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New York-based Ascend Wellness Holdings (CSE: AAWH.U) (OTCQX: AAWH) reported its financial results for the first quarter ending March 31, showing a growing six-figure debt bill from expansion and a net loss for the period.

AWH posted gross revenue of $174.2 million in the first quarter of 2024, a 23.4% increase from the same period last year and a 0.6% increase from the previous quarter. Net revenue, which excludes intercompany sales of wholesale products, rose 24.7% year-over-year and 1.6% quarter-over-quarter to $142.4 million.

The company’s retail revenue grew 15.1% year-over-year to $95.2 million, while gross wholesale revenue increased 35.2% year-over-year and 4.2% quarter-over-quarter to $79 million.

Despite the strong revenue growth, AWH reported a net loss of $18.2 million for the quarter, versus a net loss of $18.5 million in the first quarter of 2023. AWH had cash and cash equivalents of $72.9 million and net debt of $237.6 million.

However, the company’s adjusted EBITDA was $32.5 million, representing a 22.8% margin. That marks a 39% increase in adjusted EBITDA and a 239 basis point improvement in margin versus the prior year. The company also generated $3.9 million in cash flows from operations.

“This quarter also marks our fifth consecutive period of gross wholesale growth,” CEO John Hartmann said in a statement.

During the quarter, AWH opened two new dispensaries, secured operating agreements with two additional partner dispensaries, and operationalized its second cultivation and manufacturing facility in Massachusetts. The company also entered into two long-term supply agreements in Maryland.

Looking ahead, AWH expects revenue growth between 12% and 15% and an adjusted EBITDA increase of 17% to 22% versus 2023.

“We are targeting cash from operations generation for the full year between $55 million and $65 million,” said CFO Mark Cassebaum.

Ditching 280E?

In March, the company also revealed that it has filed amended federal tax returns in an effort to avoid the burdensome tax provision.

AWH’s move to escape the 280E follows a similar strategy employed by Florida-based Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF). Trulieve said it had found a way to negate the provision, saving the company $113 million in taxes after filing several years’ worth of amended returns.

During AWH’s 2023 end-of-year earnings call, Cassebaum signaled confidence that the company’s amended tax filings for 2020, 2021, and 2022 would not only work but also cover the company’s entire tax bill for 2023.

“As a result of these amendments, we expect these refunds to cover our 2023 federal tax obligations,” Cassebaum said at the time.

While the company did not disclose the specific amount of expected tax refunds, AWH reported in March an income tax expense of $33.4 million for 2023.

Hartmann added, “Those expected refunds from those returns will cover our 2023 tax obligation and then a little bit. And on a go forward basis, we are paying our 2024 estimated federal non-280E taxes each quarter.”

The specific amount of estimated non-280E federal taxes paid during the first quarter ending March 31 remains unclear for now as company period filings are not available as of press time.

The post Ascend’s expansion yields revenue gains, profitability pains appeared first on Green Market Report.

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Adam Jackson, KahliBuds, 420GrowLife