Stem Holdings, Inc. d/b/a Driven By Stem Announces Record Sales and Gross Margin for the Third Quarter

Stem Holdings, Inc. d/b/a Driven by Stem (OTCQX: STMH) (CSE: STEM) (the “Company” or “Stem“), the first multi-state, vertically integrated Farm-to-Home^™ (F2H) cultivation and technology omnichannel cannabis company featuring a proprietary Delivery-as-a-Service (DaaS) marketplace platform, today reported results for the third fiscal quarter ended June 30, 2021. Stem reported third quarter record gross sales of US$12.4 million and net sales of US$10.6 million, a 104% increase and 103% increase, respectively, over the prior year’s US$6.1 million gross sales and US$5.2 million net sales. Gross margin improved 7.6% to 41.8%, reflecting improvements in productivity, mix, and synergies from the Company’s acquisition of Driven Deliveries, Inc.

“I am proud of our results, and of our team which is executing our robust four-point plan for growth,” stated Adam Berk, Chief Executive Officer. “We are building our footprint with a strong ongoing focus on cost reductions, operational excellence, and customer acquisition and retention to drive topline sales and margin improvement as we did this quarter,” he continued. “Most importantly, we are uniquely connecting our brands, products and delivery services with the cannabis community from Farm to Home™ for long-term stability. We expect to achieve longer-term benefits that will build value for our shareholders as we invest in organic and acquisitive growth,” Berk concluded.

Stem is also reporting a 19% increase in total dispensary sales, a significant outperform to market particularly in Oregon which grew at 7% in the same period. This reflects continuous improvement initiatives and emphasis on customer service. This effort dovetailed with the launch of the company’s Budee™ delivery platform in Oregon which occurred on August 9, 2021. A customized app was built from front-to-back for this official launch, and Budee™ is now anchored by Stem’s TJ’s on Powell dispensary servicing the Greater Metro Portland area. The Company expects that Budee™ will expand to cover the majority of Oregon beginning with the Eugene metro in October 2021. In addition, Budee™ continues to increase its penetration of the California delivery market where it originated. It now covers 92% of that state’s population particularly in areas where there is high demand and a low density of dispensaries.

Stem also expects to launch its first dispensary in Michigan in September 2021, which will be coupled with Budee™ delivery, as the next step in the Company’s “Get Ready” retail expansion strategy.

As Stem builds its Farm-to-Home™ infrastructure with vertical integration from cultivation to delivery, the Company has also invested in expanding its canopy for high-quality cannabis growth, particularly at its Mulino, Oregon farm and its newest facility in Springfield, Oregon. All five Stem cultivation facilities in Oregon are growing core and new genetics to delight customers and build loyalty. Stem’s extraction lab which now includes solventless extraction is supporting both Stem’s edibles and concentrates, two sectors that are both growing and margin-accretive. Stem’s products are now sold in over 240 dispensaries outside of Stem branded stores.

Stem will host a conference call to discuss the financial results on Tuesday, August 17, 2021 at 8:00 am as previously announced.

Conference Details

Management plans to host a conference call to discuss the financial results on Tuesday, August 17, 2021 at 8:00 a.m. EDT.