Record Q4 and Full Year Revenue and Adjusted EBITDA
Q4 2022 Net Revenue Increased 26.7% Year-over-Year to $112.1 Million
Full Year 2022 Net Revenue Increased 22.1% Year-over-Year to $405.9 Million
Company Ended Q4 2022 with $74.1 Million of Cash and Cash Equivalents
NEW YORK, March 14, 2023 /PRNewswire/ – Ascend Wellness Holdings, Inc. (“AWH” or the “Company”) (CSE: AAWH.U) (OTCQX: AAWH), a vertically integrated multi-state cannabis operator focused on bettering lives through cannabis, today reported its financial results for the fourth quarter and full year ended December 31, 2022. Financial results are reported in accordance with U.S. generally accepted accounting principles (“GAAP”) and all currency is in U.S. dollars.
- Gross Revenue:
- Q4 2022: Total revenue of $134.5 million increased 0.2% quarter-over-quarter and increased 31.9% year-over-year.
- FY 2022: Total revenue of $487.7 million increased 28.2% year-over-year.
- Net Revenue:
- Q4 2022: Net revenue, which excludes intercompany sale of wholesale products, increased 0.8% quarter-over-quarter to $112.1 million, and increased 26.7% year-over year.
- FY 2022: Net revenue increased 22.1% year-over year to $405.9 million.
- Net Loss:
- Q4 2022: Net loss of $15.1 million compared to net loss of $16.9 million in Q3 2022.
- FY 2022: Net loss of $80.9 million compared to net loss of $122.7 million for FY 2021.
- Adjusted EBITDA1:
- Q4 2022: Adjusted EBITDA was $28.2 million, a 1.5% increase quarter-over-quarter and a 42.7% increase year-over-year. Adjusted EBITDA Margin was 25.1%, a 18 basis point increase compared to the prior quarter and a 282 basis point increase compared to prior year.
- FY 2022: Adjusted EBITDA was $93.2 million, a 17.4% increase year-over-year. Adjusted EBITDA Margin was 23.0%, a 93 basis point decrease compared to the prior year.
- Balance Sheet: As of December 31, 2022, cash and cash equivalents were $74.1 million, and net debt2, which equals total debt less unamortized deferred financing costs less cash and cash equivalents, was $256.5 million.
|1 Adjusted Gross Profit, Adjusted Gross Margin, Adjusted EBITDA and Adjusted EBITDA Margin are a non-GAAP financial measures. Please see the “Supplemental Information (Unaudited) Regarding Non-GAAP Financial Measures” at the end of this press release for a reconciliation of non-GAAP to GAAP measures.|
|2 Total debt less cash and cash equivalents less unamortized deferred financing costs.|
Full Year 2022 Business Highlights
- Opened four dispensaries in the year (East Lansing, MI; Fort Lee, NJ; Scranton, PA; Wayne, PA) increasing total to 24 active dispensaries at year end. Subsequent to the quarter, Ascend opened two additional stores (New Bedford, MA; Grand Rapids, MI).
- Transitioned three stores in New Jersey to adult-use and created one of the highest revenue generating stores in the state (Rochelle Park, NJ).
- Added 69,000 square feet of canopy across the network, expanding total canopy by approximately 40% to 245,000 square feet across six states.
- Expanded portfolio of products throughout the states through in-house brand launches, new product introductions, and partnerships with third-party brands; launched new value brand, Simply Herb in Illinois, Massachusetts, Michigan, and New Jersey; introduced edibles and vapes in New Jersey and edibles in Ohio; expanded partnership with AiroPro, Lowell Farms, and Miss Grass across the portfolio.
- Entered the Pennsylvania market with the acquisition of six dispensary and one cultivation license.
- Signed three additional definitive agreements for accretive acquisitions which upon respective closings, would expand footprint by three dispensaries in Ohio and two dispensaries in Illinois.
