[PRESS RELEASE] – NEW YORK, March 12, 2025 – Ascend Wellness Holdings Inc. (AWH), a vertically integrated multistate cannabis operator focused on bettering lives through cannabis, reported its financial results for the fourth quarter and full year ended Dec. 31, 2024. Financial results are reported in accordance with U.S. generally accepted accounting principles (GAAP) and all currency is in U.S. dollars.
Q4 2024 Business Highlights
Maintained focus on reducing expenditures in support of the company’s cost savings transformation initiatives, which have positively impacted both adjusted EBITDA1 of $30.2 million and adjusted gross margin1 of 41.9% in the quarter, ahead of management’s initial expectations.Demand for AWH’s in-house brands, including Common Goods, Simply Herb, Effin’, Ozone, and Royale, improved in the quarter and contributed to a 6% sequential increase in vertical sales as well as improved gross margin.The company has continued to make solid progress in improving its balance sheet and working capital, highlighted by the $30.1 million in free cash flow2 that was generated in the quarter.AWH remains committed to implementing its densification strategy, which is expected to result in a 50% increase in store count in the medium term. The company continues to maintain its data-backed focus on premier locations in high-density population centers in its expansion efforts. Currently, the company has 10 stores in development, including three in Ohio and one in Pennsylvania, as well as four additional partner stores in Illinois, which would bring the total partners in the state to six, and two partner sites identified in New Jersey.Launched Effin’, an effect-based brand focused on delivering targeted effects using minor cannabinoids. The brand has been well received, quickly achieving the top spot in the edibles category at Ascend stores where it is available.Successfully repurchased 11 million shares of Class A common stock, representing over 5% of the then-outstanding shares. The shares were acquired at a significant discount to the closing price on the Canadian Securities Exchange (CSE) as of Dec. 17, 2024. This strategic move was intended to enhance shareholder value, reduce downward pressure on the stock, and drive long-term returns for shareholders.Announced a share buyback program, which began in January 2025. Pursuant to a normal course issuer bid (NCIB), the company may repurchase up to the lesser of: (i) 10,215,690 shares of the company’s class A common stock (common shares), representing approximately 5% of AWH’s then-outstanding common shares; and (ii) $2.25 million worth of common shares, in the open market. The NCIB represents another meaningful step in the company’s ongoing efforts to deliver value to shareholders, highlighting the strong confidence of both management and the board of directors in the company’s undervalued foundation and its future growth potential. Subsequent to year-end, the company repurchased 620,500 common shares via the NCIB program._________________________________1The measure is a non-GAAP financial measure. Please see “Non-GAAP Financial Information” below and “Reconciliations of Non-GAAP Financial Measures (Unaudited)” at the end of this press release.2Free cash flow is a non-GAAP financial measure defined as cash from operations of $35.2 million net of additions to capital assets of ~$5.1 million for Q4 2024 and $73.3 million and $22.5 million, respectively, for the full year 2024. Please see “Non-GAAP Financial Information” below.3 Net debt is a non-GAAP financial measure defined as total debt, net of unamortized deferred financing costs of ~$308.5 million, less cash and cash equivalents of $88.3 million as of Dec. 31, 2024. Please see “Non-GAAP Financial Information” below.
Full Year 2024 Business Highlights
Opened four dispensaries during 2024, including one in Cincinnati and three in Pennsylvania in Monaca, Cranberry and Whitehall, and began supporting two partner locations bringing AWH’s total network to 39 dispensaries. Subsequent to year-end, in February the company re-opened the Detroit dispensary which was temporarily closed during 2024 to expand for adult-use sales.Commenced adult-use sales at five dispensaries in Ohio, achieving an average sales increase of over three times compared to their performance prior to the start of adult-use.Sold more than 187,000 pounds of wholesale products, on a gross basis, and increased wholesale revenue in each of the company’s key markets compared to the prior year.Increased brand recognition across the portfolio in various markets, with AWH attaining the top three Brand House in sales and units across our three key markets (Illinois, Massachusetts and New Jersey combined). The Simply Herb brand rose to the No. 1 selling brand in Massachusetts. Ozone holds the No. 1 spot by units in our three key markets and is No. 2 in sales. The company substantially completed a series of cost savings and transformation initiatives it initiated as part of the company’s commitment to sustainable profitability, pursuant to which the company aims to streamline operations and reduce expenditures by $30 million on an annualized basis. The company is focused on continuous improvement and has identified additional cost savings and efficiency opportunities that it plans to implement throughout 2025.Announced the appointment of three key executives to its leadership team as part of its transformation efforts. The company completed the transition to a tactical, lean leadership team focused on controlling costs while continuing to drive growth, including a reduction of headcount.
