Medmen Enterprises (CSE: MMEN) filed its first quarter 2020 financials these evening, revealing revenues of US$43.9 million for the period ended September 28, 2019, short of analyst estimates of $47.7 million for the quarter. Net loss for the quarter came in at $82.6 million.
Medmen posted a gross profit of $21.8 million before the impact of fair value adjustments. After biological adjustments, the firm posted a gross profit of $17.2 million. Expenses for the quarter however totaled $66.1 million, or 150% of revenues during the quarter. General and administrative expenses alone came in at $49.0 million, or 111% of quarterly revenues. Sales and marketing accounts for $5.7 million during the quarter.
Medmen recently made an announcement that it is currently in the process of significantly reducing its selling, general, and administrative expenses to under $85 million per year. That baseline, for which the run rate is expected to arrive by the end of 2020, currently appears to be a long shot based on the current quarter accounting for 64% of that annual target.
Moving towards the cash flow statement, Medmen spent $43.9 million in operating activities, while generating $7.3 million in investing activities and $45.1 in financing activities. The firms cash position increased from $33.7 million to $42.2 million during the quarter as a result.
Inventories during the quarter rose to $40.4 million from $29.1 million, while biological assets decreased to $2.7 million from $3.0 million. In terms of current assets, the largest increase was for that of assets held for sale, which now total $8.4 million.
Accounts payable increased to $53.8 million during the quarter, from $49.7 million in the current quarter. Income taxes payable also increased significantly, from $16.8 million to $24.4 million. Current portion of lease liabilities increased the most dramatically in terms of current liabilities, from $2.5 million to $17.5 million. Notes payable was the most significant decrease, from $20.2 million to $13.1 million.\
Medmen currently has a working capital of $9.4 million.
Always notable for Medmen Enterprises is the related party transactions during the quarter. For the period 13 week period ended September 28, 2019, total key management compensation came in at $3.4 million, of which $2.1 million was in the form of share based compensation for executives, $0.4 million in the form of share compensation for directors, and $0.8 million for short-term employee benefits, including salaries and fees.
Medmen Enterprises closed today’s session at $0.64 on the CSE.
Information for this briefing was found via Sedar and MedMen Enterprises. The author has no affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.