MedMen Enterprises Inc. (CSE:MMEN) released its third-quarter results this week and recorded revenues of $36.6 million, a 156 per cent from a year ago.
While that kept pace with the company’s April preliminary results, it fell short the consensus Wall Street estimate of $49.2 million—keeping MedMen in the red with a hefty loss of about $63 million for the quarter.
The results are similar to its previous Q2 numbers, with losses mounting amid steady growth. Cash burn continues to be a problem in Q3. In its first three quarters of fiscal 2019, MedMen has now burned through more than $194 million in cash from operations.
As of Friday, MedMen’s stock hit a new 52-week low of $2.79. Over the past 12 months, the share price has declined more than 30 per cent.
MedMen slash top-two executive salaries
Medmen CEO Adam Bierman and president Andrew Modlin have agreed to take on what the company is calling “revised employment agreements,” and both men will have salaries reduced to a paltry $50,000.
The California cannabis retail firm noted a nine per cent reduction in corporate administrative costs (SG&A) over the quarter. And the slashing executive salaries is part of its continued efforts to bring down those costs.
MedMen’s efforts to reduce expenses is an encouraging sign, but it has a long way to go to reach breakeven. And despite salary cuts, its a tall mountain to climb before the company becomes profitable.
California pot retailer still eyes expansion
MedMen is no stranger to expansion, which has been a catalyst to its rising expenses. But even with its increased focus on fiscal responsibility, the company is still looking to expand with 15 new retail locations before the end of 2019. Twelve of those will be in Florida – a hot new market for medical marijuana – but a state that’s seen a rise in competition.
Even still, MedMen holds licenses for 35 locations in that Florida, and will keep the state as a main region for its growth strategy, especially given the lackluster results it’s had in other states.
In Arizona, MedMen’s growth has mainly resulted because of mergers and acquisitions. And in California, MedMen saw sales growth of just five per cent, while holding a modest market share of only seven per cent. Nevada did much better with revenues up 34 per cent, with its Las Vegas location doing particularly well.
But in order to keep driving growth, MedMen is going to need to find new markets to go into, and that’s why Florida is a key piece for the cannabis retailer.
*All figures USD