22nd Century Reports Quarterly Results
22nd Century Group reported net revenues of $7.4 million for the quarter that ended Dec. 21, 2023, down from net revenues of $10 million in the comparable 2022 quarter. Gross loss for the fourth quarter was $7.8 million compared with a gross loss of $100,000 in the prior-year period. The loss included a one-time charge of $7.9 million for certain inventory write-down adjustments.
During the quarter, 22nd Century exited its hemp/cannabis operations to fully focus on tobacco harm reduction and contract manufacturing activities. The company substantially reduced operating costs through efficiency initiatives and the hemp/cannabis business sale. It also began new initiatives to increase sales, improve gross margin and increase operating profit in 2024. Moreover, the company started developing new customer engagement strategies to drive additional sales growth for its VLN low-nicotine cigarettes, which have been authorized by the U.S. Food and Drug Administration.
“Our turnaround is progressing rapidly after restructuring a significant portion of the business over the last 120 days as part of our mandate to produce stronger future financial results,” said 22nd Century chairman and CEO Larry Firestone in a statement. “Most importantly, cash use has declined rapidly, from a peak run rate of approximately $15 million a quarter last year to less than $4 million projected in the first quarter of 2024, with continued sequential improvement expected in each quarter throughout 2024 as we move further from prior-period cash obligations.”
Firestone said the company now has two primary areas of focus that both directly pertain to its tobacco market assets. “In the short-term, we will evaluate and profitably grow our contract manufacturing business to cover our operating expenses and mission-critical initiatives around 22nd Century’s very low-nicotine content cigarette technology,” he said. “We will also invest in and grow the VLN brand through sales, customer awareness and capitalizing on a positive regulatory and social environment. With success in these efforts, we believe that 22nd Century can break even by the first quarter 2025.”