MariMed Inc: Evolving Cannabis Giant Set to Get Bigger
General wisdom is that “if it ain’t broke, don’t fix it.” MariMed Inc (OTCMKTS:MRMD) started out as a professional management services company for marijuana start-up companies. The company was successful at that and decided to diversify by acquiring its customers.
MariMed has also made a number of strategic investments that it believes will strengthen its competitive position and long-term profitability. The company just reported strong fourth-quarter and year-end results as well as an encouraging outlook.
MariMed is one of the largest U.S.-based marijuana companies by market cap, but it still seems to fly under the radar of most investors. That is odd, since MRMD stock is up more than 200% over the last 12 months. That should change in 2019 and 2020.
MariMed Inc Overview
MariMed Inc started out helping marijuana start-ups secure and operate facilities; obtain state licenses; and assist with cultivation and production, dispensary, layouts, designs, merchandising, sales, and financial planning. (Source: “About Us,” MariMed Inc, last accessed April 17, 2019.)
MariMed has state-of-the-art regulatory-compliant facilities in Delaware, Illinois, Maryland, Nevada, Massachusetts, and Rhode Island. Medical marijuana is legal in all of these states. Recreational marijuana is also legal in Nevada and Massachusetts.
MariMed also works with manufacturers in California, Colorado, Arizona, Oregon, Washington, and Maine.
MariMed’s consulting services were so good at helping marijuana companies get their businesses going, it decided to branch out by acquiring cannabis companies.
In 2018, MariMed began to consolidate the ownership of its clients’ licensed cannabis businesses in seven states. On top of that, MariMed has made several strategic investments.
In August 2018, it invested in Sprout, an all-in-one customer relationship management (CRM) and marketing software company for marijuana dispensaries and cannabis brands. (Source: “MariMed Completes Strategic Investment in Sprout,” MariMed Inc, September 27, 2018.)
In November, MariMed invested $30.0 million in GenCanna Global Inc. The Kentucky-based company develops high-quality hemp cannabidiol (CBD) products. MariMed’s investment will create one of the largest U.S. producers of CBD-derived hemp products. (Source: “MariMed Enters Fast-Growing Hemp CBD World Market in Partnership with GenCanna Global,” MariMed Inc, November 12, 2018.)
In December 2018, MariMed Inc made a strategic investment in Iconic Ventures Inc. The company secured exclusive distribution rights in multiple states for Iconic’s “DabTabs” and other technology under development.
DabTabs is a portable tablet that delivers precise dosing and acts as a storage system for full spectrum cannabinoid vaporization.
In Massachusetts, MariMed is constructing a 70,000-square-foot cultivation and production facility. It also expects to open a 10,000-square-foot dispensary in May 2019 and two more dispensaries in the Boston area this year.
In Maryland, the company is in the process of purchasing a 9,000-square-foot building which it will turn into a dispensary, currently scheduled to open in late 2019.
MariMed Inc Stock
|MariMed Stock Information|
|Market Cap||$748.7 million|
|Shares Outstanding||213.3 million|
|50-Day Moving Average||$3.57|
|200-Day Moving Average||$3.89|
(Source: “MariMed Inc. (MRMD),” Yahoo! Finance, last accessed April 18, 2019.)
MariMed Inc has been one of the best-performing cannabis stocks over the last year. MariMed stock is up roughly 345% since the start of 2018, has increased 203% over the last 12 months, and advanced a modest 10% year-to-date.
That said, MariMed is really just getting started, much like the entire cannabis industry. The company has branched out from its successful consulting practice and is now acquiring certain cannabis firms and investing in others.
Chart courtesy of StockCharts.com
MariMed Reports Strong Revenue and EBITDA Growth
On April 17, MariMed Inc reported its financial results for the quarter and year ended December 31, 2018.
The company continued its trend of strong revenue growth, with fourth-quarter sales up 118% year-over-year at $3.4 million. (Source: “MariMed, Inc. Reports 2018 Fourth Quarter and Year End Results; Strong Revenue and EBITDA Growth,” MariMed Inc, April 17, 2019.)
Full-year revenue advanced 95% year-over-year to $11.9 million. The company reported a net loss of $13.6 million ($0.71 per share). In 2017, MariMed reported a net loss of $1.1 million ($0.10 per share).
The increased net loss in 2018 is a result of non-cash amortization relating to equity compensation granted during the year ($14.0 million).
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) grew 53% to $2.4 million from approximately $1.6 million.
MariMed’s balance sheet was considerably stronger at the end of 2018, with cash and current assets more than tripling during the year to $4.0 million.
Total debt-to-equity improved to 0.34 from 1.93 and net cash from operations grew 78% to $3.6 million. Total assets also increased significantly (158%) to $83.0 million from $32.2 million.
CEO Bob Fireman commented:
We are encouraged that the company maintained its strong operating performance and dynamic growth. We made a series of key investments to leverage opportunities we see for the years ahead, from branding and marketing to a major investment in GenCanna Global, perhaps the world’s leader in industrial hemp genetics and production.
MariMed has a lot going on with its consulting, management, acquisitions, consolidation, investments in hemp production, development of cannabis facilities, and cannabis brand development.
The company is actively pursuing other growth opportunities to expand its portfolio in the medical and adult-use cannabis industries, both domestically and internationally.
While recreational marijuana isn’t legal yet in the U.S. on a federal level, when it is, MariMed Inc will be well positioned to capitalize on the booming industry.