Acreage Holdings Inc (ACRHF, Financial) released its 8-K filing on November 15, 2024, detailing its financial performance for the third quarter of 2024. As a vertically integrated, multi-state operator in the cannabis industry, Acreage Holdings Inc focuses on cultivating, processing, distributing, and retailing cannabis across various U.S. regions, including New England, Mid-Atlantic, Midwest, West, and South.
Financial Performance and Challenges
In Q3 2024, Acreage Holdings Inc reported consolidated revenue of $39.6 million, a significant decrease from $56.5 million in the same quarter of 2023. This 30% year-over-year decline was primarily attributed to liquidity constraints that limited inventory access and heightened competitive pressures. The company's gross margin also fell to 35% from 38% in the previous year, reflecting increased inventory costs and industry-wide price compression.
The net loss for the quarter was $22.2 million, compared to a loss of $7.9 million in Q3 2023. Adjusted EBITDA stood at $0.6 million, a sharp decline from $6.6 million in the prior year, impacted by reduced sales due to liquidity issues affecting inventory purchases.
Strategic Achievements and Industry Position
Despite financial challenges, Acreage Holdings Inc made strategic strides, notably launching non-medical cannabis sales in Ohio, which accounted for 38% of the state's revenue in Q3 2024. The company also introduced the Superflux flower in Illinois, achieving a 44% wholesale penetration. These initiatives are crucial as they expand Acreage's market presence and product offerings, potentially driving future revenue growth.
The company secured a capital infusion of approximately $8 million from an amended credit agreement, aimed at supporting growth initiatives. Additionally, Acreage received approval to relocate its Atlantic City dispensary to Collingswood, New Jersey, expected to open in Q4 2024, pending regulatory approval.
Income Statement and Balance Sheet Highlights
Key financial metrics from the income statement include:
| Metric | Q3 2024 | Q3 2023 | YoY Change |
|---|---|---|---|
| Consolidated Revenue | $39.6 million | $56.5 million | (30)% |
| Gross Profit | $13.9 million | $21.3 million | (35)% |
| Net Loss | ($22.2 million) | ($7.9 million) | N/A |
| Adjusted EBITDA | $0.6 million | $6.6 million | (91)% |
On the balance sheet, Acreage ended Q3 2024 with $13.8 million in cash and cash equivalents, a slight increase from $13.6 million at the end of 2023. The company's total assets were $293.1 million, with total liabilities of $419.3 million, leading to a total deficit of $126.1 million.
Management Commentary and Future Outlook
“In the third quarter, we continued to focus on re-accelerating growth across our core states, including Connecticut, Illinois, and New Jersey, while also executing on the highly anticipated launch of non-medical sales in Ohio,” said Dennis Curran, Chief Executive Officer of Acreage. “With our strengthened financial position, we have bolstered our capacity to pursue opportunities in these markets as they continue to mature, which is expected to play a pivotal role in driving both revenue generation and improvements in Adjusted EBITDA* as we close out 2024.”
The anticipated acquisition by Canopy USA is expected to close by the first half of 2025, potentially enhancing Acreage's strategic positioning within the cannabis industry. This acquisition could provide Acreage with additional resources and capabilities to navigate the competitive landscape and capitalize on growth opportunities.
Overall, while Acreage Holdings Inc faces financial challenges, its strategic initiatives and upcoming acquisition by Canopy USA present potential avenues for future growth and profitability in the evolving cannabis market.
Explore the complete 8-K earnings release (here) from Acreage Holdings Inc for further details.
