The company’s full-year revenue was $130 million, up 227% year over year. The full-year net loss was $277.0 million, with net loss attributable to shareholders of MedMen Enterprises $79.1 million or loss of $0.75 per basic and diluted share. The company spent $42 million in executive compensation for the year. This compares to a net loss of $113.9 million, with net loss attributed to shareholders of MedMen Enterprises $68.3 million or loss of $1.69 per basic and diluted share, for fiscal 2018.
“Fiscal 2019 was a transformative year for MedMen, with over two million completed retail transactions to date and revenues increasing 227% year-over-year,” said Adam Bierman, MedMen co-founder and chief executive officer. “Our success was due, largely in part, to our loyal customer base. Throughout the year, we served over one million customers from all 50 states and more than 100 countries. In California, the largest cannabis market in the world, MedMen surpassed a record $110 million in annualized run-rate retail revenue.”
Mr. Bierman continued, “While industry tailwinds propelled us forward over the past twelve months, changing macroeconomic conditions have led us to refocus our strategy, to reevaluate our assets and to determine where it makes most sense to allocate capital going forward. As we progress into the next fiscal year, our go-forward strategy will therefore focus on three key objectives: optimizing our current retail assets, unlocking the further potential of our factories, and leveraging our omnichannel strategy. As we bring all of our factories online and up to full capacity, and simultaneously optimize our current retail assets across our core geographic markets, we continue on our path toward profitability.”
Gross margins fell to 50% in the fourth quarter compared to 53% in the prior quarter. The company attributed the decline in gross margins “to new store openings, which initially have lower gross margins.” The company reported an Adjusted EBITDA loss of $39.4 million for the fourth quarter, representing a 7% improvement from the previous quarter.
The company wrote in its filing that it could be considered at risk of ongoing concern citing, “The amount of new revenue to be generated from ongoing and planned operationalization of existing licenses to provide sufficient cash flow to fund operations and other committed expenditures.”
Production Costs Flat, Prices Fall
Costs of Production Per Gram were essentially flat $0.70 to $3.30 (2019) versus $0.72 to $3.05 (2018). Prices fell though, Selling Price Per Active Gram $3.26 to $5.61 (2019) versus $5.28 to $6.54 (2018).
MedMen seems to have refocused itself on the California market versus a nationwide expansion. The California retail revenue totaled $27.5 million for the quarter. MedMen increased its total California retail license count to 17. Of these 17 retail licenses, 13 are operational as MedMen stores. The company was also recently awarded a commercial retail license in Pasadena, California. MedMen said it expects to have a total of 30 operating retail locations in California by the end of the calendar year 2020.
MedMen added a flagship retail location in Long Beach situated strategically between its Santa Ana and LAX stores. The company also opened a second San Diego retail location in Sorrento Valley. During the quarter, MedMen was also awarded one of six retail licenses available in the City of Pasadena. MedMen continued to expand its Northern California retail footprint announcing plans to open a retail store in the city of Vallejo upon completion of a pending acquisition of a retail and distribution license.
The City Council of West Hollywood passed an ordinance to extend MedMen’s temporary recreational retail license until January 1, 2021, unless otherwise determined. MedMen continues to work with West Hollywood City Council and various community groups on a long-term resolution.