Rising High: Cannabis firms report quarterly earnings

In this week’s “Rising High,” The Fly’s recurring series focused on cannabis and psychedelic stock news, The Fly looks back on earnings, a Phase 3 program initiation and a licensing agreement.

CANNABIS EARNINGS: On Thursday, CV Sciences (CVSI) reported third quarter earnings per share of $0 on revenue of $3.9M, which compared to an EPS of $0 on revenue of $4.1M for the same period last year. “We are pleased with our third 2024 results. Revenues for our core business remained stable around the $4M range during the third quarter 2024 despite a challenging environment. With our recent acquisitions and new product innovations, we believe that we are nicely positioned to grow our revenue in 2025. Our gross margins have improved throughout 2024 compared to previous years and we anticipate making further gross margin improvements in 2025,” stated Joseph Dowling, CEO.

IM Cannabis Corp. (IMCC) also reported Q3 earnings on Thursday with a loss per share of (C$0.41) on revenue of C$13.9M, which compared to a loss per share of (C$0.96) on revenue of C$12.4M last year. “While the 66% growth we delivered in Germany, to reach $5.8M this quarter is a highlight, we spent the quarter focused on building a solid foundation for 2025,” said Oren Shuster, CEO. “Our goal was to build a strong, consistent supply chain, along with a laser focus on how to improve the efficiency and accuracy of how we use our resources. I believe that the foundation we built this quarter will be the basis we will use to deliver in 2025.”

Additionally on Thursday, MediPharm Labs (MEDIF) reported Q3 net revenue of C$9.8M, which compares to revenue of C$8.5M last year. David Pidduck, CEO, commented, “MediPharm accomplished several important milestones in Q3 that will position us well for profitability in 2025. MediPharm has successfully diversified its business. As a global GMP player, our international sales grew 37% vs. Q3 2023, resulting in over 35% of revenue coming from outside Canada. We have a strong presence in the Canadian medical channel, and growing B2B sales. Additionally, MediPharm continues to launch new products and build on our very broad product line in the Canadian adult use and wellness channel. This diversity has contributed to our balance sheet strength and our ability to capitalize on future growth opportunities in various countries, product categories, and channels.”

On Wednesday, Ayr Wellness (AYRWF) reported Q3 loss per share of (44c) on revenue of $114.3M, which compared to loss per share of (25c) on revenue of $114.4M last year. The company also said it expects Q4 revenue and Adjusted EBITDA to be essentially flat compared to Q3 and AYR continues to expect positive GAAP cash flow from operations for calendar 2024. Steve Cohen, Interim CEO, said, “Our third quarter performance reflected ongoing macroeconomic pressure to the consumer wallet and increased competition in select markets, which affected revenue and offset the growth from the launch of adult-use sales in Ohio. However, our team adapted to drive gross margin expansion and operating efficiencies, improving our Adjusted EBITDA despite the lower revenue. Notwithstanding the ongoing leadership transition, we remain focused on strengthening execution and are committed to positioning AYR for sustained growth and profitability. Particularly, in 2025, we plan to expand our presence in Ohio, develop an initial footprint in Virginia, and improve our vertical operations in Florida.”

Additionally on Wednesday, NewLake Capital Partners (NLCP) reported Q3 EPS of 31c on revenue of $12.6M, which compared to EPS of 28c on revenue of $11.5M last year. The company also reported AFFO per share of 51c, which compared to AFFO per share of 47c for the same period last year. “The cannabis industry continues to move through a transformative period, and we are pleased to have delivered another solid quarter of results, declaring a third-quarter dividend of $0.43 per share of common stock, equivalent to an annual dividend of $1.72 per share, with a payout ratio of 84%,” said Anthony Coniglio, CEO. “With the president-elect expressing support for Adult Use, Schedule 3 and legislation that would decriminalize cannabis at the federal level, we remain optimistic about cannabis reform and the prospects for growth as we supply much needed capital to this dynamic industry.”

Vireo Health (VREOF) also reported Q3 earnings on Wednesday with a loss per share of (2c) on revenue of $25.2M, which compared to a loss per share of (4c) on revenue of $24.7M last year. CEO Amber Shimpa commented, “Our third quarter results reflect continued solid performance across our core markets, but as we discussed anticipating last quarter, year-over-year comparisons of financial performance are less significant now that we have passed the one-year anniversary of the launch of adult-use sales in Maryland. Our teams continue to focus on preparing for the launch of adult-use sales in Minnesota next year, and our recently announced $10M financing commitment gives us additional flexibility to support this launch and continue executing our CREAM & Fire strategy.”

