Ascend Wellness (AAWH) Q2 2024 earnings summary

Executive summary

• Achieved $141.5M in net revenue and $28.3M in Adjusted EBITDA in Q2 2024, up 15% and 33% year-over-year, but down sequentially and 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).

• Opened two new dispensaries and supported two partner store openings, expanding into Maryland and Ohio, bringing total consolidated dispensaries to 38.

• Appointed Julie Francis as an independent director, expanding the board to seven members and enhancing governance.

• Net loss of $21.8M in Q2 2024, compared to net income of $0.8M in Q2 2023, impacted by absence of prior year tax credit.

Financial highlights

• Q2 2024 net revenue was $141.5M, up 15.1% year-over-year and down 0.6% sequentially.

• Adjusted EBITDA reached $28.3M, up 33% year-over-year but down 12.7% sequentially; margin was 20%.

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

• Free cash flow was $9M for the quarter, after $5M in capital expenditures.

• Ended the quarter with $83.7M in cash and equivalents and net debt of $225.6M.

Outlook and guidance

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

• Cash from operations for 2024 expected to exceed $40M, excluding tax refunds.

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

• Guidance includes impact of Ohio's non-medical sales, with expectations of a 2–2.5x revenue lift from adult-use transition.

• Anticipates continued margin pressure in Q3 with recovery in Q4.