MariMed (OTC:MRMD) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
MariMed reported its highest quarterly revenue in history for Q3 2026, with growth in both wholesale and retail segments. Operational highlights included a 5% sequential increase in wholesale revenue and a 31% growth in the Thrive Perks loyalty program membership.
Strategic initiatives include expanding brand reach, particularly Betty’s Eddies, into new markets like New York, and enhancing customer engagement through loyalty programs.
Future outlook is positive with expectations of growth from new market entries, despite challenges like price compression and regulatory shifts. Management emphasized the strength of the balance sheet, ongoing brand recognition, and readiness to capitalize on potential federal regulatory changes.
Full Transcript
OPERATOR
Thank you for standing by. At this time, I would like to welcome everyone to MariMed’s third quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. If you would like to ask a question during this time, please press star followed by the number one on your telephone keypad. I would now like to turn the conference over to Marlo Richard, Vice President of Human Resources for MariMed.
Please go ahead.
Marlo Richard (Vice President of Human Resources)
Hello and good morning, everyone. I’m Marlo Richard, Vice President of Human Resources at MariMed. I joined the company nearly two years ago following extensive experience in senior HR positions at leading technology and manufacturing companies. Helping align MariMed’s organizational design and talent management initiatives with our business objectives has been incredibly rewarding. I’m proud that those efforts have translated to strong cross-functional partnerships and more effective strategic decision-making at the company.
I’m honored to kick off today’s 2026 third quarter earnings call. Joining the call today are Jon R Levine, our Chief Executive Officer, Ryan Crandall, our Chief Commercial Officer, and Mario Pinho, our Chief Financial Officer. This call will be archived on our Investor Relations website and contains forward-looking statements. Actual events or results may differ materially from those forward-looking statements and are subject to various risks and uncertainties. A discussion of some of these risks is in the Risk Factors section of our 10-K and 10-Qs available on our website.
Any forward-looking statements reflect management’s expectations as of today and we assume no obligation to update them unless required by law. Additionally, we will refer to certain non-GAAP financial measures which are reconciled in our earnings release. I will now turn the call over to Jon for his third quarter overview.
Jon R Levine (President and CEO)
Thanks, Marlo, and good morning, everyone. I’m pleased to report that the momentum we built earlier this year continued through the third quarter. We generated the highest quarterly revenue in our history with growth in both wholesale and retail sequentially and year over year. Adjusted EBITDA rose again sequentially, and we once again generated positive cash flow from operations. Our employees drove these results. Our retail sales, marketing, and operations team compete every day against price compression, stiff competition, and shifting regulations, and their hard work, dedication, and smart thinking helped drive our strong quarter.
At wholesale, revenue grew sequentially in every one of our markets, driven by the strength of our branded products, which maintained or improved market share across many of our core categories. Betty’s Eddies remains the number one edible across Massachusetts, Maryland, Illinois, and Delaware. In those same markets, Vibations drink mixes, InHouse Gummies, and Bubby’s Baked Goods each held a top-10 position in their categories. Licensing continues to extend the reach of our top brands.
In Maine, Betty’s climbed to the number two edible position during the quarter, up from number three in Q2, and it did so less than a year after we launched our licensing partnership there. That speaks to the strength of the brand and its ability to win share quickly in new markets. That’s why we’re excited to bring Betty’s and our brands to New York. With a total addressable market of more than $4 billion, New York presents a major opportunity to expand the reach of our products with limited investment.
We continue to be on schedule with the buildout of our processing kitchen with our New York partner and expect to launch in the first half of 2027. Turning to retail, sales increased across our markets, transactions grew across the Thrive chain, and more notably, so did the average order value despite the pricing pressure that remains an issue in most of our markets. Earlier this year, we invested in a number of strategic initiatives to deepen customer engagement, encourage repeat visits, and deliver an exceptional experience. We showed meaningful progress in Q2, and the momentum continued last quarter.
