On May 7, 2024, Ascend Wellness Holdings Inc (AAWH, Financial) released its quarterly earnings, revealing significant financial achievements and operational progress. The company announced its results through an 8-K filing, showcasing a notable year-over-year increase in net revenue and adjusted EBITDA. Ascend Wellness, a vertically integrated multi-state cannabis operator, continues to expand its footprint and enhance operational efficiencies across its markets.
Financial Performance Overview
For Q1 2024, Ascend reported a net revenue of $142.4 million, a 24.7% increase from the previous year, exceeding analyst expectations which projected revenues around $139.79 million. This growth was primarily driven by a robust expansion in the wholesale segment, which saw a 50.2% year-over-year increase. Despite the competitive pressures in retail sectors in New Jersey and Illinois, the company managed a 15.1% increase in retail revenue year-over-year, although it noted a 2.2% decrease quarter-over-quarter.
The company's adjusted EBITDA for the quarter stood at $32.5 million, marking a 39% increase from the same period last year and aligning closely with the adjusted EBITDA margin improvement of 239 basis points year-over-year. This financial metric underscores Ascend's enhanced operational efficiency and profitability, despite the ongoing competitive and regulatory challenges in the cannabis industry.
Operational Highlights and Strategic Expansions
During the quarter, Ascend continued to expand its operational capabilities and market reach. The company opened two new dispensaries and operationalized a second cultivation and manufacturing facility in Massachusetts. These expansions are part of Ascend's strategic initiatives to cater to increasing demand and improve its supply chain efficiencies.
CEO John Hartmann highlighted the company’s operational successes and its impact on the financial health of Ascend, stating,
We've seen tremendous 25% year-over-year growth in revenue and a 39% increase in adjusted EBITDA, complemented by a 239-basis point expansion in our Adjusted EBITDA margin compared to the prior year. This quarter also marks our fifth consecutive period of gross wholesale growth."
Challenges and Market Dynamics
Despite the positive revenue and EBITDA growth, Ascend reported a net loss of $18.2 million for the quarter, which is slightly improved from the $18.5 million loss reported in Q1 2023. The net loss per share stood at $0.09, consistent with analyst expectations of a $0.07 loss per share. The slight variance in loss expectations versus actuals can be attributed to fluctuating market conditions and the competitive landscape in key markets, which also led to the noted retail revenue decline in certain states.
Looking Forward
Looking ahead, Ascend Wellness is optimistic about its financial trajectory for the remaining year. CFO Mark Cassebaum provided forward guidance, projecting revenue growth between 12% and 15% and an adjusted EBITDA increase of approximately 17% to 22% compared to 2023. The company also targets generating cash from operations between $55 million and $65 million for the full year, reinforcing its strong financial foundation and operational strategy.
Ascend Wellness Holdings Inc continues to navigate the complexities of the cannabis market with a clear focus on expanding its operational base, enhancing profitability, and delivering value to its stakeholders. The company's strategic initiatives and robust financial performance in Q1 2024 position it well for sustained growth in the competitive cannabis industry.
Explore the complete 8-K earnings release (here) from Ascend Wellness Holdings Inc for further details.
