Debra BorchardtAscend Wellness Holdings Inc. (CSE: AAWH.U) (OTCQX: AAWH) reported revenue for the fourth quarter that ended on Dec. 31, 2024, fell 3% from the previous year, but the company still posted an 8.3% year-over-year grain for the full year.
Fourth-quarter earnings
Total net revenue declined 4% quarter-over-quarter to $136 million, which was also lower than last year’s revenue of $140 million for the same period. The company also missed the Yahoo Finance average analyst estimate for revenue of $140 million.
The company attributed the decline in retail revenue to the softening of sales in Illinois, Massachusetts, Michigan and New Jersey, driven by a combination of pricing pressure and volume. The decline was partially offset by the contribution of adult-use sales in Ohio that began in the prior quarter and the ramp up of new partner stores in Illinois.
Third-party wholesale revenue totaled $45.6 million, which represented a 5% decrease compared to the prior quarter, attributable to declines in Illinois and New Jersey, partially offset by improvements in Massachusetts.
Ascend reported a net loss of $16.8 million for the quarter, which was an improvement over the third quarter net loss of $28.3 million and last year’s net loss of $19 million. The company said the improvements were primarily due to the absence of certain one-time costs recognized in the third quarter of 2024, the contribution of higher margins and a benefit from certain cost-savings initiatives.
Full-year earnings
For the full year, Ascend reported that net revenue increased 8.3% year-over-year to $561.6 million. Retail revenue increased 0.3% year-over-year to $372.2 million, and wholesale revenue increased 28.5% year-over-year to $189.4 million.
Still, the company reported a net loss of $85 million versus a net loss of $48.2 million for 2023.
“The fourth quarter marked the first full quarter with our new management team in place, and I am pleased with the initial progress we made on our key initiatives – improving profitability, maximizing asset efficiency and driving cash flow generation,” CEO Sam Brill said. “This was achieved through our team’s success in substantially completing our $30 million in annualized cost savings target, ahead of plan, and with this milestone completed we have turned our efforts to driving revenue growth.”
Total general and administrative expenses were $40.8 million in the quarter, or 30.0% of revenue, compared to $46.1 million, or 32.6% of revenue, for the third quarter of 2024. The company attributed the improvement of G&A expenses as a percentage of revenue primarily due to certain cost-savings initiatives, lower headcount in the current quarter, and the absence of certain one-time expenses recognized in the third quarter of 2024.
As of Dec. 31, 2024, cash and cash equivalents were $88.3 million, a sequential increase of $23 million. The company’s net debt was $220.2 million.
“Significant progress has been made in strengthening our balance sheet and improving our margins and profitability. This has resulted in a 450 basis point sequential improvement in Adjusted EBITDA margin and $30.1 million in Free Cash Flow generated in the quarter,” CFO Roman Nemchenko said. “Additionally, we have taken steps to rationalize our inventory levels through more rigorous purchase planning meant to clear the backlog.”
