Marimed Inc

We hired and trained their staff. They utilize our proprietary systems and SOPs and they produce and distribute our award-winning brands. Accordingly, this acquisition was seamless and I am delighted to welcome the kind therapeutic staff into the Maramed family. We continue to expand our footprint in Massachusetts. We announced the acquisition of an adult use cannabis dispensary from Greenhouse Naturals in Beverly. We are also working to open a third dispensary by the end of this year. To increase revenue in Massachusetts market, we plan to add another 70,000 square feet of cultivation and production capacity in New Bedford, including a new GMP kitchen. Sales continue to do well. in the expanding Massachusetts retail marketplace, now with over 215 adult-use stores open. Turning to Illinois, Merrimet is well-positioned to grow revenue and earnings in this $2 billion market. On May 5th, we announced the closing of the acquisition of a craft cannabis growing license. We are developing a 30,000 square foot cultivation and production facility in Mount Vernon, which we intend to have operational this year. At this facility, we will grow our award-winning Nature's Heritage cannabis flowers and produce our branded concentrate and infused products. Once construction of our facility is complete, we will supply our four high-performing dispensaries in Southern Illinois, which will increase our gross margins and profits. Just as significant, we plan to introduce our award-winning brands into the wholesale cannabis marketplace, which is on a path to have over 300 stores in the near future. Our Betty's Eddie's brand was a top-selling edible in Illinois. when it was available through a licensing partnership until 2019. And its fans of the brand have continued to ask us to bring it back, which we now intend to do this fall. In addition, under Illinois regulations, we can expand and own up to 10 dispensaries in the state. We are extremely excited about owning vertically integrated seat-to-sale operations in Maryland, Massachusetts, and Illinois. The growth of our revenue and earnings in these states has tremendous upside potential for Maramed. Maramed fully intends to be active in M&A this year. Equity investments in the public cannabis companies has been replaced with debt, as many other cannabis stocks have lost almost 70% of their market valuation. We are holding our own. We are profitable. We have positive cash flow, a clean balance sheet, which we believe will allow Merrimet to access capital as needed. That said, we continue to be financially disciplined in our approach and review of any opportunity. Any acquisition or merger must be strategic. and accretive and support our mission vision and values as an organization we are pursuing new license applications in connecticut new jersey and soon new york we are delighted with our recent lottery win for a provisional dispensary license in ohio we are actively exploring expansion opportunities into other strong cannabis markets We continue our march to be a larger MSO, yet we remain grounded on financial discipline. We will continue to be patient and prudent. Turning to our brands, we launched Vibations, Branded Powdered Energy, Drink Mix in Massachusetts and Delaware. So far, we're experiencing strong sell-through. The same is true for Bubby's Baked Goods, which recently hit shelves in Maryland and Delaware. We are planning to distribute our branded products into more markets by acquiring production and distribution businesses or partnering with companies that share our commitment to quality and focus on the needs of our customers. On our last call, we discussed the sales slowdown in December and January. We saw a pickup in February and March, and we are cautiously optimistic that these recent trends will continue. We cannot control macro forces, but we are confident we will continue to have success under the leadership of our experienced team and their commitment to drive profitable revenue growth. We are not as flashy as some of our MSO peers, but as great operators, we work hard every day to execute on our defined plan. We continue to say what we will do, and then we do it. Despite recent industry slowdown, we remain confident we will meet or exceed our full year 2022 guidance. The fundamentals of Merrimet remain strong. Looking ahead, we view 2022 as a foundational year, which should position us to accelerate revenue and EBITDA growth in 2023. With that, I will now turn the call over to Tim for his operational update.

