Executive Summary

Q3 2023 revenue was $56.5M, down 8.0% YoY and down 2.8% QoQ; gross margin improved to 38% (41% ex non‑cash inventory adjustments) as cost controls reduced OpEx by 36.9% YoY .
Adjusted EBITDA was $6.6M (12% margin), slightly below Q2 ($6.8M) and down YoY vs $8.8M; net loss improved to $(7.9)M from $(25.0)M YoY as interest expense and taxes weighed on results .
Operations were strong in New Jersey and Connecticut: record NJ wholesale with $1M in August and The Botanist Danbury +64% YoY sales; management emphasized disciplined cost controls and readiness for adult-use in New York and Ohio .
No formal financial guidance issued; Street consensus via S&P Global was unavailable for ACRHF, so estimate comparisons cannot be made (consensus data not available).

What Went Well and What Went Wrong

What Went Well

New Jersey and Connecticut outperformed with “record results and robust year‑over‑year growth,” including NJ wholesale revenue reaching $1M in August and The Botanist Danbury achieving +64% YoY sales; “I’m proud of the progress the team made in Q3… implementing a cost structure that will allow for future growth” — CEO Dennis Curran .
Gross margin improved to 38% (41% ex inventory adjustments) supported by cost efficiencies and economies of scale; OpEx declined 36.9% YoY due to lower G&A, equity comp, and D&A .
Brand traction: Superflux established as #1 extracts brand in Massachusetts (September 2023, BDSA), market share gains in MA, and in‑house product retail mix in Illinois improved to 31% from 13% YoY .

What Went Wrong

Consolidated revenue fell 8.0% YoY and 2.8% QoQ due to price compression across markets; Adjusted EBITDA declined YoY to $6.6M from $8.8M .
Continued inventory write‑downs: Q3 included $2.1M non‑cash wholesale inventory adjustments tied to excess inventory and lower NRV, following Q2’s $4.5M adjustments .
Interest expense increased vs prior-year and tax burden remained significant, contributing to net losses despite operational savings (Q3 interest expense $9.2M; income tax expense $6.4M) .

Financial Results

Metric	Q3 2022	Q1 2023	Q2 2023	Q3 2023
Revenue ($USD Millions)	$61.4	$56.0	$58.1	$56.5
Gross Profit ($USD Millions)	$21.2	$26.6	$21.1	$21.3
Gross Margin (%)	35%	48%	36%	38%
Total Operating Expenses ($USD Millions)	$37.7	$25.4	$26.2	$23.8
Net Loss ($USD Millions)	$(25.0)	$(16.2)	$(18.2)	$(7.9)
Net Loss per Share (Basic & Diluted) ($USD)	$(0.20)	$(0.13)	$(0.14)	$(0.07)
Adjusted EBITDA ($USD Millions)	$8.8	$10.6	$6.8	$6.6
Adjusted EBITDA Margin (%)	—	19%	12%	12%

Segment revenue breakdown

Segment	Q3 2022	Q1 2023	Q2 2023	Q3 2023
Retail Revenue, net ($USD Millions)	$48.3	$41.9	$44.9	$43.9
Wholesale Revenue, net ($USD Millions)	$12.8	$14.0	$13.2	$12.6
Other Revenue, net ($USD Millions)	$0.3	$0.1	$0.0	$0.0

KPIs and balance sheet

KPI	Q1 2023	Q2 2023	Q3 2023
Gross Margin ex Inventory Adjustments (%)	51%	44%	41%
Non‑cash Inventory Adjustments ($USD Millions)	$2.24	$4.48	$2.10
Cash & Cash Equivalents ($USD Millions)	$14.3	$16.4	$15.1
Restricted Cash ($USD Millions)	—	$13.6	$9.7
Weighted Avg Shares (Millions)	112.5	112.8	114.2

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Financial guidance (revenue, EBITDA, margins, OpEx, tax, segment)	FY/Q4 2023	None provided	None provided	Maintained no formal guidance

No formal quantitative guidance was issued; management discussed readiness for adult‑use transitions in New York and Ohio and continued cost discipline, but did not provide ranges or targets .

Earnings Call Themes & Trends

Earnings call transcript could not be located; themes are based on management commentary in press releases.

