Last week, Greenlane Holdings Inc. (Nasdaq: GNLN) told investors that revenue dropped dramatically when the company delivered its financial results for 2024. The company announced a major restructuring in 2023 and the results of that decision were demonstrated in the numbers for 2024.
Major revenue decline
Revenue for the full year fell to $13.3 million versus 2023’s $65.4 million. The company said the decline was attributed to transitioning the packaging and industrial vaping product lines from a gross sale to a commission structure to preserve working capital. The company also noted that revenues decreased in the Consumer Brands Group due, in part, to restructuring efforts and a shift in strategy to focus on in-house brands that carry a higher margin profile while rationalizing third-party brand offerings, which generated top-line revenue with lower margins.
The company was able to cut costs as general and administrative expenses decreased by approximately $14.4 million, or 59.7%, for 2024, compared to the same period in 2023. The decrease was related to the restructuring effort to right size the company.
On the positive side, operating losses improved by approximately $14.3 million to $11.7 compared to an operating loss of approximately $26.1 million in the prior year period. The company reported a net loss of $16.2 million versus a net loss of $32 million in 2023.
CEO Barbara Sher said, ” We believe that our financial performance directly reflects our ability to manage costs in line with revenue performance. Our operational discipline and commitment to drive toward profitability have been key in navigating the unique challenges our industry faces, and we are now well-positioned to invest in our people and technology.”
Capital raise
The company ended the year with $0.9 million in cash. However, in February, Greenlane closed on a private placement of approximately $25 million of shares. The company said it expected to use the net proceeds to repay existing indebtedness, general corporate purposes and working capital. However, Green Market Report wrote in February that the financing included a “cashless exercise.” This type of exercise allows an investor to exercise their warrant without paying the full cash price. Instead, the investor receives a reduced number of shares. According to the American Bar Association, these deals are considered sweeteners to entice buyers. If Greenlane needed to do this, it signaled to investors that buyers weren’t interested unless they got the extra incentive.
Greenlane said that the money would be enough to fund the company through the second quarter of 2026. However, the stock sold off on the news of the financing and tumbled again on the earnings report. Greenlane was also in danger of being delisted from the NASDAQ. The company managed to regain compliance with the exchange in 2024, but since February, its stock has fallen below $1 once again.
Sher went on to say, “We are starting 2025 with a new base focused on growth across all our revenue lines. Over the past two quarters, my primary objective has been to amplify our strengths, address key challenges, and stabilize the business. Having successfully achieved much of this, we are now forging ahead with our initiatives centered on driving organic growth, optimizing margins and cash flow, and reducing debt. With a strong cash position, we remain focused on initiatives that have the greatest impact on the company. With this sharp focus, I am confident that Greenlane can not only maintain but expand its leadership position.”
Looking ahead
While vapes and smoking accessories had been the company’s main focus, that is changing. Greenlane said it signed a multi-year distribution agreement with Safety Strips Tech Corp to distribute fentanyl, xylazine and drink spike detection test strips in the U.S. The company also signed a multi-year distribution agreement with Veriteque USA, Inc., a manufacturer of the patented SwabTek and Verifique brand of single-use, dry reagent presumptive field tests for the detection of narcotics, explosives, gunshot residue and other harmful substances. The company said it has also streamlined its third-party product portfolio and upgraded its sales and marketing organizations.
This week, Greenlane told investors that it would join the Mainstem B2B procurement marketplace platform. Greenlane’s integration with Mainstem will give MSOs, single-state operators and other brick-and-mortar retailers the ability to create their own catalog of Greenlane products for single or multiple locations.
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