STMH - Stem Holdings (STMH)(STEM:CA) - Fiscal First Quarter 2022 Results
1QFY22 Results. Stem reported net revenue of revenue of $4.2 million compared to $5.3 million last year. The sales decline reflects a decrease in sales resulting from general market conditions. Stem reported a net loss of $4.1 million, or $0.02 per share, for the quarter, including $795,000 of non-cash impairment charges, a $1.75 million loss from discontinued operations, and a $1.7 million gain from the change in the fair value of warrant liability. In 1Q21, Stem recorded a net loss of $3.2 million, or $0.05 per share. Outstanding shares increased to 230.2 million from 69.7 million.What's Next? Interim CEO Hubbard continues to work through putting the Stem house in order, in our opinion, with an ultimate goal of focusing on just the California and Oregon businesses. Ultimately, we believe Stem either needs to get bigger, which would require additional capital, or sell to a larger entity. Which way the Company will go is uncertain at this time, but we believe Stem does have attractive assets in those markets.Balance Sheet. At the end of December, Stem had $3.3 million of cash and $1.3 million of working capital. Current debt consists of $2.9 million of convertible notes and $329,000 of short-term notes. Long term debt was $2.1 million. Cash used in operations from continuing operations in the quarter totaled $2.3 million, up from $875,000 last year. Updated Projections. As we noted in previous reports, the California and Oregon markets are feeling the effects of the post COVID highs. With Driven behind the Company, we are flat sequential revenue of $4.2 million for 2Q22, with a loss of $4.0 million, or $0.02 per share. We projected incremental improvement during 2H22, with full year revenue of $17.9 million and a loss from continuing operations of $13.2 million, or $0.06 per share.Maintaining Market Perform. With the Company's future still in a state of flux, we are maintaining our Market Perform rating. We believe the Company has an attractive position in the Oregon market and a solid performer in its California location but it is unclear what the outcome of the Company's other holdings will be nor its competitive advantage over the increasing number of MSOs. Read More >>