Jushi Holdings Inc. (“Jushi” or the “Company”) (CSE: JUSH) (OTCQX: JUSHF), a vertically integrated, multi-state cannabis operator, announced certain preliminary financial results for the quarter ended September 30, 2022 (“Q3 2022”). The Company also announced that it is in the process of completing its interim asset impairment assessment and expects to record a non-cash, indefinite-lived asset impairment charge in the range of $35.0 to $49.0 million (after-tax of $24.8 to $34.7 million). All financial information is provided in U.S. dollars unless otherwise indicated and is prepared under U.S. Generally Accepted Accounting Principles (“GAAP”).
Third Quarter 2022 Financial Highlights1
- Total revenue of $72.8 million, an increase of 34.9% year-over-year, and flat as compared to the quarter ended June 30, 2022 (“Q2 2022”)
- Gross profit of $27.7 million, an increase of 18.9% year-over-year and 4.0% as compared to Q2 2022
- Net loss in the range of $52.9 to $62.8 million
- Adjusted net loss2, excluding the after-tax indefinite-lived asset impairment charge, of $28.1 million
- Adjusted EBITDA2 of $0.7 million
- Cash and cash equivalents were $31.1 million as of the quarter end
1 See “Financial Disclosure Advisory” below.
2 See “Use of Non-GAAP Financial Information” and “Reconciliation of Non-GAAP Financial Measures” below
Third Quarter 2022 Operational Highlights
- Opened the 34th and 35th retail locations nationwide and third and fourth Beyond Hello™ dispensary locations in Virginia
- Expanded overall canopy by 11,000 sq. ft. to a total of 80,000 sq. ft. and increased annual biomass capacity by 7,300 lbs. to a total of 45,500 lbs.
- Added nearly 8,000 new patients in Virginia in Q3 2022, compared to approximately 1,950 patients in Q2 2022. In October, the Company added 2,425 new patients
Recent Developments
- Relocated the Beyond Hello™ Westside dispensary in Pennsylvania to Dickson City in the Greater Scranton Area
- Debuted newly formulated cannabis infused fruit chews by Tasteology in Massachusetts, available in three new vegan, gluten-free varieties with upgraded sustainable packaging
- Announced partnership with Drop4Drop, a non-profit organization dedicated to helping alleviate the world water crisis, to fund clean water projects across six countries
- Strengthened Board of Directors and senior leadership with the appointment of Bill Wafford as an Independent Director and Chair of the Audit Committee, and Tobi Lebowitz to Chief Legal Officer and Corporate Secretary
Management Commentary
“We remain focused on executing our strategic initiatives to strengthen and expand our operating platform,” said Jim Cacioppo, Chief Executive Officer, Chairman and Founder of Jushi. “During the third quarter, we bolstered our retail portfolio with the addition of two new stores in Virginia, moved closer to full-scale production at our grower-processor facilities in Pennsylvania and Virginia, and expanded our Jushi branded product portfolio across our operational vertically integrated markets. As we approach the end of the year, we expect to begin realizing the benefits of our efforts as we transform the business from substantially retail only and selling mostly third party product, to a company that is vertically integrated.”
Mr. Cacioppo continued, “As we look out to 2023 and beyond, we anticipate that our sales growth and improved profitability will be driven by the growth of the Virginia market, increased production and sell-through of high quality products produced at our grower-processor facilities, and our portfolio of assets focused in markets that are well positioned to take advantage of future state-level regulatory developments. I am incredibly pleased with the significant progress we have made year-to-date and remain highly confident in our market position as we close out the year.”
Financial Results for the Third Quarter 20221
The following is a tabular summary and commentary of revenue, gross profit, net income (loss), and net income (loss) per share for the three-month periods ended September 30, 2022, June 30, 2022, and September 30, 2021.
($ in millions, except per share amounts)
| Quarter Ended September 30, 2022 | Quarter Ended June 30, 2022 | % Change | Quarter Ended September 30, 2022 | Quarter Ended September 30, 2021 | % Change | |||||||
| Revenue | $ | 72.8 | $ | 72.8 | 0.1 | % | $ | 72.8 | $ | 54.0 | 34.9 | % |
| Gross profit | $ | 27.7 | $ | 26.7 | 4.0 | % | $ | 27.7 | $ | 23.3 | 18.9 | % |
| Net (loss) income | $(52.9) – $(62.8) | $ | 12.1 | $(52.9) – $(62.8) | $ | 39.7 |
Revenue in Q3 2022 increased 34.9% to $72.8 million as compared to $54.0 million in the third quarter of 2021 (“Q3 2021”). The net increase was primarily driven by the Company’s acquisitions in Nevada and Massachusetts, new Beyond Hello™ store openings in Virginia, along with increased sales at existing stores in Virginia. On a sequential basis, revenue was essentially flat, driven by strong contributions from retail sales in Virginia and Massachusetts and increased wholesale sales in Nevada, offset by a decrease in retail sales in Pennsylvania and Nevada.
Gross profit in Q3 2022 was $27.7 million, or 38.1% of revenue, compared to $26.7 million, or 36.7% of revenue in Q2 2022. The increase in gross margin was primarily driven by an increase in the sell-through rate of Jushi’s private branded products, partially offset by increased promotional activity of Jushi branded products in Pennsylvania.
Q3 2022 net loss, including an indefinite-lived asset impairment charge in the range of $35.0 to $49.0 million, was $52.9 to $62.8 million, compared to net income of $12.1 million in Q2 2022. Adjusted net loss2, excluding the after-tax impairment charge, was $28.1 million.
Adjusted EBITDA2 in Q3 2022 was $0.7 million, which was flat as compared to $0.7 million in Q2 2022, and a decrease of $5.5 million compared to $6.2 million in Q3 2021. Adjusted EBITDA benefited from increased sales of Jushi branded products, offset by infrastructure and headcount investments at the Company’s grower processors that continue to have a transitional impact as the business scales, and slower-than-expected growth of wholesale operations.
1 See “Financial Disclosure Advisory” below.
2 See “Use of Non-GAAP Financial Information” and “Reconciliation of Non-GAAP Financial Measures” below.
Balance Sheet and Liquidity
As of September 30, 2022, the Company had approximately $31.1 million of cash and cash equivalents. The Company paid approximately $8 million in capital expenditures during Q3 2022. We expect capital expenditures in the fourth quarter to be in the range of $5 to $15 million, prior to any potential tenant improvement reimbursements or financings, for a total of approximately $55 to $65 million for the full year 2022, subject to market conditions and regulatory changes. As of September 30, 2022, the Company had approximately $209 million in principal amount of total debt, excluding leases and property, plant, and equipment financing obligations. As of November 11, 2022, the Company’s issued and outstanding shares were 195,776,372 and its fully diluted shares outstanding were 290,606,855.
Financial Disclosure Advisory
The Company has not yet completed its reporting process for Q3 2022. The preliminary results presented herein are based on the Company’s reasonable estimates and the information available to the Company at this time and, because of their preliminary nature, in certain cases, the Company has provided ranges, rather than specific amounts. As such, the Company’s actual results may materially vary from the preliminary results presented herein and will not be finalized until the Company reports its final results for Q3 2022 after the completion of its normal quarter end accounting and review procedures, including its interim asset impairment assessment. In addition, any statements regarding the Company’s estimated financial performance for the Q3 2022 does not present all information necessary for an understanding of the Company’s financial condition and results of operations as of and for Q3 2022. The preliminary financial results presented herein was not reviewed by our independent registered public accounting firm.
