Gross Profit of $30.6 Million, Representing an Improvement of $3.9 Million YoY, Gross Profit Margin of 46.0%
Net Loss of $14.0 Million, Compared to Net Income of $12.1 Million in Q2 2022 and Net Loss of $12.4 Million in Q1 2023
Adjusted EBITDA of $12.6 Million, Representing Growth of $12.1 Million YoY and $5.0 Million QoQ, Adjusted EBITDA Margin of 19%
Continued Progress on Cost Savings and Efficiency Optimization Initiatives
Jushi-Branded Product Sales Continued to Approach Nearly Half of Total Retail Revenue YTD across the Company’s Five Vertical Markets
BOCA RATON, Fla., Aug. 11, 2023 (GLOBE NEWSWIRE) — Jushi Holdings Inc. (“Jushi” or the “Company”) (CSE: JUSH) (OTCQX: JUSHF), a vertically integrated, multi-state cannabis operator, is pleased to announce its financial results for the second quarter ended June 30, 2023 (“Q2 2023”). All financial information is unaudited and provided in U.S. dollars unless otherwise indicated and is prepared under U.S. Generally Accepted Accounting Principles (“GAAP”).
Second Quarter 2023 Financial Highlights1
- Total revenue of $66.4 million
- Gross profit margin was 46.0%, compared to 36.7% in the second quarter ended June 30, 2022 (“Q2 2022”) and 42.9% in the first quarter ended March 31, 2023 (“Q1 2023”)
- Net Loss of $14.0 million, compared to net income of $12.1 million in Q2 2022 and net loss of $12.4 million in Q1 2023
- Adjusted EBITDA1 of $12.6 million, an improvement of $12.1 million year-over-year and $5.0 million sequentially
- Cash, cash equivalents, and restricted cash of $32.1 million as of quarter end
1 See “Use of Non-GAAP Financial Information” and “Unaudited Reconciliation of Net Income (Loss) to Adjusted EBITDA and Adjusted EBITDA Margin” below.
Second Quarter 2023 Operational Highlights
- Strengthened balance sheet through a $20.0 million non-dilutive debt financing with FVCbank
- Attained approximately 46.5% in Q2 2023 and approximately 47.9% YTD sell-through of Jushi-branded products across the Company’s five vertical markets
- Achieved reduction of over 50% in retail labor hours relative to last year’s peak following the implementation of an optimized retail labor model in Q2 2023
- Filed for the employee retention credit with the Internal Revenue Service in the amount of $10.1 million
Post Quarter-End Developments
- Increased operating performance at Pennsylvania, Virginia, and Massachusetts grower-processors with additional expected operating efficiencies to be achieved in the second half of the year
- Expecting to launch Hijinks, our new premium flower brand with improved genetics, in multiple states as part of approximately 15 new SKUs being launched in the second half of the year
- Starting in July 2023, began making quarterly principal payments of approximately $2.4 million on the Company’s first lien financing with Sunstream Bancorp Inc. as well as pursuing several opportunities to continue debt reduction
- Continuing expansion of our retail footprint in Virginia, with expected opening of Woodbridge, VA by the end of August 2023, the sixth Beyond HelloTM medical cannabis dispensary in the state
- Supporting the positive momentum surrounding the Pennsylvania bipartisan adult-use bill under active consideration
Management Commentary
“I am pleased to report the continued improvement in our profitability as we aggressively execute our cost savings and optimization initiatives across our national footprint, driving a meaningful reduction in operating expenses year-over-year,” said Jim Cacioppo, Chief Executive Officer, Chairman, and Founder of Jushi. “The significant enhancements we have made in our grower-processor facilities in Pennsylvania and Virginia have enabled us to operate more efficiently on a larger scale with increased capacity, resulting in expanded margins and wholesale revenue growth. Additionally, we have seen meaningful product quality improvements across our portfolio of brands. Jushi-branded product sell-through has remained steady across our vertical markets, representing nearly half of total retail sales. Sales are expected to increase with the Woodbridge, Virginia store opening and two Pennsylvania stores reopening as well as the launch of new, competitive, higher margin products, such as the anticipated introduction of our Hijinks brand in multiple states in the second half of the year.”
Mr. Cacioppo continued, “Notably in the second quarter, gross profit increased approximately $613 thousand sequentially, and Adjusted EBITDA grew by $12.1 million year-over-year and sequentially by approximately 66%, achieving an Adjusted EBITDA margin of approximately 19%. Our results for the quarter reflect the strides we have made toward long-term, reliable profitability as we work to deliver sustained improvements in our fundamentals. With rigorous cost controls and robust operational discipline, we believe we are positioned to achieve our goal of generating positive operating cash flow within the next few quarters.”
