MariMed Inc: Profitable, Beaten-Down Pot Stock Poised for Significant Growth

MariMed Inc Milestone Quarter Points to Huge Revenue Growth in 2020
iStock.com/MANORANJAN MISHRA

MariMed Inc Outlook Remains Positive on New Developments & Strong Financials

MariMed Inc (OTCMKTS:MRMD) was one of the best cannabis stocks in 2018, ending the year up 311%. It’s been a different story in 2019, with MRMD stock down approximately 80% year-to-date.

And it’s not just MariMed; the entire cannabis industry has taken a huge hit since March. Both the ETFMG Alternative Harvest ETF (NYSEARCA:MJ) and Marijuana Life Science Index ETF (OTCMKTS:HMLSF, TSE:HMMJ) are down approximately 20% year-to-date.

The entire legal cannabis sector is facing headwinds related to supply, poor operating results, +financial losses, and share dilution. Concerns over deaths associated with vaping haven’t helped the cannabis industry either.

Despite the huge selloff, MariMed stock continues to be one of the brightest cannabis stocks out there right now.

Advertisement

The company recently signed an exclusive agreement with a major beverage distributor, announced a multi-state licensing agreement, and acquired MediTaurus, LLC, a hemp-based health and wellness company.

MariMed also announced record results for both the second quarter and the first six months of 2019, including ongoing profitability.

MRMD Stock Overview

MariMed Inc is one of the biggest seed-to-consumer cannabis and hemp companies in the United States.

The company offers a wide range of products and holds 13 cannabis licenses in six states. While the company manages over 300,000 square feet of facilities in the U.S., it is looking to expand globally. (Source: “What We Do,” MariMed Inc, last accessed October 2, 2019.)

The company’s “MariMed Hemp” division develops industrial hemp-derived cannabidiol (CBD) products.

MariMed owns a big stake (33.5%) in GenCanna Global, a producer of CBD oil and isolates. GenCanna recently announced it hired Goldman Sachs Group Inc (NYSE:GS) to be its financial advisor as it looks to go public. (Source: “MariMed Inc. Reports Record Q2 2019 Results; Revenue Up 774% to $25.7 Million, Net Income of $4.7 Million,” MariMed Inc, August 12, 2019.)

MariMed also acquired a minority stake in Terrace Inc., a Canada-based company that acquires and develops marijuana assets in South America and Europe. Terrace is in the processing of going public on the Toronto Venture Exchange.

In April, MariMed acquired a 70% interest MediTaurus, home of “Florance,” a brand of CBD products available in the U.S. and EU.

MRMD Stock Information

Market Cap $189.7 Billion
52-Week Change -74.93%
52-Week High $5.80
52-Week Low $0.67
Shares Outstanding 218.0 Million
Float 133.2 Million
50-Day Moving Average $1.20
200-Day Moving Average $2.27

(Source: “MariMed Inc. (MRMD),” Yahoo! Finance, last accessed October 2, 2019.)

Record Q2 Results

On August 12, MariMed announced that its revenue for the second quarter increased 774% year-over-year to a record $25.7 million. (Source: MariMed Inc, August 12, 2019, op. cit.)

During the second quarter, MariMed Hemp, the company’s CBD-focused subsidiary, delivered its first sales of hemp seeds to GenCanna Global; $22.0 million in sales were recorded in the second quarter. Subsequent to the end of the quarter, MariMed sold an additional $8.0 million in hemp seeds to GenCanna.

Second-quarter gross profit was $8.9 million (34.8% of revenue), up 341% from $2.0 million (68.9% of revenue) in the same period last year.

The company swung to second-quarter profitability of $4.7 million ($0.02 per share). In the second quarter of 2018, MariMed reported a net loss of $393,000 (breakeven per share).

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) advanced 492% year-over-year to $6.0 million.

Year-to-date, revenue soared 481% to $29.2 million. Gross profit for the same period was up 248%, at $11.2 million (38.3% of revenue).

Net income for the period was $4.8 million ($0.02 per share), compared to a loss of $2.2 million, ($0.01 per share) in the first half of 2018.

Adjusted EBITDA was up 365% tear-to-date, at $6.3 million.

Exclusive Agreement With Major Beverage Distributor

On September 25, MariMed announced that it had signed an exclusive agreement with one of the largest beverage distributors in the Northeast U.S to market its CBD brands. (Source: “MariMed Hemp Signs Exclusive Agreement with Major Beverage Distributor to Market its CBD Brands in Rhode Island and Connecticut,” MariMed Inc., September 25, 2019.)

The unnamed distributor serves more than 8,500 locations.

Under the terms of the agreement, MariMed products will be available in retail locations, including liquor stores and supermarkets, in Rhode Island and Connecticut. The rollout is expected to start in October.

Analyst Take

MariMed stock was one of the best cannabis stocks in 2018. That hasn’t been the case in 2019 though.

Despite taking a hit this year, MariMed Inc has positioned itself to take advantage of a rebound in the broader cannabis industry.

The second quarter of 2019 was a milestone for the company, with both of its divisions (cannabis and hemp) delivering record results. Thanks to the ongoing consolidation of its operations, MariMed expects its operations to “significantly expand revenues” in the second half of 2019 and in 2020.