Cannabis Earnings: Ascend Wellness Q3 Revenue Increases 13% Sequentially to $94 Million

Ascend Wellness Holdings, Inc. AAWH AAWH, a vertically integrated multi-state cannabis operator, reported its financial results on Thursday for Q3 2021, which ended September 30, 2021.

Q3 2021 Financial Highlights

• Gross Revenue: Total revenue of $105.0 million increased 7.7% quarter-over-quarter and 131.4% year-over-year.
• Net Revenue: (excluding the intercompany sale of wholesale products) increased 13.2% quarter-over-quarter to $94.4 million. Net revenue for the first nine months of 2021 alone was $243.9 million, a 69.7% increase over the company’s full-year 2020 net revenue of $143.7 million.
• Net loss: $13.0 million during the quarter. The loss was primarily driven by elevated interest expense due to one-time prepayments of legacy loans and write-offs of unamortized deferred financing costs.
• Adjusted EBITDA: $23.5 million. Represented a 15.9% increase quarter-over-quarter. Adjusted EBITDA Margin: 24.9% represented a 58 basis point increase compared to the prior quarter.
• As of September 30, 2021, cash and cash equivalents were $204.5 million and net debt was $51.1 million.

“I am pleased with the company’s performance during the quarter as we delivered solid sequential revenue growth and substantial improvements in our Adjusted EBITDA margins,” Abner Kurtin, Ascend's founder and CEO said in a press release.

“Our focus continues to be scaling our asset-base of premier retail locations and state-of-the-art cultivation facilities in top limited license markets. With both our total canopy and number of retail dispensaries poised to meaningfully expand, we remain encouraged about the growth potential of our existing portfolio.”

Q3 2021 Financial Overview

• Total retail revenue increased to $63.5 million for the third quarter of 2021, representing an increase of 9.4% quarter-over-quarter.
• Gross wholesale revenue increased to $41.5 million, representing an increase of 5.2% quarter-over-quarter.
• Q3 2021 gross profit was $41.0 million, or 43.4% of revenue, as compared to $34.5 million, or 41.4% of revenue, for the prior quarter.
• Q3 2021 Adjusted Gross Profit was $43.7 million, or 46.3% of revenue, as compared to $39.6 million, or 47.5% of revenue, for the prior quarter. Adjusted Gross Profit dollars increased 10.3% quarter-over-quarter driven by wholesale production and yield efficiencies, partially offset by lower realized pricing at the company’s Massachusetts and Michigan cultivation facilities.
• Total general and administrative expenses for Q3 2021 were $29.3 million, or 31.1% of revenue.
• Net loss attributable to AWH for the third quarter of 2021 was $13.0 million, or a loss of $0.08 per basic and diluted common share.

Q3 2021 Business Highlights

• During Q3, the Company signed a definitive agreement to acquire a dispensary in Coshocton and Carroll, Ohio.
• In addition, the company closed on a $210 million Senior Secured Term Loan bearing a 9.5% interest rate, lowering its rate of outstanding debt and providing incremental funding for additional investment.
• Subsequent to the quarter, Ascend acquired the property adjacent to its cultivation facility in Franklin, NJ. Ascend intends to expand the existing NJ facility to 150,000 sq. ft of the total canopy by 2023. At the end of Q3, Ascend had approximately 118,000 sq. ft of total canopy across its cultivation facilities in Illinois, Massachusetts, Michigan, New Jersey and Ohio.

Price Action:

Ascend Wellness traded 3.94% higher, at $7.78 per share at the time of writing, Thursday night. 

Image By Ilona Szentivanyi