Adam Jackson
TerrAscend Corp. (CSE: TER) (OTCQX: TRSSF) posted higher sales in 2022 as it tries to find ways to uplist to a major exchange. The Ontario-based U.S. MSO reported its financial results for the fourth quarter and full year ending Dec. 31, 2022.
TerrAscend reported net revenue of $69 million in the fourth quarter, a 50.3% year-over-year rise and 4.2% sequentially. Net loss was $2 million, an improvement over the third-quarter net loss of $300.6 million.
Gross profit margin declined to 44.6%, and adjusted EBITDA from continuing operations was $12.2 million, a decline from the third quarter of 2022. The company attributed the decline to pricing pressure in Michigan and start-up expenses at the company’s Hagerstown facility in Maryland.
“Looking ahead, we expect the distress in the industry to lead to opportunities for us to pivot our ‘deep not wide’ strategy to a ‘deep and wide’ strategy, on our terms,” said executive chairman Jason Wild.
Net revenue for the full year was $247.8 million, a 27.6% increase compared to 2021, driven by the launch of adult-use sales in New Jersey and acquisitions in Michigan, though G&A expenses increased for the same reasons as gross profit margin for the year declined.
Net loss was $299.4 million in 2022. The company recorded a non-cash impairment charge of $331.2 million for its Michigan business in the third quarter, though the fair value of net assets acquired was finalized by the fourth quarter, resulting in a $20.2 million reduction in the impairment charge.
Adjusted EBITDA for full year was $38.8 million, a decline compared to 2021.
TerrAscend achieved positive cash flow from operations worth $7.3 million during the quarter, reduced debt by $80 million, and applied to uplist to the Toronto Stock Exchange (TSX). The company ended in the quarter with $26.2 million in cash and cash equivalents, down from $34.2 million in September 2022.
The company spent $13.5 million on capex during the quarter, mostly to pay for a new facility. It also completed a $45.5 million financing with Pelorus Equity Group and paid down $30 million of its $55 million term loan with Chicago Atlantic, refinancing the remaining balance of $25 million.