Before I turn the call over to Ryan, I want to thank our shareholders for authorizing the Board to implement a reverse stock split if certain conditions are met, e.g., adult use, rescheduling, banking reform, or some other significant event. If one of those were to occur, we would then evaluate whether to implement a split as well as seek uplisting to a major U.S. exchange in order to attract institutional investors in MariMed. We’ll continue to watch developments about reform in D.C. closely, as well as the timing of implementation for 280E tax relief and broader banking reform, each of which remain potential catalysts for our industry.
We hoped for more clarity on all by the end of the year, but now I believe we need to wait for the dust to settle after last week’s midterms to better understand potential timing. Fortunately, many of the newly elected state and federal legislators have gone on record in support of our industry. While federal reform still has a way to go, our home state of Massachusetts is a different story. We’re so grateful that the citizens here sent a resounding no on Question 8 to SAM and the prohibitionists last week. Instead, they overwhelmingly chose to continue moving forward with having access to safe, age-gated, and tested cannabis. MariMed will also continue moving forward with a focus on positioning the company for long-term sustainable value creation through continued operating efficiencies and additional revenue growth opportunities.
Our focus in Q4 and into next year will be on leveraging our brands, cash position, and our production capacity. The momentum we’ve built so far this year will allow us to grow market share, open new doors, and invest in the business. I’ll now turn the call over to Ryan.
Ryan Crandall (Chief Commercial Officer)
Good morning, everyone. On last quarter’s earnings call, I shared details about several strategies we implemented to grow revenue with a focus on expanding distribution, strengthening customer relationships, improving retail execution, and investing behind our top-selling brands. Those strategies have been paying off, and we built on that momentum during the third quarter across both our retail and wholesale businesses. Wholesale revenue increased 5% sequentially and 8% year over year with gains across each of our wholesale markets. Our product portfolio continues to be a powerhouse, as illustrated by the fact that we increased the market share of our house of brands by 150 basis points across our core markets during the quarter. We achieved that growth by effectively selling more of our products into our established accounts as well as opening new ones. We sold into 721 doors during the quarter, up 7% sequentially and 13% year over year.
Our performance at retail was equally strong. Retail revenue increased 5% sequentially and 8% year over year. Transactions across our stores were up 2% sequentially and 7% year over year, marking our fourth consecutive quarter of year-over-year transaction growth. Even more notable was our average order value, which increased 3% sequentially and 1% year over year. We’ve been battling industry-wide basket compression for several years now, so I’m particularly proud of our team for helping move AOV in the right direction.
Delaware remained our strongest growth market last quarter, up 13% at retail sequentially and 26% year over year. With adult use now well established after its one-year anniversary on August 1, Delaware’s retail stores and wholesale business have scaled to be important contributors to both our revenue and brand market share in the Northeast region of the United States. We also saw continued progress across all our stores in Illinois, where our retail sales grew 6% sequentially and 11% year over year, with Metropolis the single largest contributor to that growth.
As I mentioned earlier, there are a number of price promotion, customer experience, and marketing strategies we deployed earlier this year that are continuing to drive our momentum. Chief among them is the continued growth of our Thrive Perks loyalty program. Through the third quarter, we increased membership 31% year to date, and during the quarter once again saw members outspend non-members per transaction. The continued growth of the loyalty program hasn’t just increased revenues; it’s also enabled us to significantly improve the efficiency of our overall marketing investment.
I want to thank our retail sales, marketing, and operations team members contributing to a very strong quarter that saw revenue growth across all markets and all of our business segments. With that, I turn the call over to Mario.
Mario Pinho (Chief Financial Officer)
Thank you, Ryan, and good morning, everyone. Last night we reported third quarter consolidated revenue of 44.2 million, the highest in the company’s history, up 5.5% sequentially and 8.5% year over year. That growth came against a backdrop still defined by wholesale price compression and intense retail competition. Wholesale revenue was 19.5 million, up 5.2% sequentially and 8% year over year. Higher shipment volume added 1.4 million sequentially, while we lost ground on price and volume accounted for roughly 86% of our sequential revenue growth. We are moving significantly more product and that is offsetting lower prices.