Financial Highlights
Revenue:FY 2024:Net revenue increased 8.3% year-over-year to $561.6 million.Retail revenue increased 0.3% year-over-year to $372.2 million.Wholesale revenue increased 28.5% year-over-year to $189.4 million. Q4 2024:Total net revenue declined 4% quarter-over-quarter to $136 million.Retail revenue decreased 3.5% quarter-over-quarter to $90.4 million.Wholesale revenue decreased 5% quarter-over-quarter to $45.6 million.Net Loss: FY 2024: Net loss of $85 million compared to net loss of $48.2 million for FY 2023.Q4 2024: Net loss of $16.8 million compared to net loss of $28.3 million in Q3 2024.Adjusted EBITDA1: FY 2024: Adjusted EBITDA1 was $116.2 million, a 9.1% increase year-over-year. adjusted EBITDA margin1 was 20.7%, a 15-basis-point increase compared to the prior year.Q4 2024: Adjusted EBITDA1 was $30.2 million, representing a 22.2% margin1. Adjusted EBITDA1 increased 20.4% and adjusted EBITDA margin1 increased 450 basis points quarter-over-quarter.Balance Sheet: As of Dec. 31, 2024, cash and cash equivalents were $88.3 million, a sequential increase of $23 million. Net debt3, which equals total debt less unamortized deferred financing costs less cash and cash equivalents, was $220.2 million.Cash Flow: FY 2024: Generated $73.3 million cash from operations in the full year, representing the second full year the company generated cash from operations, and generated $50.8 million in free cash flow2.Q4 2024: Generated $35.2 million in cash from operations in the quarter, representing the eighth consecutive quarter of positive operating cash flow, and generated $30.1 million in free cash flow2 in the quarter.
Management Commentary
“The fourth quarter marked the first full quarter with our new management team in place, and I am pleased with the initial progress we made on our key initiatives—improving profitability, maximizing asset efficiency, and driving cash flow generation,” Chief Executive Officer Sam Brill said. “This was achieved through our team’s success in substantially completing our $30 million in annualized cost savings target, ahead of plan, and with this milestone completed, we have turned our efforts to driving revenue growth. Looking ahead, we are focused on executing our densification strategy, backed by our strengthened balance sheet, that puts us in a strong position to act on exciting retail and wholesale opportunities across our footprint.”
Frank Perullo, co-founder and president, said, “We are building our business for long-term success and are focused on providing patients and consumers with consistent, high-quality products in an approachable and elevated retail experience. This, together with our densification strategy and transformation initiatives, provides us with confidence that we are well-positioned to thrive in this current market and continue to lead as a premier operator in an increasingly dynamic industry.”
Chief Financial Officer Roman Nemchenko said, “Significant progress has been made in strengthening our balance sheet and improving our margins and profitability. This has resulted in a 450-basis-point sequential improvement in adjusted EBITDA margin and $30.1 million in free cash flow generated in the quarter. Additionally, we have taken steps to rationalize our inventory levels through more rigorous purchase planning meant to clear the backlog. While this is an ongoing process, I am proud of the work accomplished so far. It has been a strong start for our new leadership team, and we are just getting started.”
Q4 2024 Financial Overview
Net revenue decreased by 4% sequentially to $136 million, of which 2.3% was attributable to a decline in retail revenue and 1.7% was due to a decline in third-party wholesale revenue. Retail revenue totaled $90.4 million, representing a 3.5% decrease compared to the prior quarter, primarily due to the softening of sales in Illinois, Michigan, New Jersey and Massachusetts resulting from a combination of pricing pressure and volume, partially offset by the contribution of adult-use sales in Ohio that began in the prior quarter and the ramp of new partner stores in Illinois. Third-party wholesale revenue totaled $45.6 million, representing a 5% decrease compared to the prior quarter, attributable to declines in Illinois and New Jersey, partially offset by improvements in Massachusetts.
Q4 2024 gross profit was $46.9 million, or 34.5% of revenue, as compared to $43.7 million, or 30.9% of revenue, in Q3 2024. Q4 2024 adjusted gross profit1 was $56.9 million, or 41.9% of revenue, as compared to $53.6 million, or 37.8% of revenue, for the prior quarter. These increases resulted from an increase in company-produced products sold in AWH retail stores driven by efficiency improvements and expanded production at the company’s New Jersey and Massachusetts cultivation facilities, despite competitive pressures.
Total general and administrative (G&A) expenses for Q4 2024 were $40.8 million, or 30% of revenue, compared to $46.1 million, or 32.6% of revenue, for Q3 2024. The improvement of G&A expenses as a percentage of revenue was primarily due to certain cost-savings initiatives, lower headcount in the current quarter, and the absence of certain one-time expenses recognized in Q3 2024.
Net loss attributable to AWH for Q4 2024 was $16.8 million during Q4 2024, compared to $28.3 million in Q3 2024. The improvements are primarily due to the absence of certain one-time costs recognized in Q3 2024, the contribution of higher margins, and a benefit from certain cost-saving initiatives.
Adjusted EBITDA1 was $30.2 million in Q4 2024, a 20.4% increase quarter-over-quarter, and Adjusted EBITDA Margin1 was 22.2%, a 450-basis-point increase compared to Q3 2024, primarily attributable to the contribution of higher margins and lower G&A expenses.
Cash and cash equivalents at the end of Q4 2024 were $88.3 million and net debt3 was $220.2 million. Cash generated from operating activities was approximately $35 million in Q4 2024, representing the eighth consecutive quarter of positive operating cash flow.
