NEW YORK – Ascend Wellness Holdings, Inc., a vertically integrated multistate cannabis operator, reported its financial results for the fourth quarter and full year ended December 31, 2024. Financial results are reported in accordance with U.S. generally accepted accounting principles (GAAP), and all currency is in U.S. dollars.
Q4 2024 Business Highlights
Maintained focus on reducing expenditures in support of the Company’s cost savings transformation initiatives, which have positively impacted both Adjusted EBITDA of $30.2 million and Adjusted Gross Margin of 41.9% in the quarter, ahead of management’s initial expectations.
Demand for AWH’s in-house brands, including Common Goods, Simply Herb, Effin’, Ozone, and Royale, improved in the quarter and contributed to a 6% sequential increase in vertical sales as well as improved gross margin.
The company has continued to make solid progress in improving its balance sheet and working capital, highlighted by the $30.1 million in Free Cash Flow that was generated in the quarter.
AWH remains committed to implementing its densification strategy, which is expected to result in a 50% increase in store count in the medium term. The company continues to maintain its data-backed focus on premier locations in high density population centers in its expansion efforts. Currently, the company has ten stores in development, including three in Ohio, one in Pennsylvania, as well as four additional partner stores in Illinois, which would bring the total partners in the state to six, and two partner sites identified in New Jersey.
Launched Effin’, an effect-based brand focused on delivering targeted effects using minor cannabinoids. The brand has been well received, quickly achieving the top spot in the edibles category at Ascend stores where it is available.
Successfully repurchased 11 million shares of Class A common stock, representing over 5% of the then-outstanding shares. The shares were acquired at a significant discount to the closing price on the Canadian Securities Exchange (CSE) as of December 17, 2024. This strategic move was intended to enhance shareholder value, reduce downward pressure on the stock, and drive long-term returns for shareholders.
Announced a share buyback program, which began in January 2025. Pursuant to a normal course issuer bid (NCIB), the company may repurchase up to the lesser of: (i) 10,215,690 shares of the company’s class A common stock, representing approximately 5.0% of AWH’s then-outstanding common shares; and (ii) $2.25 million worth of common shares in the open market. The NCIB represents another meaningful step in the company’s ongoing efforts to deliver value to shareholders, highlighting the strong confidence of both management and the Board of Directors in the company’s undervalued foundation and its future growth potential. Subsequent to year-end, the company repurchased 620,500 Common Shares via the NCIB program.
Full Year 2024 Business Highlights
Opened four dispensaries during 2024, including Cincinnati, Ohio and three in Pennsylvania in Monaca, Cranberry, and Whitehall, and began supporting two partner locations bringing AWH’s total network to 39 dispensaries. Subsequent to year-end, in February the Company re-opened the Detroit, Michigan dispensary which was temporarily closed during 2024 to expand for adult-use sales.
Commenced adult-use sales at five dispensaries in Ohio, achieving an average sales increase of over three times compared to their performance prior to the start of adult-use.
Sold more than 187,000 pounds of wholesale products, on a gross basis, and increased wholesale revenue in each of the Company’s key markets compared to the prior year.
Increased brand recognition across portfolio in various markets, with AWH attaining the top three Brand House in sales and units across our three key markets (IL/MA/NJ combined). The Simply Herb brand rose to the #1 selling brand in Massachusetts. Ozone holds the #1 spot by units in our three key markets and is #2 in sales.
The Company substantially completed a series of cost savings and transformation initiatives it initiated as part of the Company’s commitment to sustainable profitability, pursuant to which the Company aims to streamline operations and reduce expenditures by $30 million on an annualized basis. The Company is focused on continuous improvement and has identified additional cost savings and efficiency opportunities that it plans to implement over the course of 2025.
Announced the appointment of three key executives to its leadership team as part of its transformation efforts. The Company completed the transition to a tactical, lean leadership team focused on controlling costs while continuing to drive growth, including a reduction of headcount.
Financial Highlights
Revenue
FY 2024:
- Net revenue increased 8.3% year-over-year to $561.6 million.
