AYR reported 1Q23 results
Ayr Wellness reported 1Q23 earnings results yesterday and saw revenue come in at $117.7M, which represents a YoY increase of 18% and a sequential increase of 3%. Adjusted EBITDA in the quarter was $26.3M, which represents a YoY increase of 64% and a sequential increase of 9%. They ended the quarter with $96.5M. Management commented that they will be rebranding all of their Florida stores from Liberty Health Sciences to AYR Cannabis Dispensaries by the end of the summer. How it currently stands, the company has 60 dispensaries in Florida with plans to expand to 70 by the end of the year. They also commented that they terminated the acquisition with Gentle Ventures as well as entered into an option to acquire two Ohio dispensaries (which would allow them to begin a vertically integrated approach in the state).
David Goubert, President & CEO of AYR, said, “I’m excited to share our strong profitability improvements during the quarter, as we began to execute on our financial and operational goals. Revenue and adjusted EBITDA1 each modestly beat our expectations, and respectively grew quarter over quarter by 3% and 9%. We grew revenue by 18% year-over-year and adjusted EBITDA1 over 60% year-over-year with significantly expanded adjusted EBITDA margin, while generating positive operating cash flow for the third consecutive quarter.
“From a balance sheet standpoint, we were pleased to announce that we have reached an agreement to provide significant liquidity improvement for the next few years via amendments to contingent consideration for the acquisitions of Garden State Dispensary and Sira Naturals, as well as resolving what otherwise would have been a potentially significant near-term dilution event for our shareholders, related to our acquisition of GSD. The agreements align with our goal of prioritizing the financial health of the Company and allow AYR to remain flexible as we continue to scale and optimize the business.
This is another cannabis company in the U.S. that has guided to be free cash flow positive by the end of the year. The transition to profitability has been driven by the lack of liquidity coming into the industry.
Washington Cannabis Trends
In the month of April, Washington recorded ~$103M in cannabis sales, which represents a sequential decline of 1.7% and a YoY decline of 8.2%. Unit volumes in the month were up 1.2% sequentially and up 0.7% YoY. The average price per unit was down 2.8% sequentially and down 8.8% YoY.
Minnesota legalization efforts
Yesterday, legislators in Minnesota's House of Representatives finalized a bill that would make adult-use cannabis legal in the state. The bill could be voted on as early as next week. A committee tasked with merging the House and Senate marijuana bills into one finished its work on Tuesday. Among many changes, the committee set the tax rate for cannabis products at 10%, capped home possession of marijuana flower at 2 pounds, and gave cities the option of limiting the number of cannabis retailers within their limits. Both the House and the Senate both passed their own versions of adult-use cannabis legalization earlier in the year. We expect this to be passed by the end of the month.