Retail revenue was 24.5 million, up 5% sequentially and 8% year on year, our fourth consecutive quarter of year over year growth. As Ryan said, transactions and average order value both rose. That came while retail labor was essentially flat year over year, which is the operating leverage we have been building towards in our stores. A word on Maine: licensing revenue grew 43% sequentially and it’s well under 1% of consolidated revenue. But it shows we can enter a state and reach a third of its licensed stores inside a year without the capital or the fixed cost a plant-touching entry requires. New York is next.
Adjusted gross margin was 40%, flat sequentially and down approximately 140 basis points from 41.4% a year ago. The decline reflects continued wholesale price compression, particularly in Massachusetts, and higher input costs. Direct materials rose 3.2 million and manufacturing overhead roughly 450,000, in part as a result of depreciation expense on new production equipment. Holding margin flat against that pressure is our principal operational focus heading into next year.
Total GAAP operating expenses were 15.9 million, or 36% of revenue against 38% last quarter. Sequentially, expenses grew 130,000 on 2.3 million of incremental revenue, which is why the ratio improved roughly 2 points. When the cost base does not move, the margin on incremental revenue stays in EBITDA. That is the operating leverage we have been building towards. Adjusted EBITDA was 4.7 million, or 10.5% of revenue, up 709,000 or 18% sequentially and down 482,000 or 9% year on year. The year over year decline came despite 3.5 million of revenue growth. We gave back 140 basis points of gross margin and added 1.4 million of operating expenses on a GAAP basis.
Net loss was 3.5 million against 2.9 million a year ago. Operating income of 1.2 million was down from 1.6 million, interest expense rose to 2 million and the tax provision was flat at 2.7 million. The nine-month view is more useful. Our pre-tax loss narrowed slightly to 3.4 million while the tax provision rose 1.1 million to 7.4 million. The entire increase in our year-to-date net loss is related to the impact of 280E. Operating cash flow for the third quarter was 3.5 million against 2.7 million a year ago with capital expenditures of 245,000. We ended the quarter with 10.4 million in cash, up 1.9 million from the second quarter and our strongest position in more than two years. Total debt including finance leases was 81.2 million, down from 82 million sequentially and leverage improved to approximately 4.4 times from 5.2 times.
Let me close on the same four priorities I set last quarter: on distribution, we added doors and grew volume into existing stores; on retail productivity, traffic and average order value both grew on a flat retail cost base; on licensing, Maine reached a third of its state stores in under a year; and on capital discipline, we ended the quarter with less debt and more cash than we started it. A final word on margin: last quarter I said the pressure we were seeing was transitional and that there was a clear path back to margin expansion. This quarter we held adjusted gross margin flat. It’s not progress until the line turns up, but the operating leverage underneath it is real and you saw it in both expense ratio and the step up in adjusted EBITDA. Our objective is unchanged: to convert revenue growth into higher margin, stronger cash generation and better returns on our capital.
With that, I’ll turn the call back to John.
Jon R Levine (President and CEO)
Thanks, Mario. The third quarter of 2026 will be remembered for building on the momentum we achieved during the first half of the year. Our brands continue to attract new consumers and our retail stores are generating new traffic while ensuring our loyal customers keep coming back. That progress has resulted in record revenues and tees us up for a strong future, one that will be enhanced when the additional federal catalysts finally come to fruition, fueling our ability to see many growth opportunities in front of us is our balance sheet, which continues to be among the strongest in the industry.
Looking back, one of the biggest drivers of our balance sheet is the decision I made early on when we were building the company: holding on to our real estate. That decision provided us with assets that are worth significantly more than our current market cap, while also giving us additional borrowing capacity to fund our growth. Operator, you may open the line for questions.
OPERATOR
Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star, then the number one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star-one again. Your first question comes from Pablo Zuanic with Zuanic & Associates. Your line is open.
