TerrAscend Corp. (CSE: TER) (OTCQX: TRSSF) reported its financial results for the first quarter ending March 31, 2022. Net sales for the first quarter of 2022 totaled $49.7 million, up 1% sequentially and down 7% year over year. TerrAscend attributed the decline to the vape recall on the Pennsylvania business, combined with the continued intentional accumulation of inventory in New Jersey, versus selling wholesale, in preparation for adult-use sales. The company’s Canadian business also experienced a soft quarter both sequentially and year over year. The declines were partially offset by three weeks of revenue from the Gage acquisition, which closed on March 10th.
The net loss for the quarter was $16.0 million, mainly driven by the operating loss, accrued income taxes of $3.7 million, and finance and other expenses of $6.9 million, partially offset by a net gain on fair value of warrant liability of $5.7 million.
“While revenue and margins during the first quarter were impacted by the industry-wide vape recall in Pennsylvania and front-loaded operating costs in New Jersey ahead of adult use, we expect revenue and margin to increase materially in the second quarter and beyond,” said CEO Jason Wild. “The strategic decisions and investments we have made over the last three years position us well for substantial growth in each of our four key markets – New Jersey, Pennsylvania, Michigan, and Maryland.”
New Jersey Gets Busy
The company got very busy after the quarter ended with its business in New Jersey. It celebrated the grand opening of adult-use sales on April 21st in Maplewood and Phillipsburg, New Jersey, two of only twelve dispensaries currently opened in the state. TerrAscend was approved for hydrocarbon extraction in New Jersey with the first products recently launched. It signed a lease on a new facility in New Jersey, which will provide expanded capacity up to the 150,000 canopy square foot limit. Plus, the company received a home delivery license for medical patients in New Jersey.
Mr. Wild continued, “New Jersey adult use sales began on April 21st, a significant milestone for TerrAscend and the entire industry. Demand has been strong for our brands and our elevated retail experience. We recently introduced the first concentrates in the state and expect additional ‘first-in-state’ product introductions in the near future. In Pennsylvania, we continue to cultivate the highest quality flower in our history and have introduced new genetics, to which patients have reacted positively. In Michigan, Gage has positioned us as a leader in one of the largest cannabis markets in the U.S. Lastly, subsequent to the quarter end, we announced the acquisition of a medical dispensary in Maryland and 5 dispensaries in Michigan. These acquisitions exemplify our strategy of ‘going deep’ in the markets in which we operate. While remaining focused on organic growth, the dislocation in public and private company valuations should provide attractive M&A opportunities to accelerate growth in a financially disciplined way.”