- Retail revenue increased 0.3% year-over-year to $372.2 million.
- Wholesale revenue increased 28.5% year-over-year to $189.4 million.
Q4 2024:
- Total net revenue declined 4.0% quarter-over-quarter to $136.0 million.
- Retail revenue decreased 3.5% quarter-over-quarter to $90.4 million.
- Wholesale revenue decreased 5.0% quarter-over-quarter to $45.6 million.
Net Loss
FY 2024: Net loss of $85.0 million compared to net loss of $48.2 million for FY 2023.
Q4 2024: Net loss of $16.8 million compared to net loss of $28.3 million in Q3 2024.
Adjusted EBITDA
FY 2024: Adjusted EBITDA was $116.2 million, a 9.1% increase year-over-year. Adjusted EBITDA Margin was 20.7%, a 15-basis point increase compared to the prior year.
Q4 2024: Adjusted EBITDA was $30.2 million, representing a 22.2% margin. Adjusted EBITDA increased 20.4% and Adjusted EBITDA Margin increased 450-basis points quarter-over-quarter.
Balance Sheet
As of December 31, 2024, cash and cash equivalents were $88.3 million, a sequential increase of $23.0 million. Net Debt, which equals total debt less unamortized deferred financing costs less cash and cash equivalents, was $220.2 million.
Cash Flow:
FY 2024: Generated $73.3 million Cash from Operations in the full year, representing the second full year the Company generated Cash from Operations, and generated $50.8 million in Free Cash Flow.
Q4 2024: Generated $35.2 million Cash from Operations in the quarter, representing the eighth consecutive quarter of positive operating cash flow, and generated $30.1 million in Free Cash Flow in the quarter.
Management Commentary
“The fourth quarter marked the first full quarter with our new management team in place, and I am pleased with the initial progress we made on our key initiatives – improving profitability, maximizing asset efficiency, and driving cash flow generation,” said Sam Brill, Chief Executive Officer. “This was achieved through our team’s success in substantially completing our $30 million in annualized cost savings target, ahead of plan, and with this milestone completed we have turned our efforts to driving revenue growth. Looking ahead, we are focused on executing our densification strategy, backed by our strengthened balance sheet, that puts us in a strong position to act on exciting retail and wholesale opportunities across our footprint.”
Frank Perullo, co-founder and President, added, “We are building our business for long-term success and are focused on providing patients and consumers with consistent, high-quality products in an approachable and elevated retail experience. This, together with our densification strategy and transformation initiatives, provides us with confidence that we are well-positioned to thrive in this current market and continue to lead as a premier operator in an increasingly dynamic industry.”
Roman Nemchenko, Chief Financial Officer, concluded, “Significant progress has been made in strengthening our balance sheet and improving our margins and profitability. This has resulted in a 450 basis point sequential improvement in Adjusted EBITDA margin and $30.1 million in Free Cash Flow generated in the quarter. Additionally, we have taken steps to rationalize our inventory levels through more rigorous purchase planning meant to clear the backlog. While this is an ongoing process, I am proud of the work accomplished so far. It has been a strong start for our new leadership team, and we are just getting started.”
Q4 2024 Financial Overview
Net revenue decreased by 4.0% sequentially to $136.0 million, of which 2.3% was attributable to a decline in retail revenue and 1.7% was due to a decline in third-party wholesale revenue. Retail revenue totaled $90.4 million, representing a 3.5% decrease compared to the prior quarter, primarily due to the softening of sales in Illinois, Michigan, New Jersey, and Massachusetts resulting from a combination of pricing pressure and volume, partially offset by the contribution of adult-use sales in Ohio that began in the prior quarter and the ramp of new partner stores in Illinois. Third-party wholesale revenue totaled $45.6 million, representing a 5.0% decrease compared to the prior quarter, attributable to declines in Illinois and New Jersey, partially offset by improvements in Massachusetts.
