AYR Wellness Financial Performance in Q3 2023

NEW YORK– AYR Wellness Inc. U.S. multi-state cannabis operator, has disclosed its financial results for the third quarter ending September 30, 2023. The company reported a revenue increase of 5% year-over-year to $114.4 million, excluding operations that have been discontinued. This performance is particularly notable in the dynamic and evolving cannabis industry.

These results come after the strategic divestment of the company’s Arizona business in March 2023. This change has led to a reclassification of the Arizona business as a discontinued operation, with all financial comparisons adjusted accordingly. The company’s efforts to streamline its operations are evident in the improved GAAP loss from operations, which showed a significant 92% year-over-year improvement, totaling a loss of $1.5 million, again excluding discontinued operations.

David Goubert, President and CEO of AYR, commented on the company’s recent achievements, “Our focus on optimization initiatives is yielding tangible results, reflected in our year-over-year adjusted EBITDA growth and robust cash flow generation.” The company generated over $20 million in operating cash flow during the quarter, a testament to its operational efficiency and strategic focus.

Adjusted EBITDA, a key metric in evaluating the financial health of companies, particularly in the cannabis industry, was up 52% year-over-year to $28.4 million. This impressive growth is coupled with an adjusted EBITDA margin of 25%, highlighting the company’s increasing profitability.

AYR has also been proactive in managing its financial obligations. The company recently reached agreements with its creditors to extend the maturities of nearly $400 million of debt by two years. This strategic financial maneuvering ensures that AYR will face no significant debt maturities until 2026, further solidifying its financial foundation.

In terms of market expansion and future growth, AYR is well-positioned to capitalize on new opportunities. With only 15 of its 88 dispensaries currently operating as fully ramped adult-use stores, the company stands to benefit significantly from legislative changes in key markets. The recent legalization of adult-use cannabis in Ohio, along with potential changes in Florida and Pennsylvania, presents substantial growth opportunities for AYR.

However, the quarter also saw challenges, particularly in the form of pricing pressures in certain markets and cultivation issues in Florida during the summer. These factors led to lower inventory levels at the end of the quarter, which are expected to impact sales in the fourth quarter. The company anticipates normalization of inventory levels in Florida by mid-December.

Looking forward, Goubert remains optimistic about the company’s trajectory, “As we approach the end of the year and look towards 2024, our focus remains on executing our optimization plan and laying the foundation for future revenue growth.” The company expects this strategy to drive revenue growth, adjusted EBITDA margin expansion, and free cash flow generation in 2024.

AYR Wellness Inc.’s third-quarter performance, in the face of industry-wide challenges, underscores its resilience and strategic agility in the rapidly evolving cannabis market. The company’s strong financial health, coupled with its proactive management and market expansion strategies, positions it well for continued growth and profitability in the coming years.