TerrAscend Third Quarter Revenue Drops 16% Sequentially To $ 49 Million, Reports Net Loss Of $ 14.6 Million

TerrAscend Corp. (CSE: TER) (OTCQX: TRSSF) reported its third quarter financial results Tuesday with net sales of $ 49.1 million, down 16% from the previous quarter and up 29% year-on-year.

Third Quarter 2021 Financial Highlights

  • Net loss amounted to $ 14.6 million, compared to net income of $ 62.3 million in the same quarter of 2020.
  • Adjusted gross profit margin1 46% compared to 59% in Q3 2020 and 61% in Q2 2021.
  • Adjusted EBITDA $ 10.5 million compared to $ 13.2 million in the third quarter of 2020 and $ 24.3 million in the second quarter of 2021.
  • Adjusted EBITDA margin 21% compared to 35% in Q3 2020 and 41% in Q2 2021.
  • Cash flow from operations was negative $ 1.2 million, compared to a loss of $ 16.9 million during the same period last year;
  • Cash balance $ 103 million at the end of the quarter to support growth initiatives.

“I am satisfied with the improvements made in Pennsylvania since we withdrew our forecast for the year 2021 in August”, Jason Sauvage, executive chairman of TerrAscend, said. “The relationship between the quality of flowers and the size of recent harvests has increased considerably. Additionally, the potency of THC and terpenes has been tested at record levels. In New Jersey, we’re well prepared for adult use once the state gives us the green light. Our New Jersey Apothecarium dispensaries will have some of the best selection and depth of product available in the state at launch. We are building this business for long term success and will continue to make decisions with that mindset. For the 4e quarter, we expect sequential growth in revenue and Adjusted EBITDA, with these positive trends accelerating through 2022. ”

Third Quarter 2021 Operational Highlights

  • Previously disclosed yield issues in Pennsylvania have been fixed, with the highest quality flower the facility has ever grown on the market in recent weeks.
  • Announcement of the acquisition of Gage Growth Corp. (OTCPK: GAEGF) and expects the deal to close in early 2022, ahead of previous expectations.
  • Sign exclusive agreement to cultivate, manufacture and distribute the licensed COOKIES product and bring COOKIES Corners to the three Apothecarium dispensaries in New Jersey, subject to regulatory approval.
  • Purchased An additional 12.5% ​​of the capital of TerrAscend New Jersey, bringing total ownership to 87.5%.
  • Successful launch of a premium Californian edibles brand, Confections Valhalla, New Jersey.

Subsequent events

  • Shareholders overwhelmingly approved the acquisition of Gage at the extraordinary shareholders’ meeting held on November 11, 2021.
  • Closed on purchase of 156,000 square foot facility in Hagerstown, MD aimed at expanding cultivation and processing in the state, with plans to be operational in the first quarter of 2022, in preparation for potential adult use legislation.
  • Filing of the Form 10 registration statement with the SEC to switch from a foreign private issuer and IFRS reporting to US GAAP effective January 1, 2022. The company is now ready to register on a US stock exchange once cleared.

Price action

Shares of TerrAscend were trading down 2.96% to $ 6.05 per share as of this writing on Tuesday morning.

Photo: Courtesy of Tim Foster on Unsplash

Ann J. Cox