The Q1 Earnings Season Was Not Especially Helpful
The Public Cannabis Company Revenue & Income Tracker, managed by New Cannabis Ventures, ranks the top revenue producing cannabis companies. Most of the companies have reported Q1, and the reports for the quarter ending 6/30 will take place mainly in the first half of August. Cannabis stocks didn’t react very well to the earnings reports.
This data-driven, fact-based tracker will continually update based on new financial filings so that readers can stay up to date. Companies must file with the SEC or SEDAR and be current to be considered for inclusion. When we launched this resource in May 2019, companies with quarterly revenue in excess of US$2.5 million qualified. As the industry has scaled and as more companies have gone public, we have raised the minimum several times subsequently, including a move to US$5 million in October 2019, to US$7.5 million in June 2020, to US$10 million in November 2020 and US$12.5 million in August 2021. Due to the rapid growth in the cannabis industry, we raised the minimum to US$25 million (C$33.8 million) to qualify for what we now call the senior list and introduced a junior list with a minimum of US$12.5 million (C$16.9 million) in September 2021.
In May 2019, we added an additional metric, “Adjusted Operating Income”, as we detailed in our newsletter. The calculation takes the reported operating income and adjusts it for any changes in the fair value of biological assets required under IFRS accounting. We believe that this adjustment improves comparability for the companies across IFRS and GAAP accounting. We note that often operating income can include one-time items like stock compensation, inventory write-downs or public listing expenses, and we recommend that readers understand how these non-cash items can impact quarterly financials. Many companies are moving from IFRS to U.S. GAAP accounting, which will reduce our need to make adjustments. Please note that our rankings include only actual reported revenue and not pro forma revenue. We also note that companies with non-cannabis operations must provide segment-level financial reports that detail not only revenue but also operating profit to be have their operating profit included in the tracker. Currently, Jazz Pharma (NASDAQ: JAZZ) and Tilray (TSX: TLRY) (NASDAQ: TLRY) aren’t providing this information. Please note as well that we updated how we are handling Canopy Growth (TSX: WEED) (NASDAQ: CGC), now excluding the non-cannabis revenue of BioSteel.
At the time of our last update on April 27th, 35 companies qualified for inclusion on the senior list, including 28 filing in U.S. dollars and 7 in the Canadian currency. Currently, 28 companies that file in U.S. dollars qualify and 7 that file in Canadian dollars are qualifying for the senior lists, a total of still 35. The junior list now includes 13 companies reporting in U.S. dollars and 5 in Canadian dollars. On a combined basis, the Public Cannabis Company Revenue & Income Tracker now includes 53 companies.
Since our last update, there have been lots of companies that have reported, and we have added three new members to the U.S. junior list. These new names include POSaBit (OTC: POSAF) (CSE: PBIT), Flora Growth (NASDAQ: FLGC) and 22nd Century Group (NASDAQ: XXII). On the Canadian junior list, we removed Red, White & Bloom (CSE: RWB) (OTC: RWBYF) and added BZAM (CSE: BZAM) (OTC: BZAMF).
Senior and Junior – American Dollar Reporting
The 4 largest companies by revenue, all American cannabis companies, have reported, and their sequential growth was mainly negative. The analyst forecasts for 2023 all fell. Curaleaf (OTC: CURLF) (CSE: CURA) grew revenue by 14% from a year ago, aided by M&A. Trulieve (OTC: TCNNF) (CSE: TRUL) saw sales drop 9% from a year ago. Green Thumb Industries (OTC: GTBIF) (CSE: GTII) grew sales 2% from a year ago, and Verano Holdings (OTC: VRNOF) (CSE: VRNO) grew sales by 12%. Analyst expectations for 2023 are that the company can generate an adjusted EBITDA margin of 32.0%, a substantially higher rate than its peers.
Among other large MSOs, Columbia Care (OTC: CCHWF) (CSE: CCHW) (NEO: CCHW) saw sales rise just 1% from a year ago. Ayr Wellness (OTC: AYRWF) (CSE: AYR.A) grew sales at 18% but generated an operating loss. Ascend Wellness (OTC: AAWH) (CSE: AAWH) grew revenue 34% from a year ago and had slightly positive operating earnings. Among the large revenue generators, Jazz Pharma (NASDAQ: JAZZ) saw its cannabis revenue grow 19% from a year ago.
Among the large revenue generators historically that have not yet reported, only Cresco Labs (OTC: CRLBF) (CSE: CL) has scheduled a call for 5/24. The company is expected to see revenue dip 11% in Q1 to $192 million with adjusted EBITDA of $32 million, a decline of 37% from a year ago.
Senior and Junior – Canadian Dollar Reporting
SNDL, Inc. (NASDAQ: SNDL) moved up in the rankings by a notch to second place, with cannabis revenue increasing 7% sequentially to $86.5 million.
Canopy Growth (TSX: WEED) (NASDAQ: CGC) has warned investors that it has doubt about the numbers in its historical financials for a company where it is a majority owner, BioSteel. The company’s Q4 ended in March, and it hasn’t yet announced a conference call.
Visit the Public Cannabis Company Revenue Tracker to track and explore the complete list of qualifying companies. We have recently created a way for our readers to access our library of Revenue Tracker articles. For our readers who are interested in staying on top of scheduled earnings calls in the sector, we have created and continually update the Cannabis Investor Earnings Conference Call Calendar.