TerrAscend Rides Legal Weed Wave Despite Q4 Dip As New Markets Offset Revenue Slide

TerrAscend Corp. TSNDF  reported fourth-quarter and full-year financials ended Dec. 31, 2023. The multi-state operator (MSO) reported $317.3 million in revenue for 2023, a year-over-year sales increase of 28% in 2023, driven in large part by sales in Maryland and New Jersey.

For the fourth quarter, revenue was up 25.5% from the same period a year ago, coming in at $86.6 million.

"We made substantial progress in 2023 across virtually all facets of our business, including significantly improving our margins, transforming our balance sheet, materially lowering our interest expense, and delivering positive free cash flow, all while driving industry-leading revenue growth of 28%. I am extremely pleased that, for the first time in our history, we generated positive cash flow for a full year, with $31.1 million in cash flow from continuing operations and $23.4 million in free cash flow," stated Jason Wild, TerrAscend's executive chairman, who will be attending the upcoming Benzinga Cannabis Capital Conference in Florida on April 16 and 17, 2024.

Fourth Quarter 2023:

• Net Revenue was $86.6 million, an increase of 25.5% year-over-year.
• Gross profit margin was 48.2%, compared to 44.6% in Q4 2022.
• GAAP Net loss from continuing operations was $41.8 million, including $57.7 million in non-cash impairment charges, compared to a net loss of $2.0 million in Q4 2022.
• Cash flow provided by continuing operations was $9.4 million compared to $7.3 million in Q4 2022.

Full Year 2023 Financial Highlights:

• Net Revenue was $317.3 million, an increase of 28.0% year-over-year.
• Gross Profit Margin was 50.3% compared to 41.0% in 2022.
• Despite the strength of Maryland overall, the gross margin in the quarter was down sequentially after equipment malfunctioned, which led to a crop failure.
• In New Jersey, retail sales reportedly declined, however, that was offset by a "more than doubling" of wholesale sales in that state.

Full-year results

For all of 2023, TerrAscend's gross margin climbed 9.3 percentage points to 50.3%, once again driven by revenue gains in Maryland and New Jersey. Optimization efforts in Michigan and Pennsylvania also gave the margin a boost for the year.

"We have the right team, high-performing assets, strong operating results and cash flow, and ample greenfield opportunities to pursue additional growth. 2023 was about operational excellence and strengthening the foundation. 2024 is about expansion by capitalizing on the current environment and entering into attractive states on accretive terms which would not have been possible two years ago,” added Wild.

At the end of the year, the company reported having cash and cash equivalents of $25.3 million. That's down slightly from the $26.8 million on hand as of Dec. 31, 2022.

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Photo: Jason Wild at Benzinga Cannabis Capital Conference