Total Revenue of $69.9 Million, an increase of 12.9%YoY
Net Loss of $12.4 Million, an improvement of 37.0% YoY
Adjusted EBITDA of $7.6 Million, an improvement of $8.5 Million YoY
Continued Financial and Operational Improvements at our Grower-Processor Operations
Added Ohio as Fifth Vertically Integrated Market
BOCA RATON, Fla., May 12, 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 first quarter ended March 31, 2023 (“Q1 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”).
First Quarter 2023 Financial Highlights1
- Total revenue of $69.9 million, an increase of 12.9% year-over-year
- Gross profit margin was 42.9% of revenue, compared to 30.9% in Q1 2022 and 28.6% in Q4 2022
- Net loss of $12.4 million, an improvement of $7.3 million year-over-year
- Adjusted EBITDA1 of $7.6 million, an improvement of $8.5 million year-over-year and $1.6 million sequentially
- Cash, cash equivalents, and restricted cash of $19.4 million as of quarter end
1 See “Use of Non-GAAP Financial Information” and “Unaudited Reconciliation of Net (Loss) Income to Adjusted EBITDA” below.
First Quarter 2023 Operational Highlights
- Established fifth vertically integrated state-level operation with Beyond Hello™ Cincinnati medical dispensary
- Opened a dispensary in Arlington, Virginia, our fifth medical dispensary in Virginia
- Opened a sixth flower room at Manassas, Virginia facility and a tenth flower room at Scranton, Pennsylvania facility
- Increased sell-through of Jushi-branded products as a percentage of total retail sales across the Company’s five vertical markets from approximately 47.2% in Q4 2022 to approximately 49.6%
Recent Developments
- Strengthened financial position with the closing of a $20.0 million non-dilutive debt financing with FVCbank in April 2023
- Opened 11th flower room at Scranton, Pennsylvania facility
- Announced change of auditor to Macias Gini & O’Connell LLP (MGO) effective April 20th
- Implemented new, optimized retail labor model beginning in Q2, which is expected to significantly reduce labor hour costs
Management Commentary
“In the first quarter, our efficiency and cost savings plan resulted in very encouraging improvements to our margins and profitability,” said Jim Cacioppo, Chief Executive Officer, Chairman, and Founder of the Company. “Our aggressive steps to responsibly right size the business, improve efficiencies and manage costs created an approximate 13.0% year-over-year reduction in operating expenses. In April, we further executed against our cost-savings initiatives with the implementation of our new retail labor model which is expected to meaningfully cut our labor hour costs. Additionally, we continue to make upgrades throughout our grower-processor footprint to drive operational efficiencies for further savings throughout the remainder of the year.”
Mr. Cacioppo continued, “With five state-level vertically integrated operations that are all still ramping up to our desired operating performance, we are increasing our ability to sell-through Jushi-branded products at our own retail network and continuing to grow our wholesale operations. Our wholesale business revenue has nearly doubled year-over-year, while retail sales increased over 7.5% year-over-year. We look forward to the launch of our new high-end flower line, Hijinks, and other innovative product forms across our house of brands to better serve customers and grow profitability of the Company. I would note that our grower-processor operations had significant improvement in gross profit margin fueled by efficiency gains. We realized benefits from cost savings initiatives, ramp-up of new production, and other enhancements made at our Massachusetts, Pennsylvania, and Virginia facilities along with improved retail operating performance.”
Mr. Cacioppo concluded, “In the second quarter, we were pleased to strengthen our capital position with a $20.0 million debt financing to strengthen our balance sheet. Through our cost controls, ramp-up of our grower processors, and our operational discipline our goal is to generate positive operating cash flow for debt pay-downs by the fourth quarter of 2023.”