Pablo Zuanic (Analyst at Zuanic & Associates)
Thank you and good morning, everyone. John or Mario, obviously, congratulations on the results. Very good performance and good momentum. As we look to the fourth quarter, can you talk about tailwinds and headwinds to sales growth and profit margins for the fourth quarter?
Jon R Levine (President and CEO)
Hi, Pablo. Thank you and good morning. I want to be careful and not provide guidance, but I definitely can talk about the factors that we’re seeing that are going to be catalysts for us as well as headwinds. I would say the strength of our brands first and foremost, where we’re seeing transactions hold and even—very interesting—we found out in Delaware, where we think it was a seasonal market, transactions are still holding there. So customers are still coming to our stores and asking for our brands, and that’s kind of driven by our internalization initiatives.
The holiday season obviously is something we’re looking forward to, and we have some good marketing strategies around that to continue to attract new customers, especially on the loyalty side. We believe hemp is going to be a catalyst for us, especially in Illinois, as the ban comes into effect. We should see some of the customers we lost in neighboring states come back to our stores in Illinois. So we think that will be a significant tailwind for us, and just general marketing and promotion—you know, we’ve beefed up our marketing team and we’re really looking at how to leverage our member base and just drive continued stickiness and loyalty.
I would say headwinds are general market conditions. You know, the industry still continues in certain markets to face pricing compression, especially in Massachusetts, which is a big market for us. And, you know, with inflation, we’re seeing high input costs in our production. So I would say those are the ones that will probably play a factor in our profitability and margins.
Pablo Zuanic (Analyst at Zuanic & Associates)
That’s good, thank you. And then just in terms of the brands, I mean, obviously very strong performance on Betty’s—but Betty’s Eddies—but what evidence can you provide that your other brands are resonating with consumers across all your markets? And again, the question is, Betty’s always shows at the very top, like you said, number one in several states, so it has that type of power. But can you say the same thing about some of the other brands in the portfolio, like InHouse and others?
Ryan Crandall (Chief Commercial Officer)
Pablo, this is Ryan. Good morning, and appreciate the question. So thank you for saying the kind words about Betty’s. We’re very proud of what the Betty’s brand continues to do in the states where we operate, and we believe that there’s still headroom on the Betty’s brand as well. That said, Betty’s opens a lot of doors for our brands—all of our brands. Bubby’s Baked continues to lead the baked goods category in each of the states that it operates. Although that’s not as large of a category, I think our innovation is going to drive over-indexing in the category for us within a state, and so that’s Bubby’s. In terms of InHouse gummies, that’s more of a midline good-better-best—that’s more of our good offering on the gummy side—and we continue to see great margin on that product and increased doors with that product as well. So as Betty’s opens the first door, InHouse and these other products continue to keep them open.
Nature’s Heritage, as our premium flower brand, we continue to see progress with that brand in the markets where it operates and it continues to demand a price point that’s above the median average for the products that it offers. So we feel really good about our portfolio. We’re sustaining in some difficult markets and our plan is to continue to increase the market share for each one of our brands in its category.
Pablo Zuanic (Analyst at Zuanic & Associates)
And before I ask my next question, in the case of a New York licensing deal, is it just for Betty’s or for the whole portfolio?
Ryan Crandall (Chief Commercial Officer)
It’s for the whole portfolio.
Pablo Zuanic (Analyst at Zuanic & Associates)
Okay. All right. And the last question regarding Maryland: can you buy new store licenses or bid for the licenses that are being issued? I think you have two stores right now. And the second part of the question: has there been any impact from competitor store openings? It seems the state is actually issuing more licenses now. It had been capped for a while, but now we’ve seen a rise in the number of stores. Thank you.
Jon R Levine (President and CEO)
Morning, Pablo. It’s John. Thank you very much for joining the call again and supporting us and following us every year. I’d like to start by answering your first part about the expansion in Maryland and I can let Ryan talk about the impact. But yes, we would love to be able to expand in Maryland. However, the law on the number of stores and how long you have to hold a license before you can transfer them is five years, and there are no licenses that have been in the adult-use for five years at this time.
