TerrAscend Q1 Revenue Soars 42.8% YoY, But Net Loss Also Higher

TerrAscend Corp. TER TRSSF reported its financial results for the first quarter that ended March 31, 2023.

"Despite a challenging environment, revenue in the first quarter increased 42.8% year-over-year, gross margins significantly improved by 420 basis points sequentially to 48.8% and, importantly, we generated positive free cash flow of $5.9 million," Jason Wild, executive chairman of TerrAscend stated.

First Quarter 2023 Financial Highlights

  • Net Revenue was $69.4 million, an increase of 0.6% sequentially and 42.8% YoY.
  • Gross Profit Margin was 48.8%, compared to 44.6% in Q4 2022 and 32.1% in Q1 2022.
  • Net loss amounted to $19.2 million, comapred to a loss of $13.8 million in the same quarter of 2022.
  • Adjusted Gross Profit Margin1 was 49.0%, compared to 45.3% in Q4 2022 and 40.3% in Q1 2022.
  • GAAP Net loss from continuing operations was $19.2 million, compared to $2.0 million in Q4 2022 and $13.8 million in Q1 2022.
  • EBITDA from continuing operations1 was $6.1 million, compared to $30.0 million in Q4 2022 and $1.1 million in Q1 2022.
  • Adjusted EBITDA from continuing operations1 was $12.2 million, compared to $12.2 million in Q4 2022 and $4.9 million in Q1 2022.
  • Adjusted EBITDA Margin from continuing operations1 was 17.6%, compared to 17.7% in Q4 2022 and 10.1% in Q1 2022.
  • Cashflow provided by (used in) continuing operations was $8.4 million compared to $7.3 million in Q4 2022 and ($18.8) million in Q1 2022.
  • Free cash flow was a positive $5.9 million compared to ($6.9) million in Q4 2022 and ($23.0) million in Q1 2022.
  • Cash and Cash Equivalents totaled $32.9 million as of March 31, 2023, as compared to $26.2 million as of December 31, 2022.

"The following financial measures are reported as results from continuing operations due to the shutdown of the licensed producer business in Canada, which is reported as discontinued operations for all of 2022," per an official announcement.

First Quarter 2023 Financial Results: Net revenue grew 0.6% sequentially and 42.8% year over year, driven by strong performance in New Jersey and the Allegany dispensary acquisition. Moreover, the gross margin improved to 48.8%, driven by increased yields and better capacity utilization. G&A expenses decreased, resulting in a net loss of $19.2 million. Adjusted EBITDA was $12.2 million, representing a 17.6% margin.

"This was our sixth consecutive quarter of sequential revenue growth and our third consecutive quarter with positive and increasing cash flow from operations," said Wild.

Cash and cash equivalents increased to $32.9 million. Total shares outstanding were 351 million, including common, preferred, and non-voting shares, with warrants and options at $4.33.

First Quarter 2023 Business and Operational Highlights

  • The company applied for listing on the Toronto Stock Exchange (TSX)
  • Ziad Ghanem promoted to CEO
  • It launched Gage branded products in Maryland and partnered with The Hoffman Centers for free expungement services in New Jersey.
  • Grand opening of 18th Michigan retail location at Lemonnade Center Line
  • Jeroen De Beijer was appointed as chief people and culture officer
  • Launched adult-use cannabis sales at Cookies Detroit retail location
  • Closed acquisition of Allegany Medical Marijuana Dispensary (AMMD)
  • Multi-year agreement with Wana for product introduction in New Jersey and Maryland

Subsequent Events: Expanded internal reorganization plans for TSX uplisting. Expanded partnership with Cookies for genetics cultivation and manufacturing in Maryland. Increased ownership in Cookies Retail Canada Corp to 95%.

"2023 will show substantial revenue growth. We operate in a number of attractive states that are converting to adult use, with Maryland starting on July 1st. While we would like to see the industry on stronger footing overall, we do believe that the distressed environment will present opportunities for us to acquire assets that could drive significant additional profitability for the Company," concluded Wild.

Price action: On Thursday evening, TRSSF shares closed at $1.67 per share trading 6.70% lower.

Photo: Courtesy Of Pepi Stojanovski On Unsplash

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Posted In: CannabisEarningsNewsPenny StocksSmall CapMarketsAllegany Medical Marijuana DispensaryJason WildpremiumTerrAscend Corp.Toronto Stock ExchangeZiad Ghanem
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