed Inc, January 5, 2022.)

Bob Fireman, the CEO of MariMed, said, “This acquisition will deliver another transformational year for MariMed in 2022, building on two consecutive years of more than 100% cannabis revenue and Adjusted EBITDA growth.” (Source: Ibid.)

On January 18, MariMed announced plans to acquire Green Growth Group, Inc., the holder of a provisional cannabis craft license in Illinois. (Source: “MariMed to Acquire Illinois Craft Cannabis License Allowing for Vertically Integrated Cannabis Operations,” MariMed Inc, January 18, 2022.)

This transaction will enable MariMed to add cultivation, manufacturing, and distribution operations to its existing retail operations in the state.

Another Quarter of Great Financial Results

For the third quarter ended September 30, 2021, MariMed announced that its revenue increased by 147% year-over-year to $33.2 million. Its gross profit on revenue was $18.2 million, a 109% increase over the third-quarter 2020 results. (Source: “MariMed Reports Third Quarter 2021 Earnings,” MariMed Inc, November 15, 2021.)

The company’s third-quarter 2021 EBITDA advanced 213% year-over-year to $12.9 million. Its net income went up by 25% year-over-year to $2.1 million.

During the third quarter, MariMed Inc increased its working capital to $27.3 million, compared to a working capital deficit of $2.2 million at the end of 2020. The company also reported $10.7 million in positive cash flow from operations in the third quarter of 2021 and a total of $28.2 million of cash flow from operations year-to-date.

MariMed Inc’s management maintained its full-year 2021 financial guidance of $118.0 million in revenue and $42.0 million in adjusted EBITDA.

“We are extremely pleased with our continued improving financial performance during the third quarter despite an industry-wide slowdown,” said Fireman. (Source: Ibid.)

“We continue to report some of the strongest revenue and EBITDA growth in the industry. This is a result of our financial discipline and our operational excellence at cultivation, production, and at retail.”

The company will be announcing its fourth-quarter and full-year 2021 financial results after the markets close on March 16.

Analyst Take

MariMed Inc has everything in place to help it grow significantly over the coming years.

The company has a solid balance sheet and soaring cash from operations. As discussed earlier, MariMed reported excellent third-quarter 2021 results and is on course to do so again for full-year 2021.

The years 2020 and 2021 were transformational for MariMed stock, and 2022 could be even more monumental.