Vext Science, Inc. (CSE: VEXT) (OTCQX: VEXTF) released its financial results for the third quarter ending September 30, 2024. Vext reported revenue rose 13% to $8.9 million over last year’s $8 million for the same period. Revenue also increased over the second quarter revenue of $8.4 million.
The company’s acquisitions in Ohio paid off when the state began adult-use sales. Vext owns two dispensaries in the state, which it acquired in February 2024. Initially named Buckeye Botanicals, it now operates as Herbal Wellness Center. Vext also has a binding letter of intent to buy two more dispensaries in the state. In addition to that, the company owns a cultivation and processing facility in the state. The company said in its filing, “After normalizing for consolidation, Ohio sales increased by +3.3% in Q3 2024 compared to Q3 2023. We anticipate Ohio sales will continue to increase as the customer count increases now that recreational sales are permitted.”
Vext also reported that its net losses increased to $2.4 million over last year’s net loss of $1.8 million, but was trimmed from the second quarter net loss of $4.3 million. The company’s cash levels fell dramatically from $8.7 million at the end of 2023 to $2.8 million at the end of the third quarter.
CEO Eric Offenberger said, “Our solid Adjusted EBITDA results reflect both the transition to adult-use sales in Ohio, as well as our focus on maintaining strict cost control. Despite a challenging economic climate and typical third-quarter seasonality and pricing pressures in the Arizona market with the ongoing supply-demand imbalance, we’re pleased to report that our economic unit volumes remain strong. This demonstrates the resilience of our business model and the strength of our customer relationships, positioning Vext favourably with customers as the Arizona market continues to stabilize.”
Ohio pays off
Vext told investors that during the third quarter consolidated Ohio retail locations experienced an increase of +14.2% in total sales compared to the second quarter. The company said in its filing that it is still waiting to complete the acquisition of the Big Perm dispensaries in Ohio. It also noted that the two retail locations also grew in excess of +200% in the third quarter versus the second quarter as a result of the beginning of adult-use sales.
Offenberger added, “As anticipated, Ohio proved to be a key revenue driver this quarter. Vext retail stores performed at or above state averages, resulting in a 14.2% sequential increase in consolidated retail sales driven by higher customer traffic and order volumes. As 2024 ends, our focus remains on maximizing the benefits of our fully vertically integrated footprint in Ohio to support revenue and cash flow growth, while optimizing our presence to reach the state dispensary cap of eight (8), putting us on the path to achieve our financial targets. For the remainder of the year and moving into 2025, we are confident that the continued execution of our strategy and systematic cost management will drive sustained profitability and cash flow, building long-term shareholder value.”
Arizona weakness
The company noted that Arizona, which once represented 83% of the company’s sales now only contributes 63% of the sales. Vext has cut headcount in the stores as sales have been flat. The Arizona market overall has seen store count rise and competition increase. Still, Arizona represents a large portion of the company’s revenue.
