TerrAscend's Q3 Revenue Drops 16% Sequentially To $49M, Reports Net Loss of $14.6M

TerrAscend Corp. TER TRSSF reported its third-quarter financial results Tuesday with net sales of $49.1 million, down by 16% from the previous quarter and up 29% year-over-year.

Third Quarter 2021 Financial Highlights

  • Net loss amounted to $14.6 million, compared to net income of $62.3 million in the same quarter of 2020.
  • Adjusted Gross Profit Margin1 of 46% compared to 59% in Q3 2020 and 61% in Q2 2021.
  • Adjusted EBITDA of $10.5 million compared to $13.2 million in Q3 2020 and $24.3 million in Q2 2021.
  • Adjusted EBITDA margin of 21% compared to 35% in Q3 2020 and 41% in Q2 2021.
  • Cash flow from operations was a negative $1.2 million, compared to a loss of $16.9 million in the same period of last year;
  • Cash balance of $103 million at quarter-end to support growth initiatives.

"I am pleased with the improvements made in Pennsylvania since we withdrew full year 2021 guidance in August,” Jason Wild, executive chairman of TerrAscend, stated. “The ratio of quality flower to trim from recent harvests has increased dramatically. Additionally, THC and Terpene potency has been testing at all-time highs. In New Jersey, we are well prepared for adult use once the state gives us the go ahead. Our New Jersey Apothecarium dispensaries will have some of the best selection and depth of product available in the state at launch. We are building this business for success over the long term and will continue to make decisions with that mindset. For the 4th quarter, we expect to show sequential revenue and adjusted EBITDA growth with these positive trends accelerating into 2022."

Third Quarter 2021 Operational Highlights

  • Previously disclosed yield issues in Pennsylvania have been rectified, with the highest quality flower the facility has ever grown hitting the market in recent weeks.
  • Announced the acquisition of Gage Growth Corp. GAEGF and expect the transaction to close in early 2022, ahead of previous expectations.
  • Signed exclusive agreement to cultivate, manufacture and distribute COOKIES licensed product and bring COOKIES Corners to all three Apothecarium dispensaries in New Jersey, subject to regulatory approval.
  • Purchased an additional 12.5% of the equity of TerrAscend New Jersey, bringing total ownership to 87.5%.
  • Successfully launched premium California edibles brand, Valhalla Confections, in New Jersey.

Subsequent Events

  • Shareholders overwhelmingly approved the acquisition of Gage at the special shareholder meeting held on November 11, 2021.
  • Closed on the purchase of a 156,000 square foot facility in Hagerstown, MD intended for expansion of cultivation and processing in the state, with plans to be operational in Q1 2022, in preparation for potential adult-use legislation.
  • Filed Form 10 registration statement with the SEC to convert from a foreign private issuer and IFRS reporting to U.S. GAAP effective January 1, 2022. The Company is now prepared to list on a US stock exchange once permissible.

Price Action

TerrAscend’s shares traded 2.96% lower at $6.05 per share at the time of writing Tuesday morning.

Photo: Courtesy of Tim Foster on Unsplash

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