Ascend Wellness Q3 Report: Record Revenue, Adjusted Gross Profit And EBITDA Margin

 Ascend Wellness Holdings, Inc. (CSE: AAWH.U) (OTCQX: AAWH), reported its financial results today for the three months ending September 30, 2022. All results below are in U.S. dollars and compared with the previous quarter.

Q3 Financial Highlights

  • Net Revenue: +14.1% to $134.3M
    • Retail: +9.6% to $82.8M
    • Wholesale: +22.2% to $51.5M
  • Adj. Gross Profit: +14.0% to $50.6M
  • Sales/Admin Exp.: +1.8% to $34.2M
    • as a % of Revenue: declined 30.7% from 34.4%
  • Adj. EBITDA: +32.9% to $27.8M
  • Adj. EBITDA Margin: 25%
  • Net Income (Loss): -20.3% to $(16.9)M
  • Cash on Hand: -99.3% to $91.4M
  • Total Debt: -22.4% to $219.0M

Q3 Operational Highlights

  • Commenced adult-use sales at its Montclair, New Jersey dispensary; and opened its Fort Lee, New Jersey dispensary to medical patients, with plans to welcome adult-use customers by year-end 2022.
  • Opened the kitchen at its cultivation facility in Franklin, New Jersey, which enables Ascend to produce edibles and meaningfully expand its wholesale offering.
  • Announced that it entered into a definitive agreement providing AWH the option to acquire 100% of the equity of Ohio Patient Access which is licensed to operate three medical Ohio dispensaries that are in the process of being built in Cincinnati, Piqua, and Sandusky and will increase AWH's Ohio footprint to five dispensaries, the maximum permitted by the State.
  • Signed two agreements to acquire two dispensary licenses in Illinois from separate sellers that would give the Company the state-imposed cap of ten dispensaries in Illinois.

Management Commentary:

Abner Kurtin, Executive Chairman, said:

  • "AWH continues to be among the industry leaders in revenue growth and Adjusted EBITDA expansion, despite challenging macro and microenvironments.
  • We delivered record revenue, Adjusted Gross Profit, and Adjusted EBITDA margin in Q3 2022, with quarter-over-quarter revenue increasing an impressive 14% while achieving an Adjusted EBITDA Margin of 25%. We benefited from growth in both our retail and wholesale businesses."

Frank Perullo, Interim Co-CEO, and President said: 

  • "I am proud of the entire team for execution and laser focus on our operational objectives across our cultivation, retail, and wholesale operations. The team's hard work enabled us to:
    • successfully open our Fort Lee, New Jersey store;
    • commence adult-use sales at our Montclair, New Jersey store;
    • begin production of edibles at our Franklin, New Jersey cultivation facility;
    • ramp our wholesale capabilities in New Jersey and Ohio;
    • and expand into the Pennsylvania market by opening the first of six planned dispensaries in the state."

Dan Neville, Interim Co-CEO and CFO added:

  • "We were able to achieve a sequential 354-basis-point increase in Adjusted EBITDA margin by:
    • optimizing existing overhead;
    • leveraging our retail organizational structure;
    • and executing on cost saving initiatives
    • Ascend currently has one of the strongest balance sheets in the industry with $91.4 million cash on hand and no near-term maturities, as it approaches positive cash generation from operations."

Stock Performance

Ascend's stock price was been relatively stable during the Q3 period (July, August, September), increased 10% between then and last Friday, November 5th, and has increased 7.5% since then. 

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