Ascend Wellness (AAWH) Q2 2024 earnings summary

Executive summary

• Achieved Q2 2024 net revenue of $141.5M, up 15.1% year-over-year but down 0.6% sequentially, with Adjusted EBITDA of $28.3M, up 33% year-over-year but down 12.7% sequentially; results were below internal expectations due to margin pressure in Massachusetts.

• Generated positive cash flow from operations for the sixth consecutive quarter, with $14M in Q2 (excluding tax refunds), and produced $9M in free cash flow.

• Successfully refinanced $215M term loan with $235M in senior secured notes, extending maturity and enhancing financial flexibility.

• Opened two new dispensaries and supported partner openings in Illinois, Maryland, and Ohio, bringing total consolidated dispensaries to 38.

• Appointed Julie Francis as independent director, expanding board expertise.

Financial highlights

• Net revenue (ex-intercompany) rose 15% year-over-year to $141.5M, but declined 0.6% sequentially.

• Adjusted EBITDA increased 33% year-over-year to $28.3M, but fell 12.7% sequentially; margin was 20.0%.

• Adjusted gross profit was $53M (37.5% margin), up 18% year-over-year but down 15% sequentially.

• Ended Q2 with $83.7M in cash and equivalents, including $18M in tax refunds; net debt stood at $225.6M.

• Net loss of $21.8M, compared to net income of $0.8M in Q2 2023, impacted by absence of prior year tax credit.

Outlook and guidance

• Updated 2024 guidance: net revenue growth of 11–13% and Adjusted EBITDA growth of 5–10% year-over-year.

• Expect cash from operations above $40M for the year, excluding tax refunds.

• Guidance revised downward due to increased retail competition and wholesale profitability trends.

• Guidance now includes Ohio non-medical sales, anticipating a 2–2.5x revenue lift from adult-use conversion.

• Positive free cash flow expected for the full year.