Topic	Previous Mentions (Q2 and Q1)	Current Period (Q3)	Trend
Adult‑use market expansion (CT, NJ, NY, OH)	Launched adult‑use in CT; record revenue growth in NJ and CT; optimization initiatives to support margins . Q1: Launched adult‑use in CT; approvals for NJ Pennsauken relocation; Canopy USA arrangement progress .	Emphasizes strong NJ/CT results; preparing for NY adult‑use opening and Ohio legalization vote outcome; readiness for increased output and innovation .	Strengthening presence; expanding footprint .
Cost controls and margin focus	Streamlining governance and optimization; aiming for higher margins and sustained positive Adj. EBITDA . Q1: Strict cost controls, maintained strong margins .	Maintained disciplined cost controls; continued cost savings; near two‑year streak of positive Adj. EBITDA .	Improving operating efficiency .
Infrastructure and capacity (NJ Egg Harbor)	Progressed infrastructure project to unlock premium biomass .	Large‑scale infrastructure nearing completion to support premium biomass and brand expansion .	Advancing project toward completion .
Brand strategy and product innovation	Multiple new product launches (Superflux, Journeyman, The Botanist edibles) . Q1: Fast‑acting gummies across states .	Superflux expanded to NJ; Superflux #1 extracts in MA; Botanist infused pre‑rolls launched; seasonal edibles; strain launches .	Broadening portfolio and market share .
Regulatory/legal and Canopy USA arrangement	Governance streamlined for Canopy USA transaction; participation in 280E reform efforts . Q1: Floating Shareholder approvals and court order for arrangement .	Notes transaction‑related risks in forward‑looking statements; continued readiness for adult‑use market shifts .	Ongoing process and risk management .

Management Commentary

“I’m proud of the progress the team made in Q3 building a company focused on strong brands and implementing a cost structure that will allow for future growth… New Jersey and Connecticut remain strong areas of performance… having recently launched craft cannabis brand Superflux in New Jersey” — Dennis Curran, CEO .
“The playbook… from our experiences launching adult‑use sales in Connecticut and New Jersey will benefit us greatly as our other core markets begin to adopt adult‑use regulations… we have maintained disciplined cost controls and continue to realize cost savings across our operations to expand our gross margin and maintain our near two‑year record of positive Adjusted EBITDA” — Dennis Curran .
Prior quarters: “Our commitment to introducing differentiated products and delivering exceptional customer experiences has had a profound impact… robust revenue growth in New Jersey… adult‑use sales in Connecticut” — Q2 CEO commentary ; “Our focus on our core footprint while upholding strict cost controls has enabled us to maintain strong margins and continue to deliver positive Adjusted EBITDA” — Q1 CEO commentary .

Q&A Highlights

Earnings call transcript for Q3 2023 was not available through our document tools; no Q&A detail to report. We cross‑checked press releases for clarifications on margins, inventory adjustments, and operational priorities .

Estimates Context

Wall Street consensus estimates via S&P Global for ACRHF Q3 2023 were unavailable due to missing mapping; as a result, we cannot provide beat/miss analysis relative to Street expectations (consensus data not available).

Key Takeaways for Investors

Pricing pressure persists, but cost discipline materially improved OpEx and supported gross margin stabilization; non‑cash inventory charges continue to be a swing factor for quarterly margins .
Geographic mix favors NJ and CT with tangible catalysts: Egg Harbor capacity upgrade nearing completion and strong retail/wholesale momentum; adult‑use openings in NY and Ohio are medium‑term growth drivers .
Adjusted EBITDA margin held at 12% despite revenue softness; sustaining positive Adjusted EBITDA remains a core focus (near two‑year record), but higher interest expense and tax continue to limit net profitability .
Brand equity is strengthening: Superflux leading in MA and expanding to NJ; Botanist product extensions and infused pre‑rolls broaden consumer reach and support mix improvement (e.g., IL in‑house retail mix up to 31%) .
Liquidity is constrained but managed: Q3 cash $15.1M and restricted cash $9.7M, with credit facility covenants necessitating disciplined capital deployment into eligible capex .
Near‑term trading implication: narrative likely driven by operational execution in NJ/CT and visibility into adult‑use timing in NY/Ohio; absence of formal guidance and limited Street coverage may increase volatility around regulatory headlines .
Medium‑term thesis: operating leverage from NJ capacity, broader adult‑use adoption, and ongoing cost controls can support margin resilience; watch inventory management and pricing trends to gauge EBITDA durability .

Bold highlights

Record NJ wholesale sales ($1M in August) and The Botanist Danbury +64% YoY sales demonstrate strong state-level momentum .
Gross margin improved to 38% (41% ex adjustments) alongside a 36.9% YoY OpEx reduction, highlighting effective cost discipline .
Adjusted EBITDA margin sustained at 12% despite price compression .

Acreage Holdings, Inc. (ACRHF)·Q3 2023 Earnings Summary