Acreage Holdings Posts Flat Q4 Sales in Solid 2022

The company received shareholder approval for its arrangement with Canopy USA in March.

New York-based Acreage Holdings (CSE: ACRG.A.U, ACRG.B.U) (OTCQX: ACRHF, ACRDF) posted a 26% year-over-year increase in 2022, with sales rising to $237.1 million for the year.

The vertically integrated multistate operator released its financial reports for the fourth quarter and full year ended Dec. 31, 2022.

A positive year, however, ended on a flat note, with fourth-quarter revenue down 1% year-over-year to $57.5 million.

Acreage also saw its gross margin compress in the fourth quarter, falling from 47% in the fourth quarter of 2021 to 35% in 2022. Excluding non-cash inventory adjustments, fourth-quarter gross margin was 44%.

Net loss attributable to Acreage for the period more than doubled, reaching a loss of $95 million in Q4 2022, compared with a loss of $40.1 million the previous year. Adjusted EBITDA also fell, from $8.5 million to $7 million.

“Over the course of 2022, we completed a number of important initiatives and laid a strong foundation for sustained growth, making way for a transformative shift through our arrangement with Canopy and Canopy USA,” said Peter Caldini, CEO of Acreage.

“Despite challenging macroeconomic conditions, we achieved annual growth by focusing our operations and scaling in strategic markets, diversifying our brand and product portfolio, and responsibly restructuring our balance sheet,” Caldini continued. While our fourth quarter performance was impacted by continued headwinds, we are confident that these actions will better position Acreage for the future amid current market challenges.”

For the full year, adjusted EBITDA was $34.8 million, marking the second year the company recorded positive adjusted EBITDA. This was a $10.2 million improvement over 2021 adjusted EBITDA.

Net loss attributable to Acreage for the full year was $168.7 million, more than double the net loss from a year ago of $63 million.

Operational Highlights

During the fourth quarter, Acreage entered into a strategic agreement with Canopy Growth Corp. (Nasdaq: CGC) (TSX: WEED) and Canopy USA LLC that would allow Canopy USA to acquire 100% of Acreage Holdings.

Acreage obtained shareholder approval for the deal on March 15 and approval from the Supreme Court of British Columbia on March 20.

“As we make our way through the first half of 2023, we are focused on improving our financial results and strengthening our cash position,” Caldini said in a statement. “… We continue to ready our business for the expected unification of the unmatched U.S. cannabis ecosystem that will form Canopy USA.”

In addition, the company plans to expand in the northeast U.S., with focus on developing its footprint in Connecticut and New Jersey.

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