Full Year 2024 Financial Overview
Net revenue increased 8.3% year-over-year to $561.6 million, primarily driven by expansion of the company’s wholesale business. Third-party wholesale revenue increased 28.5% year-over-year to $189.4 million, driven by expansion in New Jersey, Massachusetts and Illinois. Total retail revenue increased modestly by 0.3% to $372.2 million. AWH benefited from a full year of adult-use sales in Maryland, the opening of three new dispensaries in Pennsylvania, the commencement of adult-use sales at five dispensaries in Ohio and supporting two partner locations during the year. These increases were largely offset by a decline in retail sales in New Jersey, Illinois and Massachusetts primarily due to increased competition and pricing pressure in those states, as well as declines in Michigan mainly driven by pricing pressure.
Full-year 2024 gross profit was $184.2 million, or 32.8% of revenue, compared to $155.1 million, or 29.9% of revenue, for the prior year, driven by an increase in company-produced products at AWH retail locations and certain overhead improvements.
Full-year 2024 adjusted gross profit1 was $225.9 million, or 40.2% of revenue, compared to $209 million, or 40.3% of revenue, in 2023. Adjusted gross profit1 dollars increased 8.1% year-over-year. Adjusted gross profit1 margin decreased 8 points year-over-year driven by margin declines in Illinois and Massachusetts cultivation and Michigan retail, offset by a benefit of expanded production at our New Jersey cultivation facility.
Total G&A expenses for 2024 were $179.5 million, or 32% of revenue, compared to $158.7 million, or 30.6% of revenue, for 2023 attributable to certain one-time costs partially offset by the leveraging of the company’s existing infrastructure and certain cost-savings initiatives.
Net loss for 2024 was $85 million, compared to a net loss of $48.2 million for 2023, largely due to the absence of a $22.8 million tax credit recognized in 2023.
Adjusted EBITDA1, was $116.2 million in 2024, representing a 9.1% increase year-over-year. Adjusted EBITDA margin1 was 20.7%, a 15-basis-point increase compared to 2023, primarily driven by a contribution from overall improved margins.
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 or in other information contained herein. 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.
Adjusted EBITDA/margin and adjusted gross profit/margin are non-GAAP financial measures. See “Reconciliations of Non-GAAP Financial Measures (Unaudited)” at the end of this release.
The company defines free cash flow as “net cash provided by operating activities” net of “additions to capital assets,” which are disclosed in the company’s Selected Condensed Consolidated Cash Flow Information (unaudited) included in the financial schedules attached to the company’s press release. The company uses free cash flow measures, among other measures, to evaluate the company’s liquidity and its ability to generate cash flow. The company believes that this is a meaningful financial measure to investors because it provides a view of the company’s liquidity after deducting capital expenditures, which are considered to be a necessary component of ongoing operations. This non-GAAP financial measure should not be considered in isolation of, or as a substitute for, net cash provided by operating activities and may not be comparable to similarly titled measures provided by other companies.
The company defines net debt as total debt, net of unamortized deferred financing costs, less cash and cash equivalents, which components are disclosed in the company’s Selected Condensed Consolidated Balance Sheet Information (unaudited) included in the financial schedules attached to the company’s press release under the captions “Current portion of debt, net,” “Long-term debt, net,” and “Cash and cash equivalents.” The company believes this measure is an important indicator of the company’s ability to service its long-term debt obligations. This non-GAAP financial measure should not be considered in isolation of, or as a substitute for, the most directly comparable GAAP financial measures as an indicator of operating performance or liquidity and may not be comparable to similarly titled measures provided by other companies.
Reconciliations of Non-GAAP Financial Measures (Unaudited)
The company defines “adjusted gross profit” as gross profit excluding non-cash inventory costs, which include depreciation and amortization included in the cost of goods sold, equity-based compensation included in the cost of goods sold, start-up costs included in the cost of goods sold, and other non-cash inventory adjustments. The company defines “adjusted gross margin” as adjusted gross profit as a percentage of net revenue. The company’s “adjusted EBITDA” is a non-GAAP measure used by management that is not defined by GAAP and may not be comparable to similar measures presented by other companies. The company defines “adjusted EBITDA margin” as adjusted EBITDA as a percentage of net revenue. Management calculates adjusted EBITDA as the reported net loss, adjusted to exclude: income tax expense, other (income) expense, interest expense, depreciation and amortization, depreciation and amortization included in cost of goods sold, non-cash inventory adjustments, equity-based compensation, equity-based compensation included in cost of goods sold, start-up costs, start-up costs included in cost of goods sold, transaction-related and other non-recurring expenses, litigation settlement, and gain or loss on sale of assets. Accordingly, management believes that adjusted EBITDA provides meaningful and useful financial information, as this measure demonstrates the operating performance of the business. Non-GAAP financial measures may be considered in addition to the results prepared in accordance with GAAP, but they should not be considered a substitute for, or superior to, GAAP results. The Company’s presentation of these financial measures may not be comparable to similar non-GAAP measures used by other companies. These financial measures are intended to provide additional information to investors concerning the company’s performance.
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