Abner Kurtin, Executive Chair of AWH said, “We are thrilled to report record-breaking results for fiscal year 2022. Our growth represented leadership in the industry with revenue increasing 22% to $406 million and Adjusted EBITDA increasing 17% to $93 million. The team worked hard to achieve several significant accomplishments, including the successful transition of New Jersey to adult-use sales, expansion into a new market in Pennsylvania, and the optimization of our existing retail and wholesale footprints.”
Frank Perullo, President and Interim Co-CEO added, “Over the course of the year, we made significant progress in scaling our business; we expanded our cultivation capacity by 40%, bringing the total to 245,000 square feet across six states; grew our number of open and operating dispensaries by 20%; successfully launched a value brand, Simply Herb, to excellent results; and pioneered the cannabis outlet retail model in the US.”
Dan Neville, CFO and Interim Co-CEO stated, “We were pleased to make meaningful progress during the year, supported in part by a $65 million term loan expansion obtained this year. In addition, the Company closed on two successful acquisitions and signed agreements for three more transactions during the year. As we move into 2023, AWH has already demonstrated a strong start and we are now directing our attention to the objective of generating cash flow in the coming year.”
Q4 2022 Financial Overview
Net revenue, which excludes intercompany sales of wholesale products, increased 0.8% quarter-over-quarter to $112.1 million. The sequential increase was driven by growth in retail sales in New Jersey and Pennsylvania, partially offset by lower wholesale sales in Illinois. Net revenue increased 26.7% year-over-year due to the opening of new retail dispensaries, conversion of New Jersey to adult use, and an increase in intercompany and third-party wholesale sales compared to prior year.
Total retail revenue increased to $84.3 million for the fourth quarter of 2022, a 1.8% increase quarter-over-quarter. This was driven by the opening of two dispensaries (Wayne, PA and Scranton, PA) and the conversion of Fort Lee, New Jersey dispensary to adult use. Notably, retail revenue increased 30% compared to Q4 2021.
Gross wholesale revenue in the quarter was $50.2 million, down 2.4% quarter-over-quarter. Net wholesale revenue, after intercompany sales, was $27.8 million, down 2.3% quarter-over-quarter. The decline in net wholesale revenue was driven by third party sales declines in Illinois, partially offset by increases in New Jersey and Massachusetts. Despite sequential pressure, net wholesale revenue increased 17.6% year-over-year, driven by a significant increase in units sold in New Jersey, Massachusetts, and Michigan, partially offset by lower average pricing.
Q4 2022 gross profit was $41.5 million, or 37.0% of revenue, as compared to $36.6 million, or 32.9% of revenue, in Q3 2022.
Q4 2022 Adjusted Gross Profit was $53.5 million, or 47.7% of revenue, as compared to $50.6 million, or 45.5% of revenue, for the prior quarter. Adjusted Gross Profit excludes depreciation and amortization included in cost of goods sold, equity-based compensation included in cost of goods sold, start-up costs included in cost of goods sold, and non-cash inventory adjustments. Adjusted Gross Profit1 dollars increased 5.6% quarter-over-quarter, driven by an increase in gross profit dollar contribution from New Jersey and Massachusetts, as AWH converted retail stores to adult use in New Jersey and increased third-party wholesale profitability in Massachusetts. These increases were partially offset by declines in Illinois wholesale and Michigan retail gross profit. Adjusted Gross Profit dollars increased 42.5% year-over-year, driven by increased utilization at the cultivation facilities compared to the prior year.
Adjusted Gross Profit1 margin on a consolidated-basis increased 217 basis points quarter-over-quarter to 47.7%. This was driven by improvements in utilization and productivity in New Jersey, as the Phase 2 cultivation became operational and adult use sales commenced in Fort Lee, NJ.
Total general and administrative (“G&A”) expenses for Q4 2022 were $36.1 million, or 32.2% of revenue, compared to $34.2 million, or 30.7% of revenue, for the Q3 2022. G&A costs as a percentage of revenue were up as a result of higher sequential compensation related expenses.
Net loss attributable to AWH for Q4 2022 was $15.1 million during the quarter compared to $16.9 million in the prior quarter, representing a $1.8 millionsequential improvement. This was primarily driven by an increase in gross profit and a reduction in equity based compensation sequentially.
