Gage Growth Corp. (CSE: GAGE) (OTCQX: GAEGF) reported its financial results for the third quarter ending September 30, 2021, with revenue rising to $27.2 million versus $26.4 million in the second quarter of 2021, a 3.2% increase. The net loss for the quarter was $3.7 million,
“In the third quarter of 2021, Gage had a record performance across all financial and operating metrics,” said Fabian Monaco, CEO of Gage. “We will continue to invest while improving our margins. Moreover, as we further introduce our in-house branded concentrate products, we expect our gross margin to further improve over the next two quarters.”
Gage reported that the gross margin, before the impact of biological asset adjustments, was 36.5% in the third quarter versus 34.2% in the second quarter. The company said that the 230 basis point improvement quarter over quarter in gross margin to 36.5% was due to a greater mix of higher-margin sales from retail locations and cultivation capacity expansion via Gage-operated cultivation assets, contract growing partners, and lower input costs from dedicated wholesale partners.
The company said it expects that it will continue to see its quarter-over-quarter margin expansion in the fourth quarter as in-house branded vape cart sales have recently accounted for over 80% of the category month-to-date in November. In the month of November, the company has been averaging approximately 18,000 Gage vape carts sold per week.
A couple of weeks ago, Gage announced that shareholders voted in favor of acquisition by TerrAscend Corp., and on November 15, 2021, the Ontario Superior Court of Justice (Commercial List) has issued a final order approving the Arrangement.
Mr. Monaco continued, “We are very pleased with the announcement of the proposed acquisition of Gage by TerrAscend. Our shared strategic and corporate values make this combination a strong fit, and I am extremely excited and looking forward to executing on our shared strategy of deep vertical integration and scale in our core markets. In addition, I am also very pleased with the closing of our recent debt financing which further strengthens our balance sheet.”
In addition to 10 retail dispensaries in operation today, Gage said it is in active discussions with multiple retail operators in Michigan to potentially acquire over 10 retail locations in the coming months. The company’s second Kalamazoo dispensary is now fully built and expected to open in December. Gage also successfully acquired another dispensary located in Detroit. and expects to close another proposed acquisition of a dispensary in Sturgis by the end of November. Both dispensaries are expected to be rebranded as Gage and Cookies stores, respectively. The company now has 17 dispensaries in its portfolio with the inclusion of the Sturgis acquisition.
Mr. Monaco concluded, “Overall, we will continue to execute on our growth strategy in the remaining months of 2021 and into 2022. With a strong balance sheet, we are well-positioned to execute on our near-term acquisition opportunities that will fuel the overall growth of the company.”