Medicine Man Technologies Inc (SHWZ)

[StevenRisk]

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SHWZ - Medicine Man Technologies, Inc.

Other OTC - Other OTC Delayed Price. Currency in USD

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In the Ruff Researchyesterday

SEC fillings last week on April 8th, 2022, demonstrate continued internal support and belief in Schwazze Shares:

Both the CEO (Justin Dye) and a Director (Jeff Garwood) of the Company purchased shares from the open market as follows:

Justin Dye, CEO: 68,355 Common Shares
Jeff Garwood, Director: 5,000 Common Shares

SHWZ remains my favorite Tier 2 undervalued cannabis sector company with the following tailwinds behind it this year:

1. Revenues between $220MM to $260MM
2. EBITDA $70MM to $82MM
3. Additional accretive value created from acquisitions pending and to be announced that are not included in the above figures
4. Continued growth driven by New Mexico Rec Market opening on April 1st, 2022
5. Margin enhancement as cultivation/crops reach harvesting this quarter
6. Operating Cash Flow and EPS positive
7. Optionality should government regulations relax constraints (e.g., SAFE, MORE, etc...)

IRR

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Bullish

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3

Thomi5 days ago

CEO filed that he bought 68'355 shares, putting on savings on the table is always a great sign.

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3

jim13 days ago

Phenomenal earnings report. Combined with possible new legislation this should easily be trading above $25-30 a share now.

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71

In the Ruff Research12 days ago

Schwazze announced yesterday (after market close) their Q4 2021 and Full Year 2021 results:

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This included guidance on 2022 targeting Revenues of between $220MM - $260MM and Adjusted EBITDA between $70MM and $82MM.

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This places SHWZ in the top 10 of MSOs based on 2022 Revenue, EBITDA, EBITDA Margin and EPS Estimates.

On an EV/EBITDA and P/E multiple basis, SHWZ is among the most undervalued if not the most undervalued for 2022.

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It's important that the 2022 guidance does not include ANY contributions from acquisitions that have not already been closed (e.g., it does not include pending, unannounced, or future acquisitions).

It is fair to say there will be significant numbers of acquisitions which should close by Year-end which will boost these numbers to the high-end of estimates (if not higher).

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The Company has seen a recent recovery in its share price but has room to grow significantly as it returns to a post-Covid world where it will begin to meet with investors at roadshows, conferences and meetings now that it has recently uplisted to the NEO exchange.

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I would not be surprised if the company closed out the year closer to $275MM and $85MM on pro forma revenue and EBITDA basis as it continues to execute on it's M&A pipeline strategy.

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Historically the EBITDA to operating cash flow conversion rate has been approximately 45%, which would translate to approximately $34MM in 2022 operating after-tax free cash flows. Of course, this will vary based on a variety of factors including: product mix and wholesale/retail mix.

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The Company has `approximately 144MM fully diluted shares outstanding (which excludes ~9MM warrants held by Justin/Dye Capital which are significantly out of the money and should expire unexercised in the next six months; and also excludes 42.4MM in Convertible Debt Shares since it is treated as Debt).

The breakdown of the approximate 144MM is as follows:

52.4 million shares of common stock outstanding

78.3 million shares of preferred converted as of 12/31/21

8 million warrants outstanding (out of 17MM but ~9MM which is Justin Dye and will expire shortly out of the money since the strike price is $3.5/share)

5.4 million of vested options (out of 9.8MM granted)

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With Net Debt of approximately $122MM, this implies an enterprise value of $423MM as of today.

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This translates to the following:

a. 2022 Adjusted EBITDA Multiple of between 5x to 6x.

(NOTE: Peer group average is closer to 10x)

b. Between ~13% to ~15% After-tax Operating Free Cash Flow Yield

(Note: Market average is closer to 5 to 6%)

Additionally, the above does not include the benefits of any additional acquisitions (one of which has already been announced and not closed yet, and more to come during this calendar year).

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As a result, I narrow and maintain my 12-month Price Target to between $3.5/share with potential upside based on future acquisitions which will likely be accretive.

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As always, you should do your own due diligence, make your decisions, and invest at your own risk.

Happy Investing,

IRR

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Bullish

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7

Lee12 days ago

The analyst firm that downgraded SHWZ should be put on the bench, and fed warm soup via spoon, from Nurse Rached, from flying out of to coocoo's nest.

Bullish

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41

David19 days ago

Giddy up !!!

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4

patrick19 days ago

Looks like listing on the neo is a good move.

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BWinston19 days ago

Earning report soon and New Mexico Rec opening up in April.

So lots of news on the front burner.

I would not be surprised if they are being scrutinized by Trulieve and AYR.

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Marillionaire12 days ago

Here is a link for monthly sales out of Colorado , looks like its returning to pre scamdemic levels of sales
https://docs.google.com/spreadsheets/d/1wE7Z_1q2zxL7-kP0AqlUvL731U3Aui1l/htmlview

Marijuana_Sales_2014_To_Date_Report.xlsx - Google Drive

docs.google.com

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1

BWinston27 days ago

How about a 4th quarter announcement as to when earnings will be released?

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11

Ilki2 months ago

green in a sea of red today. Very nice to see; we may be finally reaching a turning point. I said previously that I thought 1.50 was the bottom and looks like it may have been correct. Here's hoping.