Adjusted EBITDA1, which adjusts for tax, interest, depreciation, amortization, equity-based compensation, and other items deemed one-time in nature, was $28.2 million in Q4 2022, a 1.5% increase quarter-over-quarter. Adjusted EBITDA Margin1 was 25.1%, a 18 basis point increase compared to Q3 2022.
Full Year 2022 Financial Overview
Net revenue, which excludes intercompany sale of wholesale products, increased 22.1% year-over-year to $405.9 million, driven by an increase in retail sales, particularly in New Jersey, and an increase in third party wholesale sales in New Jersey and Massachusetts.
Total retail revenue increased to $305.9 million for FY 2022, a 31.9% increase year-over-year. The growth was driven by the opening of four new dispensaries (East Lansing, MI; Fort Lee, NJ; Scranton, PA; and Wayne, PA), conversion of three New Jersey dispensaries to adult-use, and the full year consolidation benefit of two dispensaries in Ohio following close of a transaction.
Gross wholesale revenue increased to $181.8 million, a 22.4% increase year-over-year. Net wholesale revenue, after intercompany sales, decreased 0.5% to $100.0 million. This decline was driven by decreases in third-party sales in Illinois as we faced pricing headwinds and allocated more of our production to support vertical sales, partially offset by increases in sales in New Jersey, Massachusetts, and Michigan.
Full Year 2022 gross profit was $134.6 million, or 33.1% of revenue, compared to $136.0 million, or 40.9% of revenue, for the prior year.
Full Year 2022 Adjusted Gross Profit1 was $185.1 million, or 45.6% of revenue, compared to $153.4 million, or 46.2% of revenue, in 2021. Adjusted Gross Profit1excludes depreciation and amortization included in cost of goods sold, equity-based compensation included in cost of goods sold, start-up costs included in cost of goods sold, and non-cash inventory adjustments. Adjusted Gross Profit1 dollars increased 20.6% year-over-year driven by gross profit dollar increases in New Jersey, Illinois, and Massachusetts as new assets came online compared to prior years. Adjusted Gross Profit1 margin decreased 57 basis points year-over-year to 45.6%, driven by margin declines in Illinois, partially offset by increases in Massachusetts, Michigan, and New Jersey.
Total G&A expenses for 2022 were $137.1 million, or 33.8% of revenue, compared to $116.7 million, or 35.1% of revenue, for 2021 as rent and compensation expenses were increased.
Net loss attributable to AWH for 2022 was $80.9 million, compared to a net loss of $122.7 million for 2021. This improvement was is mainly due to the fact that in the prior year, the Company incurred a $32.0 million non-cash interest expense related to the Company’s IPO completed in May 2021 as well as a $36.5 million settlement expense.
Adjusted EBITDA1, which adjusts for tax, interest, depreciation, amortization, equity-based compensation, and other items deemed one-time in nature, was $93.2 million in 2022. This represents a 17.4% increase year-over-year. Adjusted EBITDA Margin1 was 23.0%, a 93 basis point decrease compared to 2021, driven by the declines in gross margin being compacted by increases in rent and compensation expenses to support expansion of operations.
Non-GAAP Financial Information
This press release includes certain non-GAAP financial measures as defined by the U.S. Securities and Exchange Commission (“SEC”). Reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP are included in the financial schedules attached to this press release. This information should be considered as supplemental in nature and not as a substitute for, or superior to, any measure of performance prepared in accordance with GAAP.
Conference Call and Webcast
AWH will host a conference call on March 14, 2023 at 5:00 p.m. ET to discuss its financial results for the quarter and full year ended December 31, 2022. The conference call may be accessed by dialing (888) 390-0605 with conference ID 91989477. A live audio webcast of the call will also be available on the Investor Relations section of AWH’s website at https://awholdings.com/investors/ and will be archived for replay until 12:00AM Eastern Time on Tuesday, March 14, 2023.