MORE CANNABIS EARNINGS: On Tuesday, Ascend Wellness Holdings (AAWH) reported a Q3 loss per share of (13c) on a revenue of $141.6M, which compared to a loss per share of (5c) on revenue of $141.3M for the same period last year. “I want to express my gratitude to the Board and all of our stakeholders as I step into this role and lead Ascend through its next chapter. We are thrilled to lead this transformation and have already started to lay the groundwork for meaningful progress in the quarters ahead. Moving forward, we must focus on three financial priorities: improving profitability, maximizing asset efficiency, and enhancing cash flow generation. I’m excited to tackle these objectives with our team and create long-term value for our stakeholders,” said Sam Brill, CEO.

Additionally on Tuesday, Cronos Group (CRON) reported Q3 earnings per share of 2c on revenue of $32.46M, which compared to an analyst loss per share estimate of (1c) and revenue of $24.8M for the same period last year. “Our results this quarter demonstrate that our long-term strategy is working. With record net revenue and a disciplined approach to operating expenses, Cronos operates more efficiently and effectively than ever before, and we anticipate long-term margin improvement. Our consolidation of Cronos Growing Company has further strengthened our supply chain, which we anticipate will lead to improved margins and allow us to meet the increasing global demand for high-quality cannabis. With an industry-leading balance sheet, we are well-positioned to expand into new legal markets and drive future growth opportunities,” said Mike Gorenstein, CEO.

GrowGeneration (GRWG) also reported earnings on Tuesday with a Q3 loss per share of (19c) on revenue of $50M, which compared to analyst estimates of a loss per share of (11c) on revenue of $47.6M. The company also guided to FY24 revenue of $190M-$195M, which compared to analyst consensus of $192.3M. Darren Lampert, CEO, commented, “Our third quarter results were consistent with our expectations and reflect the substantial progress we have made executing on our strategic restructuring plan. In particular, we exceeded our near-term targets for proprietary brand sales as a percentage of Cultivation and Gardening net sales, which grew to 23.8%, compared to 19.4% for the third quarter last year. This is tracking well against our goal to grow proprietary brand sales to 35% in 2025. Additionally, same-store sales grew 12.5% year-over-year in the third quarter, reflecting the strong performance of our core store locations as we right-size our retail footprint. In addition, we met our store closures target, even as we maintained our focus on improving efficiencies, reducing store and other operating expenses by 13.9% during the quarter. Our financial position also remains strong, with $55.2M in cash, cash equivalents, and marketable securities and no debt.”

Safe Harbor Financial (SHFS) also reported Q3 earnings on Tuesday with an EPS of 1c on revenue of $3.5M, which compared to a loss per share of (2c) on revenue of $4.3M last year. “Throughout the third quarter of 2024, Safe Harbor Financial continued to make meaningful progress on our strategic priorities focused on innovation, operational excellence, and client service,” said Sundie Seefried, CEO. “During the third quarter of 2024, we delivered strong loan interest income growth of 48% and improved net income by approximately 147%, year-over-year. We accomplished this while remaining intensely disciplined in expense management, resulting in a 12% decrease in operating expenses, compared to the same period last year.”

On Friday, Canopy Growth (CGC) reported Q2 loss per share of (C$1.48) on a revenue of C$73.96M, which compared to loss per share of (C$4.33) on a revenue of C$82.08M last year. David Klein, CEO, said, “We delivered a solid second quarter led by strong growth across our Storz & Bickel, Canadian medical, and European cannabis businesses and we are well positioned to accelerate momentum in the second half of our fiscal year. In addition, we remain highly optimistic about the momentum building within Canopy USA as this strategy was uniquely designed to succeed independent of the need for federal legalization.”

Additionally on Friday, Cresco Labs (CRLBF) reported Q3 revenue of $180M, which compared to $190.6M last year. “Our focus remains the same, win in strategic markets with a brand portfolio consumers love, provide best-in-class retail operations and maintain a relentless pursuit of financial strength. Our Q3 results underline the success of this strategy with $180M in revenue at 29% adjusted EBITDA margin, and most importantly $49M of operating cash flow, our highest ever. So far this year, we’ve generated $103M in operating cash flow, enabling us to reinvest in our core, and to explore new markets and growth verticals, all while improving our balance sheet and paying down debt,” said Charlie Bachtell, CEO.

Following the report, Cormark downgraded Cresco Labs to Market Perform from Speculative Buy with a C$2.75 price target.

ATAI LIFE SCIENCES REPORTS Q3 EARNINGS: On Wednesday, Atai Life Sciences (ATAI) reported Q3 loss per share of (16c) on revenue of $40,000, which compared to analyst EPS estimates of a loss per share of (16c) and revenue of $87,000 for the same period last year. The company said it expects its cash, short-term securities, public equity holdings, and committed term loan facility to be sufficient to fund operations into 2026. “As we approach the end of 2024, we continue to see progress and momentum across our pipeline, both with our wholly owned programs and strategic investments,” stated Dr. Srinivas Rao, Co-CEO. “We are on track to initiate Phase 2 trials for VLS-01 and EMP-01 around year-end and we look forward to topline Phase 2b data from Beckley Psytech’s BPL-003 in the second quarter of 2025. Our team is focused on executing these trials with the utmost scientific rigor and is driven by our goal of being the leader in developing new psychedelic treatment options to mental health patients in need of innovative, safe and effective solutions.”

