Denver-based Medicine Man Technologies Inc., which operates as Schwazze (OTCQX: SHWZ) (NEO: SHWZ), saw third-quarter sales spike 36% in the third quarter ended Sept. 30.
Total revenue for the quarter was comprised of:
- Retail sales of $39.8 million, up 92% over the same period a year ago.
- Wholesale sales of $3.3 million, down 70% year-over-year.
- Other operating revenue of $96,000, up 35%.
The increase in retail sales was primarily driven by acquisition. Since December 2021, Schwazze closed the acquisitions of 15 cannabis dispensaries, 10 in New Mexico and five in Colorado. It also opened two additional dispensaries in New Mexico since the beginning of the year.
The company added five cultivation sites and one manufacturing facility as well.
“Despite a challenging economic backdrop, we outperformed our markets in Colorado by 12%,” CEO Justin Dye said in a news release. “We’ve worked hard to continue to grow our market share, increase our profitability rate, and generate free cash flow from operations, after paying taxes and CAPEX, placing us in an exclusive club within the cannabis sector.”
Schwazze reported net income for the quarter of $1.8 million, a year-over-year increase of 87%. The quarter’s gross margin was 60.1%, compared with 47.3% last year.
The company once again lowered its revenue guidance for the year, from $175 million-$200 million last quarter to $155 million-$165 million. The company noted, “We expect to be slightly below the projected revenues, which was a fourth quarter annualized run-rate of $175 million to $200 million. This lower-than-expected revenue in Q4 is due to lower than expected wholesale sales, and construction delays in new store openings in New Mexico.”
For the nine months ended Sept. 30, Schwazze posted revenue of $119.2 million, up 46% from the same period a year ago. Adjust EBITDA was $38.7 million, or 32.5% of total revenue.