- California cannabis company MedMen posted downbeat financials for the final three months of 2019 on Wednesday afternoon. Revenue was $44.1 million, falling short of every analyst estimate collected by Bloomberg.
- The company’s financial losses also increased.
- The company has faced a tough year, like many others in the cannabis industry. MedMen’s CEO stepped down on February 1, and MedMen laid off about 40% of its corporate workforce in November and December.
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California-based cannabis company MedMen released its earnings report Wednesday afternoon, showing disappointing results as a new top exec takes the helm.
MedMen reported revenue of $44.1 million in the last three months of 2019, missing the lowest analyst estimate by almost $4 million, according to Bloomberg. The company lost $35.1 million as measured by Ebitda.
MedMen’s new interim CEO Ryan Lissack emphasized the pivot the company is taking as he acknowledged the challenges it faces. Lissack said the company would continue to cut costs and focus on what they do best: retail.
“MedMen’s last chapter was about pursuing growth,” Lissack said. ” This is a pivotal time for the company, where we can reassess the business.”
MedMen is closing its Arizona operation and may shutter more stores
MedMen is discontinuing its Arizona operations — which includes three retail locations as well as cultivation and manufacturing operations. Company leaders also said they were evaluating whether to temporarily or permanently close other stores they think are not profitable. They are also in “active discussions with a number of parties” to spin off factories in different states, according to CFO Zeeshan Hyder.
Hyder also said that the company “cannot continue to invest in assets that do not hold short term returns” even if they offer long term benefits.
The company said it had cash and cash equivalents at the end of its second fiscal quarter of 2020 valued at $26 million, down from $33.8 million as of mid-2019.
Lissack became interim CEO on February 1 when his predecessor Adam Bierman stepped down and faces the challenge of improving its financial performance.
“I look forward to transitioning the company into its next chapter, which will be defined by financial discipline and strategic growth to drive long-term value creation for the Company and its stakeholders,” he said in a statement.
The cannabis industry has faced headwind after headwind in the past couple of months. Multi-state operators have turned away from plans to increase their geographic footprints and instead focused on their current customer bases as capital has withered and stocks have plummeted.
A tumbling stock and a canceled deal
MedMen’s stock has tumbled down from $3.25 to about $0.30. The company’s monumental $682 million merger with PharmaCann fell apart in October.
“The initial wave of investors that went after this market has been tapped out or exhausted,” Marc Hauser, the vice chair of the law firm Reed Smith’s cannabis team told Business Insider’s Jeremy Berke after the merger’s collapse was announced. “Companies are having a much harder time raising capital than just 12 months ago.”
MedMen also cut around 40% of its workforce late last year, including 80 corporate-level employees, in an attempt to save cash as investments in the industry have slowed down. MedMen has also seen an ongoing shakeup at the executive level in the past year. Departures include: David Dancer, the company’s chief marketing officer, Chief Operating Officer Ben Cook, General Counsel Lisa Sergi Trager, and Daniel Yi, the senior vice president of corporate communications.
Former CEO Bierman was the most recent to depart. Before his exit, Bierman told Business Insider that investors were right to punish MedMen’s stock, but that he was working on a turnaround along with the help from FTI Consulting, a business advisory firm, to try and get its finances back on track.
“The investor community and the Street — they don’t really get anything wrong,” Bierman told Business Insider in January. “If our stock is trading at a tremendous discount to our peer set, there’s a reason for it.”