But we’re going to watch, and people keep writing programs where they’re going to try to acquire them when the time comes, right? We are talking to groups every day. If there’s an opportunity, we will always look at it. Maryland is a great market and we would love to expand, but at this time we are unable to because of the standing rules and regulations. Ryan.
Ryan Crandall (Chief Commercial Officer)
About 10% year to date to about 120 stores. As that expansion’s happened, that’s been good news for our wholesale business, and we continue to maintain a very high penetration—above 90%—within that state with the available doors. So as they open, we’re getting in them. And then on the retail side, we do have some new competition around the Annapolis area that we’re battling. But we have comprehensive retail strategies across our states that are working, that we’re doubling down on, that we feel very good about going into 2027.
Pablo Zuanic (Analyst at Zuanic & Associates)
That’s good, thank you. And just a quick follow-up regarding Maryland. Understood the five-year, I guess let’s call it lockup period—so people cannot sell their licenses before five years. But can you enter into MSA agreements with some of those stores before the five years, or that’s not allowed either?
Jon R Levine (President and CEO)
Well, people are signing up management agreements and then they have to submit them to the states, but you’re limited on the controls that you’re allowed. So those are being looked at. We’ve made a couple of offers; we just haven’t found the right opportunity. But we will continue to look.
Pablo Zuanic (Analyst at Zuanic & Associates)
Thank you. That’s all for me.
OPERATOR
Your next question comes from Anthony Varel with TDR. Your line is open.
Anthony Varrell (Analyst)
Morning, gentlemen. Congrats on the Q. My first question is regarding M&A. I mean, how are you guys looking about M&A and expanding the brands that you obviously have power with? Do you look at the landscape as wanting to be an acquiree or an acquirer via accretive acquisitions, or looking to merge with a company to, let’s say, build a bigger platform to scale across the country?
Jon R Levine (President and CEO)
Morning, Anthony. It’s Jon, thank you very much for joining the call this morning, and thank you for the question. We’re always open to any opportunity, and I have spoken with many companies, but we’re looking for the best of our ability to bring the share price in, the value to the shareholders first. And if an opportunity does arise, we would absolutely take a look and look at it hard. But we remain very disciplined in our approach, as we always have, to make sure the values that we’re looking at are real.
I mean, most people are still overvaluing their assets. So whether we’re out there trying to buy something, we’re trying to buy it at a price that’s reasonable, not something that’s overvalued, which is still the market, as you know, is overpriced. That’s why it’s very difficult to acquire something right now easily. But we continue to look to build our footprint to get our brand distribution and our retail brand out into as many more states or, in the states that we’re in, expand to the license limits. We’re not looking to do a lot of building of cultivation centers because of the cost or building retail from the ground up. So we’re not looking for paper licenses. We’re looking for cash flow and profitability quickly so that we can build the value of the company.
Anthony Varrell (Analyst)
Thank you for that. And then I guess my next question would be around Massachusetts. I mean, Massachusetts was a contentious issue leading into Election Day. We saw a resounding result to the positive side regarding Massachusetts with No on 8. I mean, it over-indexed 22 points from the baseline of how adult use actually passed in 2016. I mean, any other color from that market and anything that you can share about the state’s current sales in terms of, let’s say, price compression.
And are we finally reaching a floor in terms of pricing around product?
Ryan Crandall (Chief Commercial Officer)
Anthony, this is Ryan. Appreciate the question. You know, yeah, there’s definitely a green wave in Massachusetts. You know, that you mentioned, you know, legalization was at 54% and the final ballot on Question 8 was 75%. So, you know, a very large swing in our voter base over a relatively short period of time in support of cannabis legalization, which is great. Right. We were involved in that strategy here locally, heavily. Not something we necessarily wanted to spend our time on, but as responsible members of this community and the cannabis community in general, you know, we put a lot of effort into that in our stores, and we were very, very pleased to see that happen.
