Greenlane Holdings, Inc. (Nasdaq: GNLN) reported financial results for the second quarter ended June 30, 2021, with revenue increasing 7.1% to $34.7 million from last year’s $32.4 million. It was a slight miss for Greenlane from the average analyst estimate from Yahoo Finance for revenue of $35.5 million.
The net loss fell 7.5% to $5.8 million from last year’s $6.3 million net loss. The net loss per share was $0.16, which also missed the estimate for a net loss per share of $0.14. The company said that core revenue (defined as non-nicotine revenue) grew 14.9% to $34.5 million versus last year’s $30.0 million.
“Our second quarter 2021 results reflect the success of our efforts to drive growth in our core business lines and higher-margin Greenlane brands,” said Aaron LoCascio, Greenlane’s Chairman and Chief Executive Officer. “I am proud of our accomplishments and want to thank our entire team for their ongoing dedication as we execute on the opportunity ahead. During the quarter, we drove solid Greenlane Brands revenue growth, up 62% year over year and representing 26% of our total Q2 revenue, supported by strong organic growth.”
The company continues to make efforts to lessen its dependence on nicotine products like Juul that fueled the company’s early growth. Greenlane said its net sales included negligible nicotine revenue compared to the prior-year period. Core revenue accounted for 99.3% of the quarter’s total revenue.
Mr. LoCascio added, “Our focus on growing our portfolio of owned brands and driving strong performance from our existing brand portfolio, combined with our pending merger with KushCo, has positioned our business to be the leader in the ancillary cannabis space and to build strong, long-term value for both our customers, partners, employees, and shareholders.”
Greenlane said that cash totaled $11.6 million as of June 30, 2021. As of June 30, 2021, working capital was $36.4 million, compared to working capital of $54.2 million, as of December 31, 2020. After the quarter ended, the company completed a $32.0 million registered direct offering priced at the market.
Greenlane also addressed the issue of the “Consolidated Appropriations Act, 2021,” when Congress amended the Prevent All Cigarette Trafficking Act (“PACT Act”) to apply to electronic nicotine delivery systems (ENDS). The PACT Act prohibits the use of the U.S. Postal Service to deliver ENDS. The PACT Act also requires that sellers of ENDS implement certain age verification measures for direct-to-consumer sales, register with the Bureau of Alcohol, Tobacco, Firearms and Explosive and the tobacco tax administrators of the states into which shipments are made, and file monthly reports demonstrating payment of applicable taxes.
The company said in its filing, “Additionally, possibly as a result of the PACT Act amendments, FedEx and UPS adopted policies banning the shipment of vaping products starting on March 1st, 2021, and April 5th, 2021, respectively. Substantial uncertainty exists regarding which products may not be shipped pursuant to the PACT Act and the policies of FedEx and UPS. In the event, USPS determines that the mail ban applies broadly to all or almost all vaporizers, and FedEx and UPS continue to maintain restrictive shipping policies, our shipping costs will be adversely and materially impacted, and we could lose our ability to deliver products to customers in a timely and economical manner. We are unable to determine the extent of the impact to the business until further guidance and clarification is issued.”
Greenlan said it believes it is well-positioned in comparison to its competitors and may derive several advantages from the amended PACT Act. “We already maintain the required state licensure and have a compliance infrastructure that is already being utilized to satisfy the PACT Act’s requirements. In contrast, some of our competitors do not currently have the required licensure and may have to devote significant resources to achieve compliance with the PACT Act, if they can achieve compliance at all. Moreover, our shipping volumes enable us to obtain relatively favorable terms with private carriers who permit the shipment of ENDS. Additionally, our compliance and logistics capabilities also allow us to offer fulfillment services to companies that cannot or do not wish to directly ship ENDS to customers, potentially creating an additional revenue stream. Finally, we are well-positioned to take advantage of other opportunities that may arise, including favorable acquisition valuations from companies that are unable to comply with the PACT Act and the ability to attract customers from competitors who cannot be able to ship vaporizers compliantly.”