TerrAscend (TER) investor relations material

Executive summary

• Q3 revenue rose 4.8% YoY to $68.2M; gross margin increased 20 bps to 52.3%, and adjusted EBITDA reached $17.5M.

• Operating cash flow was $8.8M and free cash flow was $6.1M, marking 17 and 13 consecutive positive quarters, respectively.

• Core-market momentum reflected Pennsylvania growth, brand gains, vertical integration, cost management, and positive cash generation.

Financial highlights

• Gross profit was $35.7M versus $33.9M YoY; net loss from continuing operations narrowed to $5.5M from $9.9M.

• Adjusted EBITDA from continuing operations was $17.5M versus $17.0M; margin was 25.6% versus 26.1%.

• G&A rose to $24.0M, or 35.2% of revenue, from $21.3M, or 32.8%, mainly due to one-time debenture transaction costs and acquisition-related professional fees.

• Net loss improvement included a $4.8M fair-value gain on derivative liabilities, versus a $0.7M loss YoY, partly offset by lower operating income and higher income tax provision.

Outlook and guidance

• Q4 2026 revenue is expected to grow at a mid-single-digit rate YoY, with consistently strong gross margin performance.

• Pennsylvania capacity is nearly 50% utilized, with room for organic growth and potential adult-use demand without additional CapEx; New Jersey retail expansion remains under evaluation, with a 10-dispensary objective.

• Boonton cultivation expansion is conservatively expected to deliver ~20% more greenhouse yield; further New Jersey capacity expansion remains under evaluation.

• Management is evaluating acquisition opportunities and cited free cash flow and a term loan facility as funding sources for growth.