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AYR Wellness Reports Second Quarter 2023 Results – Cannabis Company High on Margins

AYR Wellness Reports Second Quarter 2023 Results

Aug. 17, 2023

Revenue up 18% Y/Y to $116.7 Million, Excluding Discontinued Operations

Company Delivers Record Adjusted EBITDA(1) of $29.4 Million, up 78% Y/Y, 12% Sequentially, with Adjusted EBITDA Margin of 25%

GAAP Loss from Operations Improved 81% Y/Y, 79% Sequentially to $(4.5) Million, Excluding Discontinued Operations

Aug. 17, 2023 AYR Wellness Inc.  a leading vertically integrated U.S. multi-state cannabis operator (“MSO”), is reporting financial results for the second quarter ended June 30, 2023. Unless otherwise noted, all results are presented in U.S. dollars.

The following financial measures are reported as results from continuing operations due to the sale of the Company’s business in Arizona in March 2023, which are reported as discontinued operations. All historical comparisons have been restated accordingly.

David Goubert, President & CEO of AYR, said, “The second quarter represented a meaningful step in AYR’s journey towards generating meaningful cash flow, as we simultaneously got leaner and more efficient while continuing to lay the foundation for revenue growth. We generated record Adjusted EBITDA, up 78% year-over-year with an Adjusted EBITDA margin of 25% and improved our GAAP loss from operations by 81% year-over-year to a loss of $4.5 million. Our efforts around cost savings and optimization accelerated margin expansion ahead of our expectations, and we believe these efforts will enable us to maintain Adjusted EBITDA margin in the mid-twenties for the second half as we unlock working capital through aggressive inventory management throughout the remainder of the year.

“We have also made meaningful progress on improving our liquidity profile in the second quarter. Along with the amendments to various earnout considerations completed in May, we also reached contingent agreements to extend the maturity of $69 million in promissory notes by two years and recently refinanced and upsized our Gainesville cultivation facility mortgage. As a result of the collective amendments to the vendor notes, contingent promissory notes and earn-out payments, and refinancing and upsizing of our Gainesville facility mortgage, we have extended the payment terms of more than $120 million of obligations, inclusive of the $69 million of contingent agreements. These important milestones reflect our commitment to strengthening AYR’s balance sheet, as we are intently focused on improving our working capital and liquidity.

“We are positioning AYR for sustainable long-term growth and profitability across all our markets, while prioritizing the financial health of the Company. As we look to the rest of the year, we plan to accelerate our cash generation via our 2023 optimization plan, making strides in inventory optimization, continuing to align our production with demand, and developing further synergies within our supply chain, retail, wholesale and purchasing functions. Additionally, we believe our ongoing initiatives to grow our Florida footprint, improve operations in New Jersey, and build out retail footprints in Ohio, Illinois, and Connecticut will enable us to accelerate growth in the quarters ahead.”

Second Quarter Financial Summary (excludes results from AZ for all periods) ($ in millions, excl. margin items)

                                                  % Change   % Change 
                       Q2 2022  Q1 2023  Q2 2023    Q2/Q2      Q2/Q1 
---------------------  -------  -------  -------  --------  ---------- 
  Revenue                $98.9   $117.7   $116.7     18.0%     -0.8% 
---------------------  -------  -------  -------  --------  -------- 
  Gross Profit           $36.0    $48.3    $56.6     57.2%     17.3% 
---------------------  -------  -------  -------  --------  -------- 
  Adjusted Gross 
   Profit(1)             $51.5    $65.3    $69.1     34.0%      5.8% 
---------------------  -------  -------  -------  --------  -------- 
  Operating Loss       $(23.7)  $(21.7)   $(4.5)     80.8%     79.1% 
---------------------  -------  -------  -------  --------  -------- 
  Adjusted EBITDA(1)     $16.5    $26.3    $29.5     78.1%     11.8% 
---------------------  -------  -------  -------  --------  -------- 
  Adjusted EBITDA 
   Margin(1)             16.7%    22.4%    25.2%    854bps    284bps 
---------------------  -------  -------  -------  --------  -------- 

(1) Adjusted EBITDA, Adjusted Gross Profit and Adjusted EBITDA Margin are non-GAAP measures, and accordingly are not standardized measures and may not be comparable to similar measures used by other companies. See Definition and Reconciliation of Non-GAAP Measures below. For a reconciliation of Operating Loss to Adjusted EBITDA as well as Gross Profit to Adjusted Gross Profit, see the reconciliation tables appended to this release.

