MariMed Inc: U.S. Pot Stock Up 135% in 2021 But Still Undervalued

MariMed Stock Bullish on Record Q1 Results

Multistate operator MariMed Inc (OTCMKTS:MRMD) is one of the most compelling, undervalued cannabis stocks out there. And for good reason. MRMD stock has been on a tear since the company reported great third-quarter results in November 2020. And that stellar momentum has carried into 2021.

As of this writing, MariMed stock is up by:

• 423% year-over-year
• 135% year-to-date
• 215 over the last six months
• 215% over the last three months
• 31% over the last five trading days.

Despite these eye-watering gains, MRMD stock still has a lot of room to run over the coming quarters and years—especially once recreational marijuana becomes legal at the federal level.

Until that eventuality, investors can take solace in knowing that MariMed Inc reported record fourth-quarter and full-year 2020 financial results, reported excellent first-quarter 2021 financial results, announced multistate licensing agreements, is opening new dispensaries, and is launching new products.

All this has helped MariMed Inc report amazing revenue growth. For 2019, the company reported core cannabis revenue of $16.6 million. In 2020, its revenue jumped by 206% to $50.9 million.

Management says MariMed will generate $100.0 million of revenue and $30.0 million of earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2021.

Chart courtesy of StockCharts.com

MRMD Stock Overview

MariMed is one of the largest multistate seed-to-sale cannabis operators in the U.S.

It has 17 licenses in six states: Delaware, Illinois, Maryland, Massachusetts, Nevada, and Rhode Island. (Source: “Investor Presentation: May 2021,” MariMed Inc, last accessed May 26, 2021.)

In the U.S., the company operates seven dispensaries and has three more under development. It also operates five cultivation and production facilities. Moreover, its branded products are found in thousands of other dispensaries.

MariMed Inc’s top-selling brands include the award-winning, vegan-friendly “Betty’s Eddies” medicated fruit chews, “Kalm,” “Nature’s Heritage,” “Bourne Baking,” “Florance,” and “MariMed – CBD.”

The company’s partner brands include “Dabtans,” “Healer,” and “Tikun.”

Fourth Dispensary Opens in Illinois

In late April, MariMed announced that it opened its fourth recreational marijuana dispensary in Metropolis, IL under its Illinois “Thrive” retail brand. This is the only marijuana dispensary in Metropolis. (Source: “MariMed to Open Its Fourth Illinois Dispensary in Metropolis,” MariMed Inc, April 29, 2021.)

Legal recreational cannabis sales began in Illinois on January 1, 2020. In the state’s first full year of recreational pot operations, sales reached $669.0 million. Coupled with medical marijuana sales, that figure exceeded $1.0 billion. The sales are expected to increase substantially in 2021.

Betty’s Eddies Expands to Maine

In May, MariMed announced that its best-selling Betty’s Eddies brand is now available in Maine, the fifth state to carry the brand. (Source: “MariMed Expands its Betty’s Eddies Chews to Maine, the Fifth State to Carry the Best-Selling Brand,” MariMed Inc, May 13, 2021.)

Between January and October 2020, medical marijuana sales in Maine hit $221.8 million, making cannabis Maine’s most valuable crop. Since October 9, 2020, when legal recreational pot sales launched in the state, that number has grown significantly.

In addition to Maine, Betty’s Eddies chews are available for purchase at more than 250 licensed medical and recreational cannabis dispensaries in Maryland, Massachusetts, Nevada, Rhode Island, and Puerto Rico.

Exceptionally Strong Start to 2021

For the first quarter of 2021 ended March 31, MariMed announced that its core cannabis revenue soared by 230% year-over-year to a record $24.6 million. (Source: “MariMed Q1 2021 Results Reflect Highest Core Cannabis Revenue and Profitability,” MariMed Inc, May 17, 2021.)

The company’s first-quarter 2021 net income was a record $4.3 million ($0.01 per share), versus a first-quarter 2020 net loss of $2.3 million ($0.01 loss per share). Its EBITDA were $7.6 million, up 764% from the first-quarter 2020 EBITDA of $900,000.

The company’s gross profit on core cannabis revenue was $13.2 million, a 171% increase over the $4.9 million in the same period of the previous year.

In addition to achieving its highest core cannabis revenue and profitability, MariMed Inc strengthened its balance sheet and improved its liquidity. It increased its working capital to $17.1 million, up from negative $2.2 million in the same prior-year period. The company also retired $16.6 million of debt, representing substantially all of its non-mortgage debt.

“MariMed continues to track our previously announced 2021 revenue and EBITDA guidance of $100 million and $30 million, respectively,” said MariMed’s CFO, Jon Levine. (Source: Ibid.)

“As our balance sheet continues to strengthen, and we realize increasing revenue as our manufacturing facility ramps-up production and customer and patient counts increase in our dispensaries due to robust recreational markets in Illinois and Massachusetts, we remain highly confident in our guidance.”

Analyst Take

The year 2020 will forever be associated with the coronavirus pandemic and global recession. For MariMed Inc, though, 2020 was a transformative one, for which it reported record full-year results.

That momentum has carried into 2021, with the company reporting its highest-ever quarter of core cannabis revenue and profitability.

All this has allowed the company to reaffirm its aggressive 2021 guidance of $100.00 million in revenue and $30.0 million in EBITDA. For MariMed stock, it looks like 2021 will be even more monumental than 2020.