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Acreage Holdings, Inc. (ACRHF)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 revenue was $39.6M (+2% q/q, -30% y/y), gross margin 35% (down from 43% in Q2), and adjusted EBITDA was $0.6M; net loss was $22.2M and diluted EPS was $(0.16) .
  • Liquidity improved with $13.8M cash and cash equivalents at quarter-end, supported by ~$8M net proceeds from an amended and restated credit agreement; Ohio adult-use launch contributed 38% of Ohio revenue in Q3 .
  • The company highlighted inventory restocking and brand launches (Superflux in IL with 44% wholesale penetration) as drivers for sequential revenue improvement, while acknowledging price compression and input cost inflation pressures .
  • Acquisition by Canopy USA is expected to close no later than 1H 2025; management is pursuing closer collaboration with Jetty and Wana to drive profitability post-close .
  • Wall Street consensus estimates via S&P Global were unavailable for ACRHF; beats/misses versus consensus cannot be assessed this quarter (consensus unavailable via S&P Global for ACRHF).

What Went Well and What Went Wrong

What Went Well

  • Ohio adult-use launch at The Botanist drove 38% of Ohio revenue in Q3; management called the market “an incredible growth opportunity” and expects improved revenue and adjusted EBITDA as 2024 closes .
  • Brand expansion and product traction: Superflux flower debuted in Illinois with 44% wholesale penetration; enhanced inventory in CT, IL, NJ expected to boost sales near term .
  • Liquidity actions: Amended and Restated Credit Agreement yielded ~$8M net proceeds and fully repaid the prior lender, improving flexibility to pursue growth .

What Went Wrong

  • Revenue down 30% y/y and adjusted EBITDA down 91% y/y as liquidity constraints limited inventory access and competitive pressure persisted .
  • Gross margin fell to 35% (from 38% y/y and 43% q/q), driven by higher input costs and price compression; net loss widened versus last year’s Q3 .
  • Continued operating loss: net operating loss of $(8.7)M and total operating expenses flat q/q at ~$22.6M despite cost reduction efforts, indicating profitability remains challenged .

Financial Results

Consolidated P&L (quarterly progression, oldest → newest)

MetricQ1 2024Q2 2024Q3 2024
Revenue ($USD Millions)$45.301 $38.998 $39.624
Gross Margin (%)(3)% 43% 35%
Total Operating Expenses ($USD Millions)$21.685 $22.539 $22.578
Net Loss ($USD Millions)$(33.319) $(24.129) $(22.240)
Diluted EPS ($USD)$(0.24) $(0.18) $(0.16)
Adjusted EBITDA ($USD Millions)$2.0 $1.9 $0.6

YoY Comparison (Q3 2024 vs Q3 2023)

MetricQ3 2023Q3 2024YoY Change
Revenue ($USD Millions)$56.502 $39.624 (30)%
Gross Margin (%)38% 35% -300 bps
Adjusted EBITDA ($USD Millions)$6.574 $0.622 (91)%
Diluted EPS ($USD)$(0.07) $(0.16) More negative

Segment Revenue (US$ thousands)

SegmentQ1 2024Q2 2024Q3 2024
Retail revenue, net$31,811 $26,374 $27,435
Wholesale revenue, net$13,490 $12,624 $12,188
Other revenue, net— — $1
Total revenues, net$45,301 $38,998 $39,624

KPIs and Balance Sheet Snapshots

KPI / Balance ItemQ1 2024Q2 2024Q3 2024
Cash & Cash Equivalents ($USD Millions)$7.342 $9.999 $13.780
Inventory ($USD Millions)$22.833 $34.015 $32.909
Debt, non-current ($USD Millions)$101.306 $258.409 $272.225
Weighted Avg Shares (thousands)115,995 116,278 119,965
Ohio non-medical share of state revenue (%)N/AN/A38%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Canopy USA acquisition timelineClose by 1H 2025“Expected to close in the first half of calendar 2025” (Q2) “Expected to close no later than in the first half of calendar 2025” (Q3) Maintained
Ohio revenue outlookFY 2025 (state-level)“Expected to double revenue in the state by 2025 from ~$50M in 2023” (Q2) No update provided in Q3 press release Maintained
Botanist Collingswood openingQ4 2024Not previously guided“Expected to open for medical and adult-use sales in Q4 2024, subject to final regulatory approval” (NJ) New
Formal consolidated financial guidance (revenue, margins, OpEx, tax rate)FY/Q4 2024None provided (Q1/Q2) None provided (Q3) Maintained (no formal guidance)

Earnings Call Themes & Trends

Note: A Q3 2024 earnings call transcript was not available in the source set; themes are derived from management commentary and press releases.