Second Quarter and Recent Highlights

   -- Retail Updates 
          -- Opened the Company's 86th retail location, subsequent to quarter 
          -- Q2 retail sales increased 1% sequentially from Q1, with total 
             transactions up 6%. 
          -- The Company has opened 10 Florida stores thus far in 2023, 
             bringing its Florida store total to 62 open locations to date. The 
             Company plans to exit 2023 with a total of Florida 64 stores, 
             compared to 52 to start the year. 
          -- Completed re-brand of full fleet of Florida stores to AYR Cannabis 
          -- Announced agreement to acquire third Ohio dispensary license. 
          -- Announced an exclusive licensing and retail agreement in Florida 
             with Kiva Confections, a global leader in cannabis edibles. As 
             previously announced, the agreement will bring Kiva's collection 
             of award-winning cannabis edibles to the Florida market for the 
             first time via AYR's retail locations across the state. 
   -- Corporate Updates 
          -- Closed the acquisition of Tahoe Hydroponics, an award-winning 
             cultivator and one of Nevada's top producers of high-quality 
             cannabis flower. 
          -- As previously announced, reached an agreement to amend the terms 
             of contingent consideration under the membership interest purchase 
             agreements of GSD NJ, LLC and Sira Naturals Inc. 
          -- As previously announced, reached contingent agreements to defer 
             approximately $69 million of promissory note payments. 
          -- Subsequent to quarter end, closed a $40 million refinancing and 
             upsizing of its existing mortgage for its Gainesville cultivation 
             facility, contributing a net $14 million of cash proceeds. The new 
             loan carries an interest rate of 5-year FHLB Rate + 4%.

Financing and Capital Structure

   -- The Company deployed $6.7 million of capital expenditures in Q2 and ended 
      the quarter with a cash balance of $60.0 million. 
   -- The Company has approximately 77.2 million fully diluted shares 
      outstanding based on a treasury method calculation.i 
   -- Subsequent to the quarter end, the Company closed on a $40 million 
      refinancing and upsizing of its existing mortgage for its Gainesville 
      cultivation facility. Following the July 7, 2023, paydown of its existing 
      $25.3 million mortgage, the Company had a pro forma cash balance of $74 
   -- In 2023, the Company filed an application with the U.S. Internal Revenue 
      Service ("IRS") for the employee retention credit ("ERC"), as originally 
      enacted through the U.S. Coronavirus Aid, Relief, and Economic Security 
      Act. The Company anticipates receiving $12.3 million relating to its ERC 


The Company remains committed to its financial health and is positioning itself to achieve sustainable long-term growth and profitability across all markets of operation. AYR expects to generate revenue and Adjusted EBITDA growth in the second half of 2023 and into 2024 and to generate positive GAAP cash flow from operations for the calendar year 2023.

AYR’s expectations for future results are based on the assumptions and risks detailed in its Management’s Discussion and Analysis (“MD&A”) for the period ended June 30, 2023, as filed on SEDAR+ and with the U.S. Securities and Exchange Commission (“SEC”).


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Florida Cannabis has a Treatment for Drug Addiction. Yet, Ron DeSantis Bans Medical Marijuana in Sober Living & Recovery Facilities

Ron DeSantis Bans Medical Marijuana In Sober Living & Recovery Facilities Despite Doctor’s Recommendation

Original Story by Maureen Meehan 
Ron DeSantis Bans Medical Marijuana In Sober Living & Recovery Facilities Despite Doctor’s Recommendation© Provided by Benzinga

Ron DeSantis signed a bill prohibiting sober living facilities from allowing residents to use or possess medical marijuana even if the individual has a recommendation from a physician. Florida legalized medical marijuana in 2016 when voters passed a constitutional amendment.

DeSantis, who is in a volatile primary race for the Republican presidential nomination with Donald Trump, signed the legislation this week, reported Marijuana Moment

Under the new bill, applicants seeking to operate drug recovery residences under the Florida Department of Children and Families need to declare that they do not permit the use of cannabis, which “includes marijuana that has been certified by a qualified physician for medical use.” Residents will be permitted to use other pharmaceutical drugs prescribed by doctors, “so the law explicitly singles out medical marijuana,” noted Marijuana Moment

Why It Matters: Cannabis As A Treatment For Drug Addiction

Medical marijuana has been found to be a viable alternative to current replacement therapies used to treat opioid addiction. The opioid overdose epidemic is arguably the worst public health crisis in U.S. history. New data from the Centers for Disease Control and Prevention shows overdose deaths are hovering near record numbers. It report noted that just under 110,000 people died from drug overdoses last year.

Research: Medical Marijuana Can Help

Growing pre-clinical and clinical evidence appears to support the use of cannabis for addictions, notes a study funded by the National Institute on Drug Abuse. The evidence summarized in the study, which is one among many, demonstrated the potential that cannabis has to ease opioid withdrawal symptoms, reduce opioid consumption, ameliorate opioid cravings, prevent opioid relapse and reduce overdose deaths.

Addiction: Florida Hit Especially Hard

In the area of synthetic opioids and fentanyl, Florida reported over 5,900 fatal overdoses in 2022. Emergency Medical Services noted that in 2022, teams responded to over 105,400 overdose calls, according to the Florida Department of Health.

Earlier this week, DeSantis signed a bill on Monday enabling medical marijuana patients to use telehealth to renew their physician approvals for MMJ. The bill will also help Black farmers get valuable medical marijuana licenses after years of delays.

Shortly after that, DeSantis signed legislation removing fentanyl test strips from Florida’s list of prohibited drug paraphernalia, which health officials and advocates view as an important step in curtailing the number of opioid overdoses in Florida.

We, at Inspirational Technologies are at the forefront of Inspirational and Frontrunners on the frontier of current technology.

We are often faced with our own personal conflicts which directly influence our interactions with our peers and family. 

When Inspirational Technologies is an endorsement of the “Cannabis” approach to the medical condition, we say, let’s let the look at the data and the people who say that they benefit for cannabis alternatives.



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