CYBIN INITIATES PARADIGM PROGRAM: Cybin (CYBN) announced Wednesday the initiation of PARADIGM, its Phase 3 pivotal program evaluating the efficacy and safety of CYB003 for the adjunctive treatment of Major Depressive Disorder. The company also reported a Q2 loss per share of ($2.86), which compared to a loss per share of ($1.93) for the same period last year. “Just three years after filing an Investigational New Drug application for CYB003, the initiation of our Phase 3 program is a truly significant and gratifying milestone,” said Doug Drysdale, CEO. “Following a highly collaborative and thorough design and review process with the U.S. Food and Drug Administration, we believe that PARADIGM incorporates appropriate protocols that proactively address some of the challenges encountered by peers developing molecules with similar mechanisms of action by recruiting from the larger MDD population;  administering CYB003 as an adjunctive treatment and not requiring patients to titrate off their existing antidepressants; and utilizing a 12-week blinded period to maximize the number of patients that remain in the study through the blinded stage. Our innovative approach represents a potential ‘paradigm’ shift, moving away from the daily treatment of depression symptoms and toward an intermittent, more durable treatment like CYB003 that could potentially change the course of the disease. Our clinical team has accomplished an extraordinary amount in a short time, and we are eager to continue investigating CYB003’s potential to provide long-lasting relief from depressive symptoms and disrupt the standard of care in MDD.”

On Thursday, Alliance Global Partners raised the firm’s price target on Cybin to $25 from $6 and kept a Buy rating on the shares following the 1:38 reverse stock split enacted in September. The firm notes that its price target is based on a sum-of-the-parts value for CYB003 for MDD valued at $16 per share, CYB004 for GAD valued at $6 per share, and the remaining preclinical candidates plus cash being valued at $3 per share.

Meanwhile, Canaccord lowered the firm’s price target on Cybin to $86 from $96 and kept a Buy rating on the shares. The firm said they reported results and the key update was that the company has started its PARADIGM Phase 3 program for CYB003.

ENVERIC SIGNS LICENSING AGREEMENT: Enveric Biosciences (ENVB) announced Tuesday that the company has executed a licensing agreement with MycoMedica Life Sciences, out-licensing the company’s EVM201 program, including drug candidate EB-002. Pursuant to the terms of licensing agreement, MycoMedica will seek to develop EB-002, formerly EB-373, a synthetic prodrug of the active metabolite psilocin, in treatment of neuropsychiatric disorders such as depression. MycoMedica will receive an exclusive, global license to the formulations, drugs, method of use, and medical devices developed by Enveric to utilize the compound. MycoMedica would assume responsibility for all future preclinical, clinical, and commercial development on a royalty-bearing basis for all human and animal pharmaceutical applications. As part of the license agreement, if certain conditions are met, Enveric is eligible to receive upfront, development, and sales milestones potentially totaling up to $62M, plus tiered single digit royalties on all future sales. The license grants sublicensing rights and cash buyout options to MycoMedica.

CANNABIS/PSYCHEDELIC STOCKS: Publicly-traded companies in the space include Acreage (ACRHF), Aurora Cannabis (ACB), Avant Brands (AVTBF), The Cannabist Company (CBSTF), Cannara Biotech (LOVFF), Cansortium (CNTMF), Chicago Atlantic (REFI), Clearmind (CMND), Clever Leaves (CLVR), Compass Pathways (CMPS), CordovaCann (LVRLF), Curaleaf (CURLF), Entourage Health (ETRGF), Flora Growth (FLGC), Trees Corporation (CANN), Greenlane (GNLN), Green Thumb (GTBIF), Hemp (HEMP), High Tide (HITI), IGC Pharma (IGC), Innovative Industrial Properties (IIPR), InterCure (INCR), Ispire Technology (ISPR), Lowell Farms (LOWLF), Lucy Scientific Discovery (LSDI), MindMed (MNMD), Numinus (NUMIF), Optimi Health (OPTHF), Organigram (OGI), PharmAla (MDXXF), Planet 13 (PLNHF), Psyence Biomedical (PBM), Red White & Bloom (RWBYF), Relmada Therapeutics (RLMD), Reunion Neuroscience (REUN), RIV Capital (CNPOF), SNDL (SNDL), Skye Bioscience (SKYE), Stem Holdings (STMH), TerrAscend (TRSSF), Tilray (TLRY), Trulieve (TCNNF), Tryp Therapeutics (TRYPF), Verano (VRNOF), Village Farms (VFF), and 4Front Ventures (FFNTF).