Thank you, Bob. While Bob gave us our first quarter highlights, I want to provide you with details from the quarter and the progress we are making on the strategic growth plan. Beginning with retail, we experienced 41% growth year over year, primarily due to dispensaries in Illinois and the addition of adult use sales in both Illinois and Massachusetts. We saw an increased traffic in both states, although the average ticket was down 6% versus last year. Our Illinois dispensaries continue to do well, especially our Metropolis dispensary, located in the fictional home of Superman, which continues putting up super sales results. Accordingly, we continue to strengthen our leading market position in southern Illinois. We are also working to improve our operations at our existing dispensaries. In Massachusetts, we recently launched a loyalty program to ensure we not only get our customers into our stores, but keep them there. Loyalty marketing is a proven methodology to keep consumers engaged and to increase excitement around premium products. This should complement the strong loyalty program we already have in Illinois. In Illinois, we're exploring ways to improve transaction times, especially in our metropolis facility where we open every day to long lines around the parking lot. It is too early to discuss further the details of these initiatives, but I wanted to give some examples to illustrate how we are proactively working to improve our customer experience at our retail stores. What I mentioned are many initiatives to go deeper in the states we already operate. In terms of new dispensary openings, we have completed construction of our Beverly, Massachusetts dispensary and are awaiting approval of both the license transfer and the certificate of operation before sales commence. We are still targeting receipt of these approvals by September. Construction of our Annapolis dispensary in Maryland is also nearing completion, and we are still targeting our grand opening in July, which would complete our transition to full vertical operations in that state. Moving on to our wholesale results, we grew wholesale revenues by 6%. Sales of our craft flour and branded products continue to increase, and our products are now available in nearly 200 dispensaries across Massachusetts. Pricing pressure remains throughout Massachusetts, But we continue to maintain pricing better than average. We maintain our premium position on Nature's Heritage, recently voted one of the best quality flower brands in Massachusetts, which continues to sell at the top of the pricing spectrum. Pricing pressures are real, as premium flower currently sells for about $3,800 a pound, which is down from about $4,200 last year. Our recent product launches, such as Bubbies Baked Goods, Libations Energy Drink, and even our existing Betty's Eddies also sell at a premium price and sales trends remain robust. While we pride ourselves in offering the highest quality products, we recently launched a value price vape pen under the in-house brand. We saw an opportunity to fill a customer need while making a profit. In-house vape pens have been well received by our wholesale customers as well as retail consumers as a higher quality alternative at an affordable price. We view in-house as a nice complement to our brand portfolio and pricing strategy, and today it makes up about 5% of our wholesale sales mix. Looking ahead, we are on track with our production and manufacturing expansion initiatives. In New Bedford, Massachusetts, we still anticipate adding two additional grow rooms this year, and we'll begin the expansion construction in the fourth quarter. In Illinois, we recently announced closing on the acquisition of our craft cultivation license, which will allow us to manufacture and distribute our entire brand portfolio of cannabis products. Construction on a 30,000 square foot facility in Mount Vernon has begun. We are targeting completion of the kitchen in the third quarter and should begin selling Betty's, Eddie's, and other edibles in the fourth quarter through our dispensaries. We are targeting completion of the cultivation facility in the first half of 2023. at which time we can start wholesaling our product, which will accelerate revenue and profit growth in Illinois and for the overall company. In terms of new products, I continue to be excited about our recent launches and those coming later this year. During the quarter, we launched Vibations, high in energy on all-natural, full-spectrum energy powder drink mix in Massachusetts, and more recently, our consulting partner launched Vibations in Delaware. Bubbies Baked Goods and Betty's Eddie's have also been expanded into the Delaware market, and sales are exceeding our expectations. Looking ahead, we are making final tweaks to our THC-infused ice cream, which we plan to launch this summer under the Betty's Eddie's brand name. And finally, under the in-house brand, we are expanding into pre-rolls to utilize some of our excess capacity and fill another customer void. That concludes my operations review. I will now turn to call over to John for his financial results discussion.

Thank you, Tim. And good morning, everyone. Last night, we reported first quarter 2022 results. We reported revenue of $31.3 million, which increased 27% year over year and was primarily driven by growth in retail and wholesale revenues. Our gross profit was $17 million, which increased 29% year-over-year, driven primarily by increased revenue and lower cost of goods. Gross margin for the quarter was 54.3%, which was 80 basis points higher than the 53.5 reported in the first quarter of last year. Our adjusted EBITDA was $10.4 million, which increased 29% year-over-year and was driven primarily by higher revenue and strong cost controls. Adjusted EBITDA margin was 33.1% during the quarter, which improved 50 basis points year-over-year. During the quarter, we continued strengthening our balance sheet. We ended the first quarter with $33.5 million in cash on hand compared to $29.7 million at the end of 2021. Additionally, our working capital improved to $20.1 million, an increase of 16% versus our working capital of $17.4 million at the end of 2021. Our ability to generate cash continues to be a strength as illustrated in our cash flow from operations of $8.5 million during the quarter. versus cash from operations of $6.8 million in the first quarter last year. As Bob discussed, we noted recent slowdowns, but sales trends picked back up in March. And while we did close our Maryland acquisition a little earlier than targeted, we think it's prudent to maintain the 2022 full-year financial targets we communicated in February. These targets include Revenue of $145 to $150 million. Adjusted EBITDA of $47 to $52 million. Gross margin in line with last year's gross margin of 54% to 55. And CapEx of approximately $25 million. That concludes my remarks. I will now turn the call back over to Bob.