Medicine Man Technologies Inc (SHWZ)

[olivernoyes]

In the Ruff Q1'23 Forecasts for Schwazze (5/3/23)
In anticipation of the Q1'23 Earnings Call scheduled for May 10th at 5pm EST, we are providing our own forecast estimates:



SHWZ revenue forecast breakdown for Q1'23:

Retail - New Mexico: ~$11.2MM

Retail - Colorado: ~$23.8MM

Wholesale: ~$3.15MM

Other: ~$0.1MM

Total Q1'23 : ~$38MM



Observations:

While New Mexico is seeing a growth in overall sales. Schwazze's developed R.Greenleaf stores are mostly only witnessing a shift in mix from Medical to Recreational sales which having risen from 48.9% of total Schwazze/R.Greenleaf New Mexico Sales to 60% in March (note: this is similar to what happened with Colorado when it underwent it's Adult Rec opening period). The lack of significant growth in the developed stores is likely a function of competition with the large number of dispensary openings that New Mexico witnessed in the past 12 months.

Newer recently developed/launched Schwazze/R.Greenleaf dispensaries in New Mexico are ramping up steadily and we anticipate seeing this as a primary driver for growth in same-store sales for the coming over the next two quarters (Q2'23 and Q3'23).

As foreshadowing of this impending ramp-up, it is important to note that March witnessed a significant bump in Schwazze New Mexico recreational sales to a record high of $2.4MM sales and overall Schwazze NM sales (i.e., both Rec and Med) hitting a record high of $4.1MM sales.



While overall Q1'23's quarterly sales reflect ~5% lower than Q4'22, we expect to see an uptick in both Q2'23 and Q3'23 as:

Seasonal demand picks up again and

As "new" developed stores start to gain further traction and economies of scale resulting in overall margin improvement





Margins

Gross Profit Margins will likely shrink to a range in the low 50% due to:

Newly established New Mexico dispensaries brought online which are slowly ramping

Price compression from the overall market in both CO and NM

As a result of all of this we should expect further deterioration of Adjusted EBITDA Margin for Q1'23 of a few million dollars (dropping down to between $10MM and $11MM)

We expect these margins to recover by Q3'23 with seasonal demand increases and ramp up of newly developed stores in New Mexico.



Everest Acquisition Impact

Expectations are for the Everest Acquisition to close sometime in Q2'23.

Our expectations on revenue contribution are as follows:

~$1.4MM / month Recreational

~ $500k / month Medicinal

In total, for Q3'23, we expect close to $7MM in Everest retail revenue contributions.



I Hope that helps, and if anyone has any other thoughts (even if it conflicts with my own estimates, feel free to share).

IRR

https://www.reddit.com/r/SHWZ/comments/136jmjf/in_the_ruff_q123_forecasts_for_schwazze_5323/