The Greenrose Holding Company Inc. (OTC: GNRS, GNRSW) posted increasing losses for the consecutive quarter as its cultivators navigate demand headwinds. The multi-state cannabis SPAC (special purpose acquisition company) reported its second-quarter financials ending June 30, 2022.
While Greenrose reported approximately $9.2 million in rising revenue during the period, the company’s second-quarter net losses totaled $10.3 million, down 132% sequentially; versus a net income of $3.3 million in the same period last year. The earnings were a loss of $0.63 cent per share versus a loss of $0.92 cents in the first quarter.
The company attributed the loss to production interruptions at True Harvest and demand headwinds in the Connecticut market, as well as increased interest expense of $6.9 million, purchase accounting fair value inventory step-up of $2.2 million and intangible amortization expense of $4.0 million.
Theraplant said its second quarter revenues decreased year-over year as a result of “sustained demand headwinds in Connecticut’s medical market, as well as increased competition and impacts from the state’s illicit market.”
The company attributed True Harvest’s second quarter-revenue to production disruptions “stemming from construction on our additional grow rooms.”
“While we continued to incur higher costs associated with ramping our expanded cultivation capacity at both True Harvest and Theraplant, we believe this work improves our positioning for improving our operations in Arizona and preparing for Connecticut’s forthcoming recreational market, respectively,” CEO Mickey Harley said. “As we progress into the second half of 2022, we remain focused on leveraging our existing production efficiencies to deepen and expand our presence in our existing state markets.”
In Connecticut, Greenrose said that the company and its partners tried to apply for four retail licenses and two hybrid retail licenses as part of the state’s equity joint venture (EJV) program, but were denied Connecticut’s Social Equity Council.
“We are working to address deficiencies in the applications,” the company said.
Greenrose posted second-quarter adjusted EBITDA of $3.1 million versus $4.6 million in the prior year quarter. The company said the slump was “primarily driven by the aforementioned lower level of gross profit generated during the quarter, higher corporate general and administrative expenses, and costs related to ramping the Company’s production capacity at Theraplant and True Harvest.”
The company recorded cash and cash equivalents combined with restricted cash at $2.7 million versus to $9.1 million in the period ending December 31, 2021. It said the decrease was driven by acquisition-related expenses and debt obligations.
Greenrose suspended its previously stated full year 2022 guidance “Due to regulatory delays surrounding the expected timing of Connecticut’s recreational cannabis market…The Company expects to re-evaluate and provide further updates on its 2022 outlook as regulatory visibility improves.”