Acreage Holdings, Inc. (CSE: ACRG.A.U, ACRG.B.U), (OTCQX: ACRHF, ACRDF) delivered positive results in the second quarter as the company moves away from established western markets in favor of emerging markets east of the Mississippi. The company reported 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% versus the second quarter of last year. The company posted a gross margin of 50% versus 52% in the previous quarter and 54% in last year’s second quarter. Acreage also posted a net loss of $9.9 million, versus $2.5 million in the same period last year.
New Jersey For the Win
Acreage said that growth over the past year was primarily driven by expansion into Ohio in addition to the green-lighting of adult-use sales in New Jersey, “which was somewhat offset by declines within the company’s operations that were held for sale.” The Botanist (Acreage’s dispensary name) is now available to adult-use consumers at the Egg Harbor Township and Williamstown dispensaries in southern New Jersey. Acreage also closed the sale of its four Oregon retail dispensaries branded as Cannabliss & Co.
“We were thrilled to execute on a significant milestone with the launch of adult-use sales in the state of New Jersey during the second quarter,” said CEO Peter Caldini. “The initial performance of our retail stores during the roll-out has been strong, and we believe there is an even bigger opportunity to further optimize our cultivation and wholesale capabilities to serve this growing market. We are working diligently to improve our New Jersey cultivation and processing operations to take advantage of the market opportunities that are available to us.”
Additionally, total revenue for the second quarter improved sequentially by $4.5 million or 8% versus the first quarter. The company said it was able to “overcome challenges associated with industry pricing pressures which negatively impacted revenues.”
Total operating expenses for the second quarter decreased by $3.3 million, or 11%, to $27.3 million, from the same quarter last year. Increases in compensation and general and administrative expenses were more than offset by reductions in equity-based compensation expenses, losses on notes receivable, and depreciation and amortization expenses, the company said.
Adjusted EBITDA was $10.4 million in the second quarter, versus $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 revenue was 16.9% for the quarter.
The company said it ended the quarter with $29.3 million in cash and cash equivalents. Additionally, $100.0 million was drawn under the credit facility entered in the fourth quarter last reporting year. A further $50 million is available in future periods under a committed accordion option once certain predetermined milestones are achieved, Acreage said, as it intends to use the money to “fund expansion initiatives, repay existing debt and provide additional working capital.”
“With the conclusion of our operations in Oregon following the end of the quarter, we are in a more favorable position to drive development in our core markets, where we see the best opportunity to foster long-term growth and enhance shareholder value,” Caldini added. “During the latter half of the year, we will continue our preparation for pending adult-use sales in these developing Northeastern markets, such as New York and Connecticut, in addition to strengthening our presence in New Jersey.”