Senior analyst Pablo Zuanic of Zuanic & Associates released an update on Verano Holdings VRNOF, which is crucial for investors monitoring the cannabis sector. Verano's sales for 2023 are projected at $938.5 million, with a potential EBITDA recovery to $300.4 million by 2025. Zuanic's report indicates that Verano may achieve profitability by 2025, highlighting key financial metrics that are vital for informed investment decisions.
Sales Projections
Sales for 2023 are estimated at $938.5 million, a 7% increase from $879.4 million in 2022. Quarterly sales are projected to fluctuate, with Q2 2024 expected to see a slight rise to $225 million from $221.3 million in Q1. By 2025, sales are anticipated to reach $983.4 million.
EBITDA And Operating Income
EBITDA for 2023 is forecasted at $305.5 million, declining to $280.7 million in 2024 but expected to recover to $300.4 million by 2025. The company has faced operating losses, recording -$162.7 million in 2022 but projecting an operating income of $129.1 million for 2024.
Net Interest Expenses And Profit
Net interest expenses are expected to decrease from -$59.8 million in 2023 to -$49.3 million in 2024. The net profit for 2024 is projected at -$9 million, with EPS moving from -$0.81 in 2022 to -$0.03 in 2024 and possibly turning positive by 2025. This means Verano is expected to reduce its losses and achieve profitability by 2025, reflecting improved financial health and operational efficiency.
Share Price And Market Cap
Verano's share price stands at $4.12, with a market cap of $1.4 billion. The company's debt levels are projected to decrease, with net debt falling from -$270.9 million in 2023 to -$164.6 million by 2024.
Comparative Analysis With Other MSOs
The report compares Verano with other multi-state operators (MSOs), providing valuable insights for investors. Verano's EV/EBITDA multiple for 2024 is 6.7x, in line with other major players like Green Thumb GTBIF at 9.0x and Curaleaf CURLF at 13.5x.
Additionally, Ascend Wellness AAWH has a multiple of 5.5x, and Cresco Labs CRLBF is at 6.4x. These comparisons show Verano's relative valuation in the market, positioning it competitively among its peers.
Debt-to-EBITDA ratio is also favorable for Verano at 0.6x, compared to Curaleaf's higher leverage at 3.3x. This lower debt ratio indicates a more stable financial position, potentially reducing risk for investors.
Sales Breakdown
Verano's retail and wholesale sales breakdown indicates a diverse revenue stream. Retail sales are projected at $741.4 million for 2023, with wholesale contributing $197 million. Geographical distribution of sales includes significant contributions from states like Florida ($222.4 million) and New Jersey ($178.8 million).
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