Vireo Health International Inc (OTCMKTS: VREOF) has every reason to bounce back after coming under immense bearish pressure in recent weeks. While a 20% plus slide raises serious concerns, underlying developments paint a picture of a company in a phase of robust growth.
Vireo Health Price Analysis
Strong revenue growth, as well as increasing patient counts and contributions from wholesale revenues streams, affirm the Company’s growth metrics. Vireo Health has also completed a string of strategic acquisitions and commenced construction on many development projects as it continues to pursue opportunities for growth in the cannabis sector.
Amidst the development, the stock has continued to trade in a steep downtrend after breaking out of a tight trading range. A plunge to the $3.20 level calls for a speedy recovery to avert further slides. For the stock to turn bullish and correct higher, then it will have to rise and take out the $3.60 mark, which happens to be the immediate resistance level.
Below the critical resistance level, Vireo Health remains bearish and likely to continue edging lower in continuation of the long-term bear trend. A rally followed by a close above the resistance level should pave the way for the stock to make a run for the $4 mark, above which bulls could push the stock back to 52-week highs.
Vireo Health Background
Vireo Health is a cannabis-focused company engaged in the cultivation, production, and sale of medical cannabis products. The Company is seeking to bring to market the best of medicine, engineering, and science to the cannabis industry. It boasts of a physician-led team of more than 300 employees focused on providing the best in class cannabis products and customer experience.
Q1 Stellar Financial Results
Vireo Health future looks bright amidst the recent plunge in the market. First quarter financial results paint an accurate picture of the Company’s long-term prospects. Supported by an excellent team of professionals, the company has embarked on strategic initiatives, as the race for growth opportunities in the cannabis sector heats up.
Total revenue for the first three months of the year increased 57% to $5.8 million as the Company’s strategic initiatives continued to bore fruit. In addition, Vireo exited the quarter with $7 million in pro-forma revenue from its recently completed acquisitions in Arizona and New Mexico.
Gross profit in the quarter surged to $2.1 million or 37% of revenues, from $1.9 million or 50% of revenue reported a year ago.
“We continued to experience strong revenue growth during the first quarter, with increasing patient counts in Minnesota and New York and contributions from wholesale revenue streams in Maryland and Pennsylvania during the quarter,” said Founder & CEO, Kyle Kingsley, M.D.
In building up on Q1 performance, Vireo Health is planning to launch Green Goods dispensaries in Pennsylvania as it continues to expand its retail footprint in pursuit of sales. The Company expects to exit the year with at least 20 operational cannabis dispensaries across the U.S.
The Company also plans to ramp up its cultivation and processing capacity in Arizona, Minnesota and New Mexico, to take advantage of the growing demand for cannabis products. Plans are also underway to launch new brands and innovative products in multiple state-based markets, as the race for market share in the multi-billion industry heats up.
In addition, Vireo Health has set sights on the Tobacco sector, where it hopes to pursue opportunities for growth. The Company has already secured a united states Patent for the development or less harmful tobacco products infused with cannabinoids as part of the latest push.
“This patent is a component of our strategy to disrupt the tobacco industry and help save lives. As a physician, I am passionate about finding ways to use cannabis to reduce the harmful effects of tobacco. “We look forward to collaborating with research institutions and tobacco companies committed to developing less harmful tobacco products,” Vireo CEO Kyle Kingsley, M.D., said in a statement.
With the new patent, the company should be able to ramp up its operations in Massachusetts, where it is targeting adult-use consumers with healthier and less addictive cannabis products that are alternative to alcohol and tobacco.
Vireo Health is an ideal bounce-back play as a flurry of positive developments justify why the stock deserves a higher valuation. Robust revenue growth and a push to expand the current cannabis product line underscores the Company’s long-term prospects.
A strong rebound from current lows could come calling on investors taking note of the Company’s growth metrics in the burgeoning cannabis sector.
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Disclosure: We have no position in VREOF and have not been compensated for this article.