Acreage Holdings sees revenue soar and heads east

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Acreage Holdings, Inc. (CSE: ACRG.AU, ACRG.BU), (OTCQX: ACRHF, ACRDF) posted positive results in the second quarter as the company moves away from established western markets towards emerging markets east of the Mississippi. The company released its financial results for the first quarter ending June 30, 2022 after the market closed on Monday.

Acreage reported total revenue of $61.4 million, an increase of $17.1 million or 39% from the second quarter of last year. The company posted a gross margin of 50% compared to 52% in the previous quarter and 54% in the second quarter of last year. Area also posted a net loss of $9.9 million, compared to $2.5 million in the same period last year.

New Jersey for the win

Acreage said the growth over the past year was primarily due to expansion in Ohio in addition to the greenlight of adult-use sales in New Jersey, “which was somewhat offset by the decline operations of the company which were intended for sale”. The Botanist (Acreage dispensary name) is now available to adult consumers at dispensaries in Egg Harbor Township and Williamstown in southern New Jersey. Acreage also completed the sale of its four Oregon retail dispensaries under the Cannabliss & Co. brand.

“We were thrilled to achieve a significant milestone with the launch of adult use sales in the State of New Jersey in the second quarter,” said CEO Peter Caldini. “The initial performance of our retail stores during the rollout has been strong, and we believe there is an even greater opportunity to further optimize our cultivation and wholesale capabilities to serve this growing market. We are working diligently to improve our growing and processing operations in New Jersey to take advantage of the market opportunities available to us.

Additionally, total second quarter revenue improved sequentially by $4.5 million or 8% from the first quarter. The company said it was able to “overcome challenges associated with industry pricing pressures that negatively impacted revenue.”

Total operating expenses for the second quarter decreased by $3.3 million, or 11%, to $27.3 million, compared to the same quarter last year. Increases in compensation and general and administrative expenses were more than offset by reductions in stock-based compensation expense, losses on notes receivable and depreciation and amortization expense, the company said.

Adjusted EBITDA was $10.4 million in the second quarter, compared to $8.1 million in the same period last year and $8.6 million in the previous quarter this year. Adjusted EBITDA as a percentage of consolidated sales was 16.9% for the quarter.

Look forward

The company said it ended the quarter with $29.3 million in cash and cash equivalents. In addition, $100.0 million was drawn on the credit facility entered into in the fourth quarter of the prior year. An additional $50 million is available in future periods under a committed accordion option once certain pre-determined milestones are reached, Acreage said, as it intends to use the money to “fund initiatives expansion, repay existing debt and provide additional working capital”.

“With the conclusion of our Oregon operations after the end of the quarter, we are in a better position to drive development in our core markets, where we see the best opportunity to drive long-term growth and enhance value. for shareholders,” Caldini said. added. “During the second half of the year, we will continue to prepare for pending adult-use sales in these developing Northeast markets, such as New York and Connecticut, in addition to strengthening our presence in the New Jersey.”


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