TerrAscend (TER) Q3 2024 earnings summary

Executive summary

• Maintained #1 market share in New Jersey and strong positions in Maryland and Pennsylvania, with ninth consecutive quarter of positive cash flow from continuing operations and fifth consecutive quarter of positive free cash flow.

• Reported Q3 2024 net revenue of $74.2 million, gross profit margin of 48.8%, and adjusted EBITDA of $13.7 million.

• Entered Ohio through acquisition of a dispensary, expanding to a sixth state, and announced plans for further M&A and greenfield expansion.

• Closed $140 million senior secured term loan at 12.75% interest, maturing August 2028, with no warrants or prepayment penalties, providing financial flexibility.

• Launched $10 million stock buyback program, repurchasing 107,000 shares for $133,000 in Q3 2024.

Financial highlights

• Q3 2024 net revenue was $74.2 million, down from $77.5 million in Q2, mainly due to declines in New Jersey wholesale and Michigan retail, partially offset by 26% wholesale growth in Maryland.

• Gross profit margin improved to 48.8% from 48.6% in Q2, driven by Maryland margin expansion.

• Adjusted EBITDA was $13.7 million (18.5% of revenue), down from $15.6 million (20.2%) in Q2, reflecting lower revenue.

• Net loss from continuing operations increased to $21.4 million from $6.2 million in Q2, impacted by one-time non-cash accounting items totaling $13 million.

• Free cash flow was $1.5 million, with cash and equivalents of $27.2 million at quarter end.

Outlook and guidance

• Q4 2024 revenue expected to be flat to down mid-single digits sequentially, with stable gross margins, lower SG&A, and flat adjusted EBITDA.

• Guidance excludes potential Ohio contributions due to uncertain regulatory approval timing.

• Focus remains on organic growth levers in core states, disciplined M&A, and optimism for Pennsylvania adult-use legalization in 2025.