Q4 2024 gross profit was $46.9 million, or 34.5% of revenue, as compared to $43.7 million, or 30.9% of revenue, in Q3 2024. Q4 2024 Adjusted Gross Profit was $56.9 million, or 41.9% of revenue, as compared to $53.6 million, or 37.8% of revenue, for the prior quarter. These increases resulted from an increase in company-produced products sold in AWH retail stores driven by efficiency improvements and expanded production at the Company’s New Jersey and Massachusetts cultivation facilities, despite competitive pressures.
Total general and administrative expenses for Q4 2024 were $40.8 million, or 30.0% of revenue, compared to $46.1 million, or 32.6% of revenue, for Q3 2024. The improvement of G&A expenses as a percentage of revenue was primarily due to certain cost-savings initiatives, lower headcount in the current quarter, and the absence of certain one-time expenses recognized in Q3 2024.
Net loss attributable to AWH for Q4 2024 was $16.8 million during Q4 2024, compared to $28.3 million in Q3 2024. The improvements are primarily due to the absence of certain one-time costs recognized in Q3 2024, the contribution of higher margins, and a benefit from certain cost-savings initiatives.
Adjusted EBITDA was $30.2 million in Q4 2024, a 20.4% increase quarter-over-quarter, and Adjusted EBITDA Margin was 22.2%, a 450-basis point increase compared to Q3 2024, primarily attributable to the contribution of higher margins and lower G&A expenses.
Cash and cash equivalents at the end of Q4 2024 were $88.3 million and Net Debt was $220.2 million. Cash generated from operating activities was approximately $35 million in Q4 2024, representing the eighth consecutive quarter of positive operating cash flow.
Full Year 2024 Financial Overview
Net revenue increased 8.3% year-over-year to $561.6 million, primarily driven by expansion of the Company’s wholesale business. Third-party wholesale revenue increased 28.5% year-over-year to $189.4 million, driven by expansion in New Jersey, Massachusetts, and Illinois. Total retail revenue increased modestly by 0.3% to $372.2 million. AWH benefited from a full year of adult-use sales in Maryland, the opening of three new dispensaries in Pennsylvania, the commencement of adult-use sales at five dispensaries in Ohio, and supporting two partner locations during the year. These increases were largely offset by a decline in retail sales in New Jersey, Illinois, and Massachusetts primarily due to increased competition and pricing pressure in those states, as well as declines in Michigan mainly driven by pricing pressure.
Full year 2024 gross profit was $184.2 million, or 32.8% of revenue, compared to $155.1 million, or 29.9% of revenue, for the prior year, driven by an increase in company-produced products at AWH retail locations and certain overhead improvements.
Full year 2024 Adjusted Gross Profit was $225.9 million, or 40.2% of revenue, compared to $209.0 million, or 40.3% of revenue, in 2023. Adjusted Gross Profit dollars increased 8.1% year-over-year. Adjusted Gross Profit1 margin decreased 8-basis points year-over-year driven by margin declines in Illinois and Massachusetts cultivation and Michigan retail, offset by a benefit of expanded production at our New Jersey cultivation facility.
Total G&A expenses for 2024 were $179.5 million, or 32.0% of revenue, compared to $158.7 million, or 30.6% of revenue, for 2023 attributable to certain one-time costs partially offset by the leveraging of the Company’s existing infrastructure and certain cost-savings initiatives.
Net loss for 2024 was $85.0 million, compared to a net loss of $48.2 million for 2023, largely due to the absence of a $22.8 million tax credit recognized in 2023.
Adjusted EBITDA, was $116.2 million in 2024, representing a 9.1% increase year-over-year. Adjusted EBITDA Margin was 20.7%, a 15-basis point increase compared to 2023, primarily driven by a contribution from overall improved margins.
About Ascend Wellness Holdings Inc.
AWH is a vertically integrated multistate cannabis operator with licenses and assets in Illinois, Massachusetts, Maryland, Michigan, New Jersey, Ohio, and Pennsylvania. AWH owns and operates cultivation facilities and produces and distributes in-house brands including Common Goods, Simply Herb, Ozone, Royale, and Effin’ branded products.
