Ascend Wellness Holdings Inc. and Ayr Wellness Inc. posted wider losses but signaled that their businesses remain sound as they eye revenue growth ahead despite economic headwinds.
grew its presence in New Jersey, with plans to open a store near the George Washington Bridge in Fort Lee, N.J., by the end of the year.
Ascend Wellness interim CEO and CFO Daniel Neville told MarketWatch the company continues to search for a chief executive, as announced on Sept. 28.
It’s likely the search will focus on finding an executive from the consumer packaged goods industry to boost growth at Ascend. For now, Neville remains interim co-CEO along with Frank Perullo, who is also president and co-founder of the company.
Ascend Wellness has managed to achieve the $10 million in cost savings it projected in January as it keeps tighter control on spending.
While credit remains scarce in the cannabis market and the high-yield market overall, Ascend Wellness ended the quarter with $91 million in cash and raised debt in the more price-friendly months of May and June of this year.
“Right now, debt capital is expensive,” Neville said. “For smaller, private multi-state operators, it’s getting difficult and for single-state operators, life’s tough.”
Looking ahead, Ascend Wellness plans to boost its presence with new cannabis dispensaries in New Bedford, Mass., and Pennsylvania, as well as a new store in Cincinnati next to a casino and a mile from the stadium where the Cincinnati Bengals play.
Citing operating costs and tax expenses, Ascend Wellness said its net loss widened to $16.82 million, or 9 cents a share, from a loss of $13.03 million, or 8 cents a share, in the year-ago quarter. Net revenue increased to $111.24 million from $94.38 million.
Ascend Wellness beat the Wall Street target of $105 million for revenue but fell short of the estimate for a loss of 4 cents a share.
During the quarter, Ascend Wellness launched adult-use sales in Montclair, N.J. and ramped up edibles production at its cultivation facility in Franklin, N.J.
Shares of Ascend Wellness fell 4.7% on Friday. The stock is down 69% in 2022, compared to a loss of 55.4% by the AdvisorShares Pure U.S. Cannabis ETF
and a drop of 49.1% by the ETFMG Alternative Harvest ETF
For its part, Ayr Wellness
said its third-quarter loss increased to $36.1 million, or 52 cents a share, from a loss of $3.38 million, or 6 cents a share, in the year-ago quarter.
Revenue increased to $119.64 million from $96.19 million.
Wall Street analysts expected Ayr Wellness to lose 38 cents a share on revenue of $120.1 million.
Ayr continues to increase its presence in Massachusetts, where it received state regulatory approval to begin adult-use sales in Somerville, but it must still obtain local approvals. It’s also won approval to begin production at a new cultivation expansion in Massachusetts.
Ayr Wellness said it managed to grow its retail market share in six of seven states despite economic headwinds.
Cantor Fitzgerald analyst Pablo Zuanic reiterated a neutral rating on Ayr Wellness and said the company could be involved in mergers in the industry going forward.
“The notion that some companies could be ‘consolidated’ should be part of the investment analysis for mid-size multi-state [cannabis] operators, in our opinion,” Zuanic said “The company’s footprint does not stand out versus other potential targets, in our view.”
Shares of Ayr Wellness dropped 5.2% on Friday.