Over the past three and six months, the MSOS has declined 15.8% and 21% versus AYR Wellness, flat and -3%, respectively. However, with or without the federal legalization of cannabis, cannabis fundamentals matter, and AYRWF is showing above-average performance. The strength of the operations can be seen in the improved performance in the company's Florida assets since the acquisition of Liberty Health Sciences, which closed on February 26, 2021. Over the next few weeks, many MSOs (multi-state operators) like Ayr Wellness will be reporting earnings putting fundamentals front and center with the investment community.
AYRWF is scheduled to report earnings on August 17. In 1Q21, AYWF reported revenues increased 22% sequentially (74% YoY) to $58.4 million. In 2Q21, sales should grow 54% sequentially (240% YoY) to $93 million. But, as the CEO, Jonathan Sandelman, said on the 1Q21 earnings call: "The results of our successful execution thus far can be seen in our April monthly revenues, which have nearly doubled since January. We expect step function growth across Q2, Q3, and especially Q4 2021, with further milestones reached when additional cultivation projects come online, and we close our New Jersey acquisition later this summer."
At $29 and only 5x 2021 sales, the stock reflects doubts about execution and integrating all the recent acquisitions, especially the assets in Florida. However, as seen in the charts below, the high-frequency data coming out of Florida shows significant progress the company is making in improving the performance of those assets. As seen in the FL tracker, Curaleaf is also has a great quarter in FL and is estimated to post 136% revenues growth in the FL. We estimate that AYR will grow revenues 107% in FL, but the company did not own the assets last year. As a result, TCNNF estimates to only see 50% revenue growth in the FL in 2Q21. While the law of large numbers is impacting TCNNF's performance in FL, the stock is down 20% over the last three months on concerns of increased competition in its home market, and the Harvest acquisition raises other questions as well.
When we look to 2022, the stock trades for less than 7x EV/EBITDA (2.9x sales), while many company peers trade at twice that level. Thus, we can easily see Ayr Wellness trading at $60+ as the market gets more convinced of the execution in FL and other important markets.