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Liquidity/credit & inventoryQ1: Cash preservation; margin impacted by accounting change; inventory lower . Q2: Credit challenges constrained inventory; recapitalization and private placement .~$8M net proceeds from amended credit agreement; inventory restocking across CT/IL/NJ to improve sales .Improving liquidity; restocking underway
Ohio adult-use launchAnticipated in Q2 commentary, Ohio expected to be a growth driver .Launch executed; 38% of Ohio revenue from non-medical in Q3 .Positive momentum post-launch
Canopy USA acquisitionProcess advancing; expected close 1H 2025 .“No later than” 1H 2025; pursue collaboration with Jetty and Wana .On track; integration planning intensifying
Product/brand executionQ1: Entry into NY adult-use wholesale; record NJ production . Q2: Launches across markets; IL Superflux edibles .IL Superflux flower wholesale penetration 44%; enhanced inventory levels; NY YTD record wholesale revenue in September .Broadening footprint; brand traction building
Margin dynamicsQ1: Reported GM (3)%; adjusted GM 31% excluding non-cash effects . Q2: GM 43% on efficiencies and pricing .GM 35%; pressures from input costs, price compression .Mixed: sequential decline vs Q2
Regulatory & footprintQ1: CT hybrid dispensary; NY adult-use wholesale entry . Q2: PA dispensary permits; NJ relocation approval initiated .NJ Cannabis Commission approval; Collingswood opening expected Q4; NY wholesale momentum .Continued regulatory progress

Management Commentary

  • “With our strengthened financial position, we have bolstered our capacity to pursue opportunities in these markets as they continue to mature, which is expected to play a pivotal role in driving both revenue generation and improvements in Adjusted EBITDA* as we close out 2024. The Ohio market presents an incredible growth opportunity for us...” — Dennis Curran, CEO .
  • “Our acquisition by Canopy USA is advancing as planned, and in anticipation of closing, we are actively seeking opportunities to collaborate with Jetty and Wana...” — Dennis Curran, CEO .
  • Q2 context: “We’ve now recapitalized our business and expect our commercial activities... to significantly accelerate revenue and Adjusted EBITDA* for the remainder of the year.” — Dennis Curran, CEO .

Q&A Highlights

  • Not available: No Q3 2024 earnings call transcript was located in the source set used for this analysis; therefore, Q&A highlights and any call-specific guidance clarifications cannot be provided.

Estimates Context

  • Consensus unavailable: S&P Global Wall Street consensus for ACRHF was not retrievable this quarter; as a result, we cannot assess beats/misses versus consensus for revenue, EBITDA, or EPS.
  • Implications: In lieu of consensus comparisons, focus is on sequential trends and operational catalysts (Ohio adult-use launch, credit agreement proceeds, inventory restocking), and on y/y trajectory indicating ongoing margin and competitive pressures .

Key Takeaways for Investors

  • Sequential stabilization with revenue +2% q/q and narrowed net loss, but margin retracement to 35% underscores lingering input cost inflation and price compression; watch Q4 rebound from inventory restocking .
  • Ohio adult-use launch is a clear near-term growth driver; 38% of Ohio revenue in Q3 came from non-medical, suggesting a pathway to scale as the market matures .
  • Liquidity improved via ~$8M net proceeds and prior lender repayment; monitor leverage metrics and interest expense given non-current debt of $272.2M at Q3-end .
  • Brand execution (Superflux penetration in IL, NY wholesale momentum) and NJ footprint expansion (Collingswood expected in Q4) provide tactical catalysts for sales mix and gross profit recovery .
  • Canopy USA transaction progress (“no later than” 1H 2025 close) and collaboration with Jetty/Wana are medium-term strategic positives for product breadth and profitability potential post-integration .
  • Consensus unavailability reduces clarity on market expectations; trading setups likely key off state-level adult-use ramp in Ohio, inventory rebuild, and any updates on regulatory milestones and Canopy USA timing .
  • Risk skew remains to competitive pricing and cost inflation; monitor gross margin trajectory and operating expense discipline across Q4 and early 2025 .