One of the world’s front-runners of luxury cannabis devices and specialized vaporization products, Greenlane Holdings, Inc. (Nasdaq: GNLN), today announced financial results for the third quarter ended 30 September 2020.
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In the third quarter of 2020, net revenues were $35.8 million, compared to $44.9 million for the third quarter of 2019, a drop of $9.1 million or 20.3 percent. The market transition is primarily attributed to the introduction of the corporate restructuring plan by Greenlane, in which the firm has purposely shifted away from low-margin nicotine revenues to concentrate on higher-margin goods. Net revenue for the third quarter of 2020 rose 10 percent on a sequential basis from $32.4 million in the second quarter of 2020.
Sales of tobacco products dropped from about $21.1 million in third-quarter 2019 to around $3.5 million in the third quarter of 2020. Isolating the effect on Greenlane’s net revenues of decreased market demand for nicotine drugs, core revenue in the third quarter of 2020 rose 36 percent to $32.3 million relative to $23.8 million in the third quarter of 2019.
In the third quarter of 2020, net sales of Greenlane branded goods rose to about $5.6 million, or 15.5 percent of overall revenue, compared to about $3.4 million in the third quarter of 2019, or 7.5 percent of total revenue.
Greenlane has completely moved to a more simplified and centralized platform with fewer, but bigger, highly automated distribution centers as of the fourth quarter of 2020. With these improvements, the company aims to significantly increase the scalability of the business model of the organization.
Gross profit was $2.5 million in Q3 2020, or 6.9 percent of net revenue, compared to $6.4 million in Q3 2019, or 14.3 percent of net sales. The Organization reported write-offs and modifications of $4.8 million for defective and outdated inventory as a result of those decisions. Otherwise, Q3 2020 gross income will have been $7.3 million, without the effect of these inventory changes, and gross profit margin would otherwise have been 20.4 percent or 610 basis points greater than Q3 2019 gross profit. As it advances its strategic strategy for Greenlane Products at its heart, Greenlane expects total gross profit to increase from the current adjusted levels of 20.4 percent.
In Q3 2020, wages, pensions, and payroll taxes fell by around $1.6 million, or 23.7 percent, relative to Q3 2019, largely due to a net reduction in the rate of equity-based incentives. General and operating costs for Q3 2020 soared by about $5.9 million. In addition to other costs attributable to the company’s corporate improvement efforts that are intended to achieve long-term cost savings, this rise was largely attributed to a non-recurring loss of around $2.2 million related to a portion of an indemnification asset.
The net loss for Q3 2020 was $13.8 million compared to $9.0 million the previous year in the same period. In Q3 2020, the adjusted net loss was $6.9 million, relative to the adjusted net loss for Q3 2019 of $7.5 million. Compared to the adjusted EBITDA loss of $3.4 million in Q3 2019, the adjusted EBITDA loss was $6.3 million in Q3 2020. The following are the meanings of adjusted net loss and adjusted EBITDA and the reconciliation of these measures with the closest GAAP indicator.
To finance the company’s growth plans and future M&A opportunities, Greenlane Holdings, Inc. (Nasdaq: GNLN)continues to aggressively maintain its balance sheet.