Financial Results for the Second Quarter Ended June 30, 2023
($ in millions)
| Quarter Ended June 30, 2023 | Quarter Ended June 30, 2022 | % Change | Quarter Ended June 30, 2023 | Quarter Ended March 31, 2023 | % Change | |||||||||||
| Revenue | $ | 66.4 | $ | 72.8 | (8.7 | )% | $ | 66.4 | $ | 69.9 | (4.9 | )% | ||||
| Gross profit | $ | 30.6 | $ | 26.7 | 14.6 | % | $ | 30.6 | $ | 29.9 | 2.0 | % | ||||
| Operating expenses | $ | 27.2 | $ | 38.7 | (29.9 | )% | $ | 27.2 | $ | 32.5 | (16.4 | )% | ||||
| Income (loss) from operations | $ | 3.4 | $ | (12.1 | ) | 128.2 | % | $ | 3.4 | $ | (2.5 | ) | 235.4 | % | ||
| Net income (loss) | $ | (14.0 | ) | $ | 12.1 | (216.3 | )% | $ | (14.0 | ) | $ | (12.4 | ) | (12.8 | )% | |
| Adjusted EBITDA | $ | 12.6 | $ | 0.5 | 2317.6 | % | $ | 12.6 | $ | 7.6 | 66.0 | % | ||||
Revenue in Q2 2023 was $66.4 million as compared to $72.8 million in the second quarter of 2022. The year-over-year decrease in revenue can be attributed to a modest decline in retail sales due to the closure of three underperforming stores, in addition to headwinds in: (i) Illinois, due to the impact of the state of Missouri moving to recreational use, and (ii) Nevada and Pennsylvania, due to increased competition. The decrease in retail revenue was partially offset by new dispensary openings in Virginia and Ohio. The Company ended the quarter with thirty-four operating dispensaries in seven states, as compared to thirty-three in six states at the end of June 30, 2022. Additionally, Jushi-branded product sales grew to approximately 46.5% of total retail sales in the Company’s five vertical markets in Q2 2023.
Wholesale revenue increased $1.3 million year-over-year, primarily due to continued operational improvements and increased efficiencies at our grower-processors in Massachusetts and Virginia.
Gross profit in Q2 2023 was $30.6 million compared to $26.7 million in Q2 2022, an increase of $3.9 million or 14.6% year-over-year. Gross profit margin increased to 46.0% compared to 36.7% in Q2 2022 and 42.9% in Q1 2023. The improvements in gross profit and gross profit margin were driven by operating efficiencies at the grower-processor facilities in Massachusetts and Virginia, which were partially offset by market price compression and competition in Illinois, Nevada, and Pennsylvania.
Operating expenses for Q2 2023 were $27.2 million, compared to $38.7 million in Q2 2022, a decrease of $11.6 million or 29.9% year-over-year, demonstrating the continued effectiveness of the Company’s cost savings, increased efficiency, and optimization plan. Increased savings were comprised of a decrease in the number of employees as the organization is right-sized, a reduction in retail labor hours following the implementation of a budgeted retail labor hour model, and a decrease in share-based compensation reflecting lower value of share-based compensation grants as well as forfeitures of unvested equity awards. Prior year included costs related to the Company’s transition to GAAP reporting and SEC registration.
Net loss for Q2 2023 was $14.0 million, compared to net loss of $12.4 million in Q1 2023, and to net income of $12.1 million in Q2 2022.
Adjusted EBITDA1 in Q2 2023 was $12.6 million compared to $0.5 million in Q2 2022 and $7.6 million in Q1 2023, representing an improvement of $12.1 million year-over-year and $5.0 million quarter-over-quarter.
1 See “Use of Non-GAAP Financial Information” and “Unaudited Reconciliation of Net Income (Loss) to Adjusted EBITDA and Adjusted EBITDA Margin” below.
Balance Sheet and Liquidity
As of June 30, 2023, the Company had approximately $32.1 million of cash, cash equivalents and restricted cash. In 2023, the Company expects total commitments for capital expenditures to be approximately $10.0 – $12.0 million, of which the majority is for maintenance capex as a substantial amount of expansion projects in Pennsylvania and Virginia were completed last year. As of June 30, 2023, the Company had approximately $229.4 million in principal amount of total debt, excluding leases and property, plant, and equipment financing obligations. As of August 7, 2023, the Company’s issued and outstanding shares were 196,631,598 and its fully diluted shares outstanding were 312,432,357.
