Ascend Wellness Holdings, Inc. (CSE: AAWH.U) (OTCQX: AAWH) reported increased revenue for the fourth quarter and full year ending December 31, 2023. The fourth quarter revenue of $173 million easily beat the Yahoo Finance average analyst estimate for revenues of $140 million.
Fourth quarter numbers
Ascend Wellness reported revenue increased 1.9% sequentially in the fourth quarter to $173.1 million and increased 28.7% year-over-year. Total retail revenue decreased 3.9% sequentially to $97.3 million for the fourth quarter of 2023, largely led by declines in Illinois. Ascend noted that these declines were partially offset by the three new store openings within the quarter and the improvement in the Pennsylvania stores’ performance.
Net revenue excluding wholesale business was $140 million. On the wholesale side, revenue was up 10% sequentially. The company attributed the gain to wholesale growth in New Jersey, Massachusetts, and Michigan.
The company delivered a net loss of $19.3 million, which was an increase over 2022’s fourth-quarter net loss of $15.1 million. It was also an increase over the third quarter’s net loss of $11.2 million. This $8.1 million variance was blamed on one-time compensation-related expenses.
Full-year numbers
Ascend reported total revenue increased 30.3% to $635.2 million and attributed the growth to the opening of six new stores; the acquisition of four stores in Maryland that started adult use in July; and the full-year benefit of adult-use sales in New Jersey. While those were positive markers, the company noted a decline in retail sales in Illinois, caused by the start of adult-use sales in Missouri and additional retail stores coming online in the Chicago area.
The company also cut its net losses for the year to $48.2 million from a 2022 net loss of $80.9 million. At the end of 2023, Ascend had cash and cash equivalents of $72.5 million, and net debt, which equals total debt less unamortized deferred financing costs less cash and cash equivalents, of $236.2 million.
CEO John Hartmann said, “Our notable achievements translated into impressive financial success, with 2023 net revenue reaching $519 million, a robust 28% growth from the previous year. This growth was fueled by expansion of both retail and wholesale businesses, including a 21% increase in the retail business driven by store openings and strategic acquisitions and a 47% growth in the third-party wholesale business as we increased our presence in New Jersey, Massachusetts, and Illinois. Despite cultivation challenges faced in Franklin, New Jersey earlier in the year, and initial pressure on our Illinois retail from the start of neighboring Missouri’s recreational sales, we rebounded, achieving an Adjusted EBITDA of approximately $107 million, reflecting 14% growth.”
Expenses inch higher
In the fourth quarter expenses rose 33.5% to $47.0 million or 33.5% of revenue. The company said that G&A expenses as a percentage of revenue were up due to the timing of certain expense accruals and one-time employment-related items. Total G&A expenses in 2023 were $158.7 million, or 30.6% of revenue, compared to $137.1 million, or 33.8% of revenue, for 2022. Ascend said it leveraged overhead to support new markets.
Abner Kurtin, Executive Chairman of AWH said, “Thank you to our stakeholders for helping us deliver a strong Q4 and full year 2023. We were pleased Ohio voters endorsed adult-use cannabis in the fall and expect the program to roll out in the coming quarters. In addition to the legislative progress in Ohio, we have been happy to see the Governor of Pennsylvania’s enthusiasm and call to action for his state legislators to draft an adult-use bill.”
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