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AYR Wellness Inc. (AYRWF), a constituent in the MunAiMarkets American Cannabis MSO Stocks Index, reported financial results for the third quarter (Q3) ended September 30th, 2024 today. Unless otherwise noted, all results are presented in U.S. dollars and in comparison to the previous quarter.

Q3 Financial Summary 

• Revenue: DOWN 2.6% to $114.4M
• Adj. Gross Profit: DOWN 0.5% to $60.5M
  • (Gross Profit Margin is the profit remaining after subtracting the cost of goods sold from revenue. A high gross profit margin indicates that a company is successfully producing profit over and above its costs.)
  • as a % of Revenue: UP to 52.9% from 51.7%
• Net Profit (Loss): Loss DOWN to $(1.4) from $(7.7)M
  • (Net profit margin, or simply net margin, measures how much net income or profit a company generates as a percentage of its revenue. The net profit margin illustrates how much of each dollar in revenue collected by a company translates into profit. A higher margin reflects the cash profit generated by the company's operations.)
  • as a % of Revenue: DOWN to (1.2)% from (6.6)%
• Adj. EBITDA: UP 1.6% to $28.4M
  • (Adjusted EBITDA, or Earnings Before Interest, Taxes, Depreciation, and Amortization, represents the cash profit generated by the company's operations excluding non-recurring, irregular, and one-time items such as unrealized gains or losses; non-cash expenses such as depreciation and amortization; litigation expenses; gains or losses on foreign exchange; goodwill impairments; non-operating income; and share-based compensation. A higher margin reflects the cash profit generated by the company's operations.)
  • as a % of Revenue: UP to 24.9% from 21.9%

Q3 Operational Highlights

• Steven M. Cohen was appointed interim Chief Executive Officer, replacing David Goubert, who stepped down as CEO and President. The Board is currently conducting a search for a permanent CEO and has retained True Search, a global recruiting firm, to lead the search.
• Received conditional approval to serve as a pharmaceutical processor by the Virginia Cannabis Control Authority with exclusive rights to service Health Service Area 1, one of five service regions in the state of Virginia.
• Launched adult-use sales in Ohio with three affiliated AYR stores and wholesale operations. The Company has also started the process of building out five new dispensaries in Ohio that are expected to open in the first half of 2025.
• In November 2024, the New York Cannabis Control Board voted to approve the application for Amethyst Health, LLC (“Amethyst Health”) for registration as a “Registered Organization,” which would conditionally allow the company to commence medical marijuana operations in the state. AYR is an operational partner and minority equity holder in Amethyst Health.
• Entered the Connecticut market with the opening of AYR Cannabis Manchester.
• Opened four retail stores in total during the quarter, including the Company’s fourth Illinois retail store in July, and the Company’s 65^th and 66^th stores in Florida.

Management Commentary

Steven M. Cohen, Interim CEO of AYR, said,

• “Our third quarter performance reflected ongoing macroeconomic pressure to the consumer wallet and increased competition in select markets, which affected revenue and offset the growth from the launch of adult-use sales in Ohio. However, our team adapted to drive gross margin expansion and operating efficiencies, improving our Adjusted EBITDA despite the lower revenue.
• Notwithstanding the ongoing leadership transition, we remain focused on strengthening execution and are committed to positioning AYR for sustained growth and profitability.
• Although we are disappointed by the result of the Amendment 3 referendum last week in Florida, we continue to maintain strong share in the state’s medical market and see potential for revenue growth as our new indoor cultivation facility comes online next year, which will fill a crucial gap by supplying high-quality indoor flower to our stores.
• We are well-positioned to navigate the near-term environment as we focus on improving execution in our key markets.”

Outlook

• For the fourth quarter, the Company expects revenue and Adjusted EBITDA to be essentially flat compared to the third quarter of 2024.
• AYR also continues to expect positive GAAP cash flow from operations for calendar 2024.
• In 2025, Ayr plans to:
  • expand its presence in Ohio,
  • develop an initial footprint in Virginia, and
  • improve our vertical operations in Florida.

Stock Performance

AYR's stock price was trading in the $1.80 to $1.90 range up until the end of September before rising to $2.15 by the end of October. The stock was DOWN 58% last week, however, with the failure to pass the Amendment 3 legislation in Florida last week where Ayr operates 66 retail outlets (dispensaries) and is down a further 12% today with the release of its Q3 financials.