Financial Results for the First Quarter Ended March 31, 2023
($ in millions)
| Quarter Ended March 31, 2023 | Quarter Ended December 31, 2022 | % Change | Quarter Ended March 31, 2023 | Quarter Ended March 31, 2022 | % Change | |||||||||
| Revenue | $ | 69.9 | $ | 76.8 | (9.0)% | $ | 69.9 | $ | 61.9 | 12.9% | ||||
| Gross profit | $ | 29.9 | $ | 22.0 | 36.4% | $ | 29.9 | $ | 19.1 | 56.7% | ||||
| Operating expenses2 | $ | 32.5 | $ | 161.2 | (79.9)% | $ | 32.5 | $ | 37.3 | (13.0)% | ||||
| Net loss2 | $ | (12.4 | ) | $ | (139.9 | ) | 91.1% | $ | (12.4 | ) | $ | (19.8 | ) | 37.0% |
| Adjusted EBITDA | $ | 7.6 | $ | 6.0 | 26.1% | $ | 7.6 | $ | (0.9 | ) | 968.9% | |||
Revenue in Q1 2023 increased 12.9% to $69.9 million as compared to $61.9 million in the first quarter of 2022 (“Q1 2022”). The year-over-year increase in revenue can be attributed to growth in retail revenue of over 7.5% or $4.4 million primarily due to new dispensary openings from build outs and acquisitions. The Company acquired Apothecarium and NuLeaf in Nevada during March 2022 and April 2022, respectively, and opened new Beyond Hello™ dispensaries in Ohio, Pennsylvania, and Virginia in 2022. The increase in retail revenue was partially offset by declines in revenue in: (i) Illinois, due to the impact of the state of Missouri moving to recreational use, and (ii) Pennsylvania due to increased retail competition and lower retail market prices. The Company ended the quarter with thirty-seven operating dispensaries in seven states, as compared to twenty-nine in six states at the end of March 31, 2022.
Wholesale revenue increased $3.7 million year-over-year primarily due to increased cultivation and processing activities at the grower-processor facilities in Massachusetts, Nevada, and Virginia with the increase in Nevada being attributable to the acquisition of NuLeaf. Jushi-branded product sales accounted for 49.6% of total retail sales in the Company’s five vertical markets, growing from 47.2% in the fourth quarter of 2022 (“Q4 2022”).
Gross profit in Q1 2023 was $29.9 million compared to $19.1 million in Q1 2022, an increase of $10.8 million, or 56.7% year-over-year. Gross profit margin increased to 42.9% compared to 30.9% year-over-year and 28.6% quarter-over-quarter. The improvements in gross profit and gross profit margin were driven by operating efficiencies at the grower-processor facilities in Massachusetts, Nevada, and Virginia, which were partially offset by declines in revenue in Illinois and Pennsylvania driven by new competition and market price compression. Additionally, gross profit and gross profit margin for the prior year were negatively impacted by the sell through of inventory acquired in the acquisitions of Nature’s Remedy, which was acquired in September 2021, and Apothecarium, which had a fair value step up.
Operating expenses for Q1 2023 were $32.5 million, compared to $37.3 million in Q1 2022, a decrease of $4.9 million, or 13.0% year-over-year, demonstrating the effectiveness of the Company’s cost savings and efficiency optimization plan. Salaries, wages, and employee-related expenses decreased due to a reduction in the number of employees as the Company works to right-size the organization. Share-based compensation expense decreased primarily due to lower stock options granted to new employees and management. Depreciation and amortization expense increased primarily related to property, plant, and equipment (“PP&E”) and amortizable intangible assets that were acquired with the 2022 acquisition of NuLeaf and Apothecarium.
Net loss for Q1 2023 was $12.4 million, compared to net loss of $19.8 million in Q1 2022.
Adjusted EBITDA1 in Q1 2023 was $7.6 million compared to $(0.9) million in Q1 2022 and $6.0 million in Q4 2022, representing an improvement of $8.5 million year-over-year and $1.6 million quarter-over-quarter. The increase in Adjusted EBITDA1 is primarily due to expanded sales and realizing the benefits of operational efficiencies.
1 See “Use of Non-GAAP Financial Information” and “Unaudited Reconciliation of Net (Loss) Income to Adjusted EBITDA” below.
2 Q4 2022 Included non-cash asset impairment charge of $122.0 million.
Balance Sheet and Liquidity
As of March 31, 2023, the Company had approximately $19.4 million of cash, cash equivalents and restricted cash. During Q1 2023, the Company paid approximately $4.5 million in capital expenditures. In 2023, the Company expects capital expenditures for new projects to be approximately $13.0 million, of which approximately $6.0 million is discretionary growth capital, as a substantial amount of its expansion projects in Pennsylvania and Virginia were completed in fiscal year 2022. As of March 31, 2023, the Company had approximately $209.0 million in principal amount of total debt, excluding leases and property, plant, and equipment financing obligations. As of May 8, 2023, the Company’s issued and outstanding shares were 196,633,371 and its fully diluted shares outstanding were 310,680,966.
