Jushi Holdings Inc. Reports Third Quarter 2021 Financial Results
- Third Quarter 2021 Revenue Increased 116.7% to $54.0 million as Compared to the Third Quarter 2020;
- Net Income of $38.2 million, a $68.2 million Improvement as Compared to the Third Quarter 2020;
- Adjusted EBITDA(1) Increased 124.9% to $6.4 million as Compared to the Third Quarter 2020
BOCA RATON, Fla., Nov. 17, 2021 (GLOBE NEWSWIRE) — Jushi Holdings Inc. (“Jushi” or the “Company”) (CSE: JUSH) (OTCQX: JUSHF), a vertically integrated, multi-state cannabis operator, announced its financial results for the third quarter 2021 (“Q3 2021”) ended September 30, 2021. All financial information is provided in U.S. dollars unless otherwise indicated.
Third Quarter 2021 Highlights
- Total revenue of $54.0 million, an increase of 13.1% sequentially and 116.7% year-over-year
- Gross profit of $24.5 million, an increase of 11.4% sequentially and 99.6% year-over-year
- Net income of $38.2 million, an increase of $33.5 million sequentially and $68.2 million year-over-year
- Adjusted EBITDA(1) of $6.4 million, an increase of 38.5% sequentially and 124.9% year-over-year
Third Quarter 2021 Operational Highlights
- Expanded Nevada footprint with a definitive agreement to acquire The Apothecarium,(2) an operating adult-use and medical retail dispensary in Las Vegas, NV
- Launched flower sales in Virginia, with the introduction of the flower brands, The Bank and Sèche
- Completed the acquisition of Nature’s Remedy of Massachusetts, Inc. (“Nature’s Remedy”), includes two operating retail dispensaries and a cultivation and manufacturing facility in Massachusetts (“Lakeville Facility”)
- Opened the 21st and 22nd BEYOND / HELLO™ retail locations nationwide with the Company’s 14th and 15th store in Pennsylvania
- Completed the acquisition of a licensed processor in Ohio and commenced operations at the processing facility
- Completed the acquisition of a licensed cultivator in Ohio
- Awarded a conditional retail dispensary license in Illinois through its partner Northern Cardinal Ventures
- Converted founder’s super and multiple voting shares into subordinate voting shares
- Announced the appointment of Brendon Lynch as Executive Vice President of Retail Operations
- Received an approximate $16.4 million final arbitration award in a previously announced dispute
- Announced the transition to domestic issuer status in the United States
- Announced it has entered into a definitive agreement to acquire NuLeaf, Inc. together with its subsidiaries and related companies, a Nevada-based vertically integrated operator
- Opened the 25th and 26th retail locations nationwide with the Company’s 16th BEYOND / HELLO™ store in Pennsylvania and 2nd BEYOND / HELLO™ store in Virginia
- Secured $100 million acquisition facility (“Acquisition Facility”) from SunStream Bancorp Inc.
- Filed a preliminary short form base shelf prospectus (the “Shelf Prospectus”) with the securities commissions
- Announced the appointment of Edward Kremer as Chief Financial Officer
(1) See “Reconciliation of Non-IFRS Financial Measures” at the end of this press release for more information regarding the Company’s use of non-IFRS financial measures.
(2) The Apothecarium is used under license with an affiliate of TerrAscend Corp.
Our financial performance in the third quarter demonstrates our ability to continue to drive strong top line revenue growth and improved profitability, both on a sequential and year-over-year basis, while continuing to invest in the business to support our future growth.
Jim Cacioppo, Chief Executive Officer, Chairman and Founder of Jushi
In the third quarter, we made significant progress strengthening all areas of our platform including growing our retail network through a strategic acquisition in Massachusetts, and the opening of two new stores in Pennsylvania. We also expanded access to our brands and products, including the introduction of flower in Virginia, and enhanced our wholesale capabilities with acquisitions in high-growth markets such as Massachusetts and Ohio.
Mr. Cacioppo added, “With our recently announced Acquisition Facility, we are well positioned with a strong balance sheet to continue executing on our growth plans. We expect to accelerate our expansion plans by identifying and securing assets in new and existing markets and continuing to deliver a differentiated customer experience through our best-in-class retail and online platforms.”
Financial Results for the Three Months Ended September 30, 2021
The following is a tabular summary and commentary of revenue, gross profit, net income and net income (loss) per share for the three-month periods ended September 30, 2021 and June 30, 2021.
Revenue in Q3 2021 was $54.0 million, an increase of 13.1% as compared to $47.7 million in the second quarter of 2021 (“Q2 2021”) and 116.7% from $24.9 million in the third quarter of 2020 (“Q3 2020”). The 13.1% increase in revenue was driven primarily by solid revenue growth at the Company’s BEYOND / HELLOTM stores in Pennsylvania, Virginia and Illinois, and less than one month of revenue contribution from the addition of two Nature’s Remedy stores in Massachusetts. Furthermore, increased operating activity at the Company’s grower-processor facilities in Pennsylvania and Virginia, and a partial contribution from Nature’s Remedy’s Lakeville Facility also contributed to the increase in revenue. The 116.7% year-over-year increase in revenue was primarily driven by the build-out and expansion of the Company’s retail store base, expanding from 10 to 24, and the modest expansion of the Company’s wholesale business driven by an increase in cultivation and manufacturing activity.
Gross profit in Q3 2021 was $24.5 million, or 45.3% of revenue, compared to $21.9 million, or 46.0% of revenue in Q2 2021. The increase in gross profit was primarily driven by the increase in revenue, partially offset by an increase in promotional activity focused on growing the percentage mix of private brand products, and an increase in loyalty program promotional activity. Gross profit increased $12.2 million as compared to Q3 2020 driven by higher revenue.
General, administrative and selling expenses in Q3 2021 were $24.3 million, a $0.6 million decrease as compared to $24.9 million in Q2 2021. Excluding one-time severance costs in Q2 2021, operating costs increased $1.3 million, driven primarily by an increase in headcount to support new store openings, an increase in activity at our cultivation and manufacturing facilities, and the size and scope of general administrative functions.
Q3 2021 net income was $38.2 million, or $0.22 per basic share and net loss of $0.08 per diluted share, compared to net income of $4.8 million, or $0.03 per basic share and net loss of $0.08 per diluted share in Q2 2021. The net loss per diluted share in Q3 2021 was primarily due to the dilutive effects of the derivative warrants as accounted for under IFRS. The fair value gain on the derivative warrants is removed from basic earnings to calculate diluted net loss, which is then divided by the diluted weighted average number of shares. The $33.5 million improvement in net income in the third quarter was primarily driven by the gain on fair value derivative liabilities of $55.1 million. Net income increased $68.2 million as compared to Q3 2020, driven by an increