TerrAscend Reports 3Q 2022 Financial Results: Net Revenue Up 36.4% YoY

On Monday, TerrAscend Corp. TER TRSSF reported its financial results for the third quarter ending September 30, 2022.

"We took decisive action to reduce our operating expenses in the quarter while still generating record sales. These factors combined to drive substantial improvement in adjusted EBITDA margins quarter over quarter and positive cash flow from operations," Jason Wild, executive chairman of TerrAscend said in a press release.

"Our strong brand presence is evidenced by our retail and wholesale results in New Jersey, where we have quickly established ourselves as a leading operator with three of the top ten flower SKUs, including #1. We look forward to deploying our branded strategy in Maryland and Pennsylvania when these states implement adult use."

Third Quarter 2022 Financial Highlights

• Net Revenue increased 3.4% sequentially and 36.4% YoY to $67 million.
• Gross Profit Margin was 36.3%, compared to 35.5% in Q2 2022 and 43.7% in Q3 2021.
• The adjusted Gross Profit Margin was 46.1%, compared to 47.1% in Q2 2022 and 46.1% in Q3 2021.
• Adjusted EBITDA was $11.3 million, an increase of 96% sequentially and 22.8% year over year. Adjusted EBITDA Margin was 16.9%, compared to 8.9% in Q2 of 2022 and 18.8% in Q3 of 2021.
• GAAP Net Loss was $311 million, compared to a net income of $14.2 million in Q2 2022. The firm informed that a $331 non-cash impairment charge "was recorded against goodwill and intangibles for the company's Michigan business."

Cash

Cashflow from Operations was positive $1.5 million, compared to negative $16.1 million in Q2 2022.

Cash and cash equivalents totaled $34.3 million as of September 30, 2022. Subsequent to the third quarter, the company closed on a $45.5 million non-brokered senior secured term loan.

Capital expenditures were $3.6 million in the third quarter, primarily related to the recently completed expansion at TerrAscend's Hagerstown facility. The company also closed on the acquisition of Pinnacle, which included a $10 million cash component. As of November 11, 2022, there were 324 million shares outstanding including 259 million common shares, 13 million preferred shares as converted, and 52 million exchangeable shares.

Third Quarter 2022 Business and Operational Highlights

• Entered into an agreement to exclusively introduce the Cookies brand to Pennsylvania.
• Closed on the acquisition of Pinnacle in Michigan, which includes six dispensary licenses, five of which are currently operational.
• Opened third New Jersey Apothecarium Dispensary in Lodi.
• Opened "Cookies Corners" at all three Apothecarium locations in New Jersey.

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