After the market closed on Monday, MedMen Enterprises Inc.(CSE: MMEN) (OTCQX: MMNFF) released its consolidated financial results for its first-quarter fiscal 2021 ended September 26, 2020. The company delivered a sequential growth of 31% on revenue of $35.6 million, however, it declined from $39.7 million for the same time period in 2019. On a positive note, the net losses were trimmed to $21.9 million from last year’s $33.1 million.
On the MedMen earnings call Interim Chief Executive Officer Tom Lynch said, “This is also the first quarter in which we achieved positive cash flow after-tax across our retail footprint, a significant milestone for the team. With the strength of our team and support of our capital partners, we are ahead of schedule with respect to our turnaround plan. As we get closer to achieving company-wide profitability, we remain committed to growing the MedMen brand and maintaining our position as the leading cannabis retailer in the U.S.”
The company noted that the increase in revenue was driven by its California footprint, which was up 34% this quarter over the previous quarter. The flagship stores, such as LAX, Beverly Hills, and West Hollywood were up 56%, 39%, and 31%, respectively, during the quarter. The company only recognized partial revenue for its Evanston IL retail store, because of its agreement divest the license to the third-party. MedMen said its pre-announced revenue number for this quarter of $37 million included a full quarter of the Evanston revenue.
The company also managed to dramatically cut expenses from last year’s $71 million to just $24.9 million. The company said it cut expenses by 21% sequentially. Still, MedMen said it only had $10 million in cash as of September 2020 and it is working on new financing.
MedMen has been committed to making big changes as the company works to survive following a year of negative headlines resulting in the departure of former co-founder Adam Bierman. MedMen said it has deferred approximately $32 million in cash commitments during fiscal 2021 as a result of agreements with some of its lenders. During the first quarter, the company said it closed on $5.0 million in additional gross proceeds under its senior secured convertible debt facility led by funds affiliated with Gotham Green Partners. It also closed on $3.0 million in additional gross proceeds under its senior secured term loan with funds managed by Stable Road Capital and its affiliates. MedMen entered into a $10.0 million unsecured convertible debenture facility with certain institutional investors and agreed to sell its Evanston retail store for $20.0 million and received $10.0 million of the total consideration.
Tim Bossidy, the Chief Operating Officer reviewed the company’s recreational stores on the earnings call as well saying, “We plan to enhance our footprint further with two new stores in San Francisco, a new store in Emeryville, and a new store in Pasadena. We’ve also nearly completed our LAX store expansion, already our highest growth and most profitable store in the state. Moving over to Nevada, we saw a 192% increase in revenue this past quarter, if tourism began to return without the impact of state-mandated closures due to COVID-19. With the tightness in the Nevada wholesale market, we also expect that the various cultivation partnerships we are working on will show up an improved revenue and margin in the coming quarters.”
He added, “In Illinois, our Oak Park location continues to perform extremely well. This location is the best performing store and the national portfolio in terms of revenue. During the quarter, we made the tough decision to sell our Evanston location. While we were excited about the prospects of the online market, given capital needs for the turnaround plan, the ability to bring in $20 million of cash proceeds in short order is highly attractive to us. We still expect to expand in that market as we evaluate the additional location associated with our Oak Park license. Our final recreational market is in Massachusetts. We’ve made significant progress here on the licensing front. We recently announced that the Massachusetts Cannabis Control Commission voted in favor of granting us provisional adult-use license in both our Fenway Park and Newton locations.”
MedMen named Tracy McCourt to the new role of Chief Revenue Officer. The company appointed Al Harrington to its Board of Directors. Mr. Harrington is the founder of Viola, Inc., a premium cannabis company, and the founder of Harrington Wellness, a manufacturing company of non-psychoactive cannabinoid products.