The Greenrose Holding Company (OTCQX:GNRS) Inc saw its revenue grow during the first quarter of 2022 thanks to its acquisition of Arizona cannabis operator True Harvest in late 2021.
For the three months ended March 31, 2022, Greenrose delivered total revenue of $8.2 million compared to $7.2 million in the year prior.
During the quarter, New York State-based Greenrose began building the foundation of its multi-state, cultivation-focused cannabis business, CEO Mickey Harley said.
READ: The Greenrose Holding Company closes asset purchase of True Harvest
"Since acquiring Connecticut-based Theraplant and Arizona-based True Harvest in the fourth quarter of 2021, we have worked closely with the management and cultivation teams at each of our operating subsidiaries to streamline operations and optimize production capacity,” Harley said in a statement.
“Over the past few months, we have worked to expand the production at each subsidiary and enhance our positioning for the early-stage recreational market opportunities in Connecticut and Arizona. While our first quarter financial performance reflects certain costs and operational interruptions associated with ramping this additional production capacity, we believe our work to strengthen our infrastructure will help position our brands as high-quality flower brands in Connecticut and Arizona's emerging recreational markets.”
The company reported adjusted EBITDA of $0.1 million compared to $4.1 million in the prior year quarter. The decrease was primarily driven by a lower level of gross profit generated during the quarter, higher corporate general and administrative expenses, as well as expenses related to ramping the company's expanded production capacity at Theraplant and True Harvest, according to a company release.
True Harvest's first-quarter revenue performance reflects the impact of construction-related production interruptions during the facility's recent expansion, while its Connecticut asset Theraplant's revenue decreased period over the period, reflecting demand headwinds in the state's medical market, as well as increased competition, particularly from the illicit market, Greenrose said.
Full year outlook
Greenrose has revised its 2022 revenue forecast to between $100 million and $120 million due to ongoing demand headwinds within Connecticut's medical market and the impact of construction-related production interruptions at True Harvest.
The firm is expecting full year 2022 adjusted EBITDA in the range of $65 million to $75 million, excluding fair value adjustments to financial instruments and transaction related expenses.
The company added that the projections assume an expected fourth quarter 2022 start for recreational cannabis sales in Connecticut.
"As we move further into 2022, we remain focused on growing our existing platform and seeking additional expansion opportunities,” Greenrose president Paul ‘Otto’ Wimer said.
Wimer told investors that the firm will continue to ramp up additional capacity at Theraplant and complete construction on the additional grow rooms and improving post-harvest processes at True Harvest. The team is also eyeing vertical integration via retail stores.
“While early in the company's lifecycle, we look forward to making additional progress on our strategy and working to establish Greenrose as a vertically integrated, cultivation-led multi-state operator,” Wimer said.
Greenrose is a multi-state cultivator and producer of cannabis brands and products.
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