In the crowded legal cannabis space, it can be difficult to find overlooked stocks that stand out. MariMed Inc (OTCMKTS:MRMD) is one of them.
Admittedly, the multistate operator has seen its share price make strong gains over the last few months, up 485% since the U.S. election and up 75% in 2021. But at $0.82, MRMD stock is still undervalued and is trading well below its spotlight-hogging peers.
By all accounts, 2021 will be a transformational year for MariMed stock. The company reported strong third-quarter results, it has announced multistate license agreements, it’s opening new dispensaries, and it has been launching new products.
Thanks to a slew of new developments, MariMed Inc expects to see its revenue grow significantly in 2021. Not that it has any problems in that area. From fiscal 2015 to 2019, MariMed’s total revenues soared from $1.3 to $16.6 million, expanding at a compound annual growth rate of 66.4%.
Although MRMD stock is up significantly since last November, it still needs to advance by about 575% to get to its early-2019 highs.
Suffice it to say, 2019 was not a very good year for the marijuana industry. But with pot-friendly Democrats in control of the White House and Congress, 2021 and 2022 could be a totally different story.
Chart courtesy of StockCharts.com
MRMD Stock Overview
MariMed is one of the largest multistate seed-to-sale cannabis operators in the U.S.
The company has 17 cannabis licenses for cultivation, production, and dispensaries across seven states (Delaware, Illinois, Maine, Maryland, Massachusetts, Nevada, and Rhode Island). Its products are also found in Puerto Rico. (Source: “Virtual Investor Conference,” MariMed Inc, January 7, 2021.)
The Norwood, MA-based company currently manages more than 300,000 square feet of premier marijuana facilities.
In Massachusetts, MariMed Inc’s 70,000-square-foot cultivation and production facility grows 1,000 pounds of cannabis monthly. Its 10,000-square-foot dispensary in Middleborough has seen its revenue increase each month from medical and recreational pot sales. Moreover, the company has two additional dispensaries under development.
2021 will be the first full year that MariMed has booked sales in Massachusetts from both the medical and recreational space.
On January 1, 2020, Illinois became the 11th state to legalize recreational marijuana. During that year, MariMed opened three new recreational cannabis dispensaries in the state, with a fourth under development. Revenue from the three dispensaries tops more than $3.0 million per month, and the company expects that to increase in 2021.
MariMed Inc has also commenced the expansion of its capacity across its cannabis facilities in Maryland, Illinois, and Delaware. The company has plans to add more canopy, new kitchens, additional testing equipment, and new automated machines to increase volume and quality while lowering costs.
While the company is busy running facilities in seven states, it also has global expansion plans. In April 2019, MariMed acquired 70% of MediTaurus LLC. (Source: “MariMed to Acquire Majority Stake in International CBD Pioneer MediTaurus; Dr. Jokūbas Žiburkus Appointed MariMed Chief Innovation Officer,” MariMed Inc, April 25, 2019.)
MediTaurus LLC’s “Florance” brand of cannabidiol (CBD) products has an established presence in the U.S., U.K., and Europe with online distributors, wholesalers, pharmacies, and physicians.
MariMed’s products continue to be leaders in their respective markets, with its award-winning “Betty’s Eddies” fruit chews being a top-selling marijuana edibles brand.
To build on that momentum, the company announced in January that it had launched “Betty’s Eddies Smashin’ Passion” chews—just in time for Valentine’s Day. (Source: “Chews Love: MariMed Launches Cannabis-Infused Betty’s Eddies ‘Smashin’ Passion’ Aphrodisiac Chews,” MariMed Inc, January 28, 2021.)
The company’s other brands include “Kalm,” “Nature’s Heritage,” and “Bourne Baking.” Partner brands include “Dabtans,” “Healer,” and “Tikun.” Licensed and ancillary brands include “binske,” “Kind Therapeutics,” “Thrive,” and “Tropizen.”
In the midst of all of this, MariMed has taken steps to improve its bottom line. Last July, MariMed announced that it had restructured its debt, which will allow the company to reduce interest costs and maintain maximum financial flexibility. (Source: “MariMed Announces Debt Restructuring Actions and Improved Revenues and Cash Flow,” MariMed Inc, July 23, 2020.)
MariMed also reported that it has been experiencing improved cash flow from operations due to robust sales in the recreational marijuana programs in its consolidated licensed businesses in Illinois and Massachusetts—as well as increased revenue from sales in its managed medical businesses in Delaware and Maryland.
Q3 Revenue Up 220%; Gross Profit Up 221%
In November, MariMed announced that its core cannabis revenue for the third quarter ended September 30 increased 220% year-over-year to $4.2 million. (Source: “MariMed Reports Third Quarter 2020 Results,” MariMed Inc, November 9, 2020.)
The gross profit from the company’s core cannabis business climbed 221% year-over-year to $8.7 million. MariMed’s earnings before interest, taxes, depreciation, and amortization (EBITDA) were $4.4 million, compared to a third-quarter 2019 EBITDA loss of $733,000.
“These strong quarterly results reflect the tremendous growth of our cannabis business units coupled with the consolidation of our Massachusetts and Illinois business units into our company,” said Bob Fireman, CEO. (Source: Ibid.)
He added, “We continue to see strong consumer demand for our Betty’s Eddie’s edibles and Nature’s Heritage flower brands, which are top sellers across most of our markets. We look forward to continued revenue growth throughout the remainder of 2020.”
For the first nine months of 2020, MariMed Inc reported core cannabis revenues of $30.5 million, a 168% increase over the $11.4 million recorded in the first nine months of 2019.
Over the same time frame, gross profits from the core cannabis business were up 159%, at $19.7 million. EBITDA were $8.6 million, compared to an EBITDA loss of $1.3 million for the first nine months of 2019.
“During the quarter, we improved our balance sheet and financial flexibility by converting short-term, high interest rate debt to longer-term debt on much more attractive terms,” said Jon Levine, CFO. (Source: Ibid.)
He continued, “We appreciate our lenders’ and investors’ continued support and believe this result reflects both the recognition of our progress to date, and shared confidence in our business strategy.”
Although 2020 was a challenging year, it was a transformative one for MariMed Inc. The company reported record revenue and earnings, with cannabis revenue for the first nine months nearly doubling on a year-over-year basis.
Management said the company has carried the momentum of increased revenue and earnings into the fourth quarter. That’s tough to do at the best of times, let alone during the worst economic crisis since the Great Depression and worst health crisis in 100 years.
All this bodes well for MariMed stock.