MariMed, MRMD stock, is one of my Top Picks. They happen to be one of my favorite cannabis stocks as they consistently report earnings and increasing revenues; and I wanted to put together the MRMD stock forecast. I had done the MRMD stock forecast earlier. However, after looking at some of the numbers, it may be best that I lower my projections; I do not think MariMed will hit their revenue targets I had set earlier. While the price target is lowered, I think MariMed MRMD Stock has a lot of upside potential. I believe that MariMed is going to be one of the top performing cannabis stocks. However, I think the data points I used for inputing into my DCF were a bit too overzealous; this came more from other sources.
MariMed will eventually get to where they are going. And, with continued revenue increases, MariMed will be one of the better performing cannabis companies.
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MariMed MRMD Stock Financial Data
Here is a breakdown of MariMed financial data.
MariMed Gross Profits
Strong, continuous growth upwards in revenue was the big theme for MariMed. The 32.3% growth rate was solid. However, despite this, MariMed printed lower gross margins whose affect you can see trickle all the way down the financial statement. Nonetheless, gross profits continuously maintained a slid increase showing a balance between revenue and cost.
Most cannabis companies are seeing a slight slowing in revenue. Overall, cannabis companies increased about 5% for this quarter. This is still solid growth, especially when you compare that to the broader market which prints all of about 3.5% quarterly.
MariMed expects to meet guidance given at the beginning of the year, but, that means a print of $28M for the upcoming quarter. Cannabis companies have been attributing this to no more stimulus checks to which, I see that as a scapegoat without merit. Bars are opening up again and people are normalizing their lives. This means no more sitting at home getting stoned to death while binging Netflix and Doritos with nothing else to do. I figured this would occur.
MariMed Operating Profits
Operating costs advanced for the quarter along with revenues. But, on a percentage basis, operating efficiencies also went higher; 34.9% for the quarter. In order to make an omelet, you need to crack some eggs. I expect that new management brought on to the team, along with other costs associated with advancing management’s objectives will pay off.
Still, the 35% is within the same range of the best players in the industry. I look for 30% – 35% as being the standard to achieve. Prior to this, MariMed was well beyond these metrics dipping in to the 20s. I expect operating efficiencies will see these numbers again soon as new stores open and revenues continually increase.
MariMed EBTIDA & Net Profits
On an adjusted basis, EBTIDA hit 38% (Unadjusted was 21%). This is about 50% higher than the broader S&P 500 stocks. This means that every dollar in revenue MariMed earns in revenue, they are keeping 50% more from cost of goods and operations, less D&A. Which company would you rather invest in? A company that prints 50% higher in margins, or not? Hopefully, you are always looking to optimize your investment opportunity. Time is money. And, on a percentage basis, MariMed makes more money comparatively.
We are likely to see EBITDA, unadjusted, heading back upwards during future quarters. MariMed is continually looking to expand and get its #1 selling products in more areas, opening more dispensaries, and continually looking towards acquisitions.
While MariMed has been focused on the East Coast, I always try and envision big mergers happening, such as MariMed and maybe 4Front up in Washington State (And others), or Unrivaled who are truly West Coast. Keep these kinds of moves in mind as we will continually see M&A activity ahead.
MariMed Cash On Hand
Strengthening its balance sheet on a percentage basis, again, MariMed is one of the better-situated companies with regards to cash on hand. And, with MariMed having net earnings positive, they will continue to add to their capabilities with more and more cash.
I have mentioned many times that cash is king and companies in a positive net earnings position with sufficient cash will begin to outperform others that are lagging behind. This should absolutely be something you need to keep an eye on, cash on hand, and whether there is a burn rate.
MariMed Total Equity
Continually, MariMed is adding assets to its balance sheet in order to increase its revenue & profits capabilities and the continuous moves upwards show that management is doing its job.
Shareholder value can be directly correlated to the increase in total equity and net earnings. This upward climb is continuously improving and MariMed’s fortunes will do the same.
MariMed MRMD Stock Forecast
MariMed MRMD DCF
| Assumptions | |
|---|---|
| Tax Rate | 25% |
| Discount Rate | 8.000% |
| Perpetural Growth Rate | 25.0% |
| EV/EBITDA Mulltiple | 45.0x |
| Transaction Date | September 1, 2022 |
| Fiscal Year End | 12/31/22 |
| Current Price | $0.510 |
| Shares Outstanding | 338,739,004 |
| Debt | $55,100,000 |
| Cash | $11,400,000 |
| Market Value | |
|---|---|
| Market Cap | $172,756,892 |
| Plus: Debt | $55,100,000 |
| Less: Cash | $11,400,000 |
| Enterprise Value | $216,456,892 |
| Equity Value/Share | $0.5100 |
| Date | September 1, 2022 | Dec 31, 2023 | Dec 31, 2024 | Dec 31, 2025 | Dec 31, 2026 | Dec 31, 2027 | Dec 31, 2027 | |
| Time Periods | 1 | 2 | 3 | 4 | 5 | |||
| Year Fraction | 1.33 | 1.00 | 1.00 | 1.00 | 1.00 | |||
| EBIT | $36,000,000 | $47,500,000 | $64,625,000 | $82,500,000 | $105,625,000 | |||
| Less: Cash Taxes | $9,000,000 | $11,875,000 | $16,156,250 | $20,625,000 | $26,406,250 | |||
| Plus: D&A | $5,600,000 | $6,650,000 | $8,225,000 | $9,625,000 | $11,375,000 | |||
| Less: Capex | $16,000,000 | $19,000,000 | $23,500,000 | $27,500,000 | $32,500,000 | |||
| Less: Changes in NWC | -$16,000,000 | -$19,000,000 | -$23,500,000 | -$27,500,000 | -$32,500,000 | |||
| Unlevered FCF | 1 | $32,600,000 | $42,275,000 | $56,693,750 | $71,500,000 | $90,593,750 | ||
| (Entry)/Exit | -$216,456,892 | $2,299,434,743 | ||||||
| Transaction CF | - 0 | $43,466,667 | $42,275,000 | $56,693,750 | $71,500,000 | $90,593,750 | $2,299,434,743 | |
| Transaction CF | -$216,456,891 | $43,466,667 | $42,275,000 | $56,693,750 | $71,500,000 | $90,593,750 | $2,299,434,743 |
| Rate of Return | |
|---|---|
| Target Price Upside | 891% |
| Internal Rate of Return (IRR) | 66% |
| Market Value vs Intrinsic Value | |
| Market Value | $0.51 |
| Upside | $4.54 |
| Intrinsic Value | $5.05 |
My original analysis had MariMed MRMD Stock forecast projecting $175M in revenue for 2022. That does not appear likely to occur. Instead, I have dropped this down to approximately $135M and $175M for the following year. This dropped the potential of free cash flow considerably.
However, I maintained a solid performance from MariMed with regard to margins. MariMed prints some of the better numbers in the industry. However, MariMed did not do so the past quarter. Despite that, MariMed printed positive net earnings with what could be considered lower gross margins and EBTIDA/Revenue numbers.
Once MariMed continues its upward moves in revenues, this will push the target for MRMD stock upward.
Is MRMD A Good Investment?
MariMed is expanding. And, they are incurring more costs that are shifting the margin numbers. I feel that because of the work MariMed is doing now they will be a powerhouse of future profits. MariMed has some of the best products in the market with the #1 selling edible in the East Coast. If they are able to take that and push that product throughout the rest of the nation this could be a real winning opportunity.
If you are able to invest in MariMed over the longer period of time, this will be well rewarding. MariMed continues to expand its foundation and, as their products grow in popularity, this will continually push their future higher; along with MRMD stock.
MariMed MRMD Stock Financial Data
MariMed MRMD Stock Financial Data
| June 2018 | September 2018 | December 2018 | March 2019 | June 2019 | September 2019 | December 2019 | March 2020 | June 2020 | September 2020 | December 2020 | March 2021 | June 2021 | September 2021 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | $2.9 | $3.4 | $3.4 | $3.5 | $25.7 | $11.2 | $5.2 | $7.5 | $9.6 | $13.5 | $20.4 | $24.6 | $25.0 | $33.2 | |
| Cost of Goods | $0.9 | $1.5 | $0.5 | $1.3 | $16.7 | $6.5 | $2.4 | $2.6 | $3.5 | $4.8 | $8.7 | $11.5 | $9.0 | $15.0 | |
| Gross Income | $2.0 | $1.9 | $2.9 | $2.2 | $9.0 | $4.7 | $2.8 | $4.9 | $6.1 | $8.7 | $11.7 | $13.1 | $16.0 | $18.2 | |
| Gross Profit Margin | 69.0% | 55.9% | 85.3% | 62.9% | 35.0% | 42.0% | 53.8% | 65.3% | 63.5% | 64.4% | 57.4% | 53.3% | 64.0% | 54.8% |
| June 2018 | September 2018 | December 2018 | March 2019 | June 2019 | September 2019 | December 2019 | March 2020 | June 2020 | September 2020 | December 2020 | March 2021 | June 2021 | September 2021 | ||
| Revenues | $2.9 | $3.4 | $3.4 | $3.5 | $25.7 | $11.2 | $5.2 | $7.5 | $9.6 | $13.5 | $20.4 | $24.6 | $25.0 | $33.2 | |
| Total Operating Expenses | $1.6 | $2.4 | $6.3 | $2.5 | $3.6 | $3.7 | $36.6 | $3.9 | $4.1 | $5.3 | $3.0 | $6.1 | $7.4 | $11.6 | |
| Operating Income | $0.4 | -$0.5 | -$3.4 | -$0.3 | $5.4 | $1.0 | -$33.8 | $1.0 | $2.0 | $3.4 | $8.7 | $7.0 | $8.6 | $6.6 | |
| Operating Efficiency | 55.2% | 70.6% | 185.3% | 71.4% | 14.0% | 33.0% | 703.8% | 52.0% | 42.7% | 39.3% | 14.7% | 24.8% | 29.6% | 34.9% |
| June 2018 | September 2018 | December 2018 | March 2019 | June 2019 | September 2019 | December 2019 | March 2020 | June 2020 | September 2020 | December 2020 | March 2021 | June 2021 | September 2021 | ||
| Net Income | -$0.5 | -$3.5 | -$7.7 | $0.0 | $4.7 | -$7.4 | -$78.4 | -$2.4 | -$1.2 | $1.7 | $4.1 | $4.2 | $7.5 | $2.0 | |
| Diluted EPS | $0.00 | -$0.02 | -$0.04 | $0.00 | $0.02 | -$0.03 | -$0.41 | -$0.01 | $0.00 | $0.00 | $0.01 | $0.01 | $0.02 | $0.01 | |
| Dividend Per Share | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | |
| EBITDA | $0.6 | -$0.5 | -$3.0 | $0.1 | $5.6 | $1.3 | -$33.4 | $1.6 | $2.6 | $4.0 | $8.6 | $7.7 | $12.7 | $7.3 | |
| EBITDA/Revenue | 20.7% | -14.7% | -88.2% | 2.9% | 21.8% | 11.6% | -642.3% | 21.3% | 27.1% | 29.6% | 42.2% | 31.3% | 50.8% | 22.0% |
| June 2018 | September 2018 | December 2018 | March 2019 | June 2019 | September 2019 | December 2019 | March 2020 | June 2020 | September 2020 | December 2020 | March 2021 | June 2021 | September 2021 | ||
| Cash On Hand | $5.1 | $6.0 | $4.1 | $4.2 | $3.5 | $0.1 | $2.2 | $2.6 | $3.1 | $3.3 | $4.4 | $13.6 | $18.3 | $26.0 | |
| Free Cash Flow | -$0.03 | -$0.03 | -$0.07 | -$0.12 | -$0.09 | $0.01 | -$0.18 | -$0.02 | $0.00 | $0.00 | $0.00 | $0.01 | $0.02 | $0.01 | |
| Total Assets | $45.4 | $57.1 | $83.0 | $97.6 | $133.7 | $137.1 | $61.6 | $65.3 | $67.8 | $72.5 | $76.4 | $90.0 | $102.9 | $118.2 | |
| Total Liabilities | $23.8 | $20.6 | $21.2 | $32.1 | $50.9 | $54.3 | $55.2 | $58.9 | $57.5 | $57.6 | $53.6 | $37.6 | $40.4 | $45.2 | |
| Total Equity | $21.6 | $36.5 | $61.8 | $65.5 | $82.8 | $82.8 | $6.3 | $6.4 | $10.3 | $14.8 | $22.8 | $52.4 | $62.5 | $73.0 | |
| Cash/Debt Ratio | 21.4% | 29.1% | 19.3% | 13.1% | 6.9% | 0.2% | 4.0% | 4.4% | 5.4% | 5.7% | 8.2% | 36.2% | 45.3% | 57.5% | |
| Book Value Per Share | $0.11 | $0.18 | $0.29 | $0.31 | $0.38 | $0.38 | $0.03 | -$0.03 | -$0.01 | $0.00 | $0.03 | $0.05 | $0.08 | $0.11 |
I like Marimed and where the company is going.. Matter of fact, I have added a few more hundred shares to my position..
@mattpaul02yahoo-com
MariMed may be one of the best companies out there. They softened a bit on this last report but, all of the cannabis stocks have slowed somewhat. Also, MRMD stock has not sold off nearly as much as the rest of the industry. This is likely because of how well MariMed is performing.
Good morning DH. I’ve read that Marimed had applied for a listing on the cse around the middle of April. Do you know roughly how long the process takes from the time they apply to the time they actually start trading.
Thanks
Paul
This is what I like to see!
This great news for MRMD that got released yesterday on there website:
MariMed Completes Acquisition of Kind Therapeutics USA, a Maryland Vertically Integrated Cannabis Business.
https://ir.marimedinc.com/news-events/press-releases/detail/177/marimed-completes-acquisition-of-kind-therapeutics-usa-a
@mattpaul02yahoo-com
Nice… thanks for posting this, Matt. These guys will be huge… if they don’t merge with another before hand.
@dhtaylor They could but I don’t think Robert Fireman wants to sell this company any time soon in my personal opinion.. When your revenue growth doubles w/ zero debit, your company is heading in the right direction..
@mattpaul02yahoo-com @birkboy91gmail-com
Probably both correct. But, keep this in mind: There will continuously be M&A activity moving forward. If the right deal comes along, say 4Front & MariMed? where both companies are effectively on different sides of the nation and have the best flower/edible on the market, a merge would make sense. I can see each of these companies looking outward for growth in what will be a hyper-competitive market. I’m not saying it is a done deal. And, yes, MariMed is sitting at the top spot, as far as I am concerned. But, it is also a race to be #1 across the board. With MariMed, they are in the best position of all. But, why not expand on that continuously?
We’ll see what the future holds. I believe we are going to see tons of M&A and I rule nothing out.
@mattpaul02yahoo.com Saw an interview with Fireman a few months back, and your comment lines up with what I heard him say…that Marimed will not be selling, rather, growing into a mid to top-tier MSO.
DH, I’m wondering if some of the assumptions were mistyped. I show:
30m debt vs 519m you have
8m cash vs 26m you have
The big drop in cash from $35m Q1 to $8m Q2 is concerning to me, $6.5m of the drop was from operations. Price compression could be a real threat?
@kc Yes… I had switched up systems and did not realize that the old system was printing inside the posting. There are a lot of moving parts to this website. I cleaned it all up.