You know, talking to the status of the state, you know, Massachusetts is an incredibly difficult cannabis market to operate. And you know, I think quarter after quarter and year after year, we show that we’re able to perform very well here. And you know, as we look forward to 2027, you know, our retail is continuing to hold and continuing to grow transactions, you know, and our wholesale brands continue to perform very well. You know, as we look to go forward, we’re going to look for our brands to become, you know, larger market share positions in each of their categories.
So we’re looking to expand our brand, but expand our share. And that’s really kind of the name of the game for the wholesale brands, and then the retail brands. It’s all about, you know, execution for our customer, improving their experience and making sure that we’re a better store than our neighbor. So that’s the name of the game for us in ’27. It’s been performing very well for us in Massachusetts.
Anthony Varrell (Analyst)
Thank you. Thank you. And obviously we’ll look for the continued execution in that market. I guess my last question is around margins. I mean, your margins have been historically lower than your peers. However, your margins have been consistent and you do have an emphasis on the wholesale business within the footprint. I mean, how should we be looking at margin on a go-forward basis within the platform? And what’s really driving that gap? And is closing it achievable?
And with that, is it a function of allocating, I guess, more time and resources towards wholesale versus retail, or is that just the way that the platform has been built right now for consistency where you’re at? We’re obviously seeing that with some, with free cash flow starting to drop to the bottom line, and with 280E getting out of the picture, I mean, it’s just going to become even stronger in the quarters to come.
Mario Pinho (Chief Financial Officer)
Hi, Anthony, it’s Mario here. Thanks for your question. I want to maybe provide some context first and then maybe get into your second part, second question. So we have two structural reasons why our margins are lower than our peers. We carry the heaviest wholesale mix in the industry. We’re at 44%, where our peers are significantly less than that because they have just a lot more stores from a footprint perspective. But that’s a deliberate choice for us.
Our strategy is to expand the brand, so we’re focusing more on wholesale, knowing that the margins there are lower. And I would say the second structural factor is the largest markets we’re in, Massachusetts and Illinois, are also where we’re facing the biggest compression issues. Right. So all of our peers are entering some new markets where the adult use is coming into play, where that also is driving lower margins. The second part of your question is can we expand there and can we grow? Definitely, yes. And we’re focusing on what we can control. Right. So I would say our biggest levers are internalization. You know, when we look compared to our peers, we sell about a third of our own products in our stores. We can definitely sell a lot more and drive higher margins. The second one is production efficiency. So we’re investing in production equipment and being more efficient.
From a wholesale perspective, we’re focused on going deeper. With respect to our stores, we’re currently at about 75% penetration. I think we can grow that even more in some markets, but also go deeper, sell more of our products in existing stores. And finally, our licensing initiatives. You know, I mentioned Maine. It’s still small from a revenue perspective, but it’s scaling well. But we’re also seeing it’s our channel that has the highest margins for us.
So as that grows and we introduce New York, we definitely will see some margin expansion there as well.
Anthony Varrell (Analyst)
And I guess as a follow up question, in Illinois, we’ve seen growth in Ohio with hemp getting reined in on the regulatory side. Are you expecting to see a bump in Illinois, let’s say, both on the wholesale and on the retail side as consumers are now choosing regulated—well, the forced decision to choose regulated—channels versus the hemp channels that have been prevalent in Illinois for some time now.
Ryan Crandall (Chief Commercial Officer)
Anthony, this is Ryan. Yeah, I mean, I think a lot is in the future here with regard to what’s going to happen on the hemp side. I think cannabis is, you know, regulated. Cannabis operators can certainly benefit by, you know, some of this hemp stuff getting reined in. And we’re certainly watching it closely. You know, I do think there’s benefit for our stores in Illinois if in fact it does get tightened, but we will see whether or not that’s the case.
Anthony Varrell (Analyst)
Awesome. I will look forward to continuing to look out for the story, continued execution, and once again, congrats on the Q. Thanks a lot, gentlemen.
OPERATOR
That concludes the Q&A session and our webcast. Thank you for your participation. You may now disconnect and have a wonderful rest of your day.
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