Ascend Wellness Reports Q3 Revenue Increases 14% Sequentially To $111M

Ascend Wellness AAWH reported its financial results for the three months ending September 30, 2022  

Q3 2022 Financial Highlights

• Gross revenue increased 14.1% quarter-over-quarter and increased 27.8% year-over-year to $134.3 million.
• Net revenue increased 14.1% quarter-over-quarter and 17.9% year-over-year, to $111.2 million.
• Retail revenue grew 9.6% quarter-over-quarter to $82.8 million.
• Gross wholesale revenue grew 22.2% quarter-over-quarter to $51.5 million and wholesale, net of intercompany sales, grew 29.6% sequentially to $28.4 million.
• Net loss of $16.9 million during the quarter, compared to a net loss of $21.2 million in Q2 2022.
• Adjusted EBITDA¹ was $27.8 million, representing a 25.0% margin, a 354 basis point margin expansion quarter-over-quarter.

As of September 30, 2022, cash and cash equivalents were $91.4 million, and net debt² was $219.0 million.

"AWH continues to be among the industry leaders in revenue growth and Adjusted EBITDA expansion, despite challenging macro and microenvironments," said Abner Kurtin, executive chairman. "We delivered record revenue, Adjusted Gross Profit, and Adjusted EBITDA margin in Q3 2022, with quarter-over-quarter revenue increasing an impressive 14% while achieving an Adjusted EBITDA Margin of 25%. We benefited from growth in both our retail and wholesale businesses."

Business Highlights

In August, Ascend began sales at Montclair, New Jersey dispensary, opened its Fort Lee MMJ dispensary and kitchen in Franklin, NJ to produce edibles.

During the quarter, announced a definitive agreement providing AWH the option to acquire 100% of the equity of Ohio Patient Access.

Q3 2022 Financial Overview

Net revenue increased 14.1% quarter-over-quarter, primarily driven by an increase in third-party wholesale sales, the conversion of retail stores to adult-use, and new store openings

Total retail revenue in the third quarter of 2022 was $82.8 million, which represents a 9.6% increase compared to the prior quarter and was driven by: the full quarter benefit of adult-use sales at Rochelle Park, New Jersey; the adult-use conversion of the Montclair, New Jersey dispensary; and increases in same-store sales³ for the portfolio in aggregate.

Gross wholesale revenue was $51.5 million, a 22.2% sequential increase, driven by growth in third-party sales increases in Illinois, New Jersey, and Massachusetts, and intercompany sales increases in New Jersey. 

Q3 2022 gross profit was $36.6 million, or 32.9% of revenue, compared to $33.0 million, or 33.8% of revenue, in the prior quarter. Q3 2022 Adjusted Gross Profit¹ was $50.6 million, or 45.5% of revenue, compared to $44.4 million, or 45.6% of revenue, in the prior quarter. 

Total Q3 2022 general and administrative expenses were $34.2 million, compared to $33.6 million in the prior quarter. 

Net loss in the third quarter of 2022 was $16.9 million, or a loss of $0.09 per basic and diluted share of Class A common stock, which was primarily driven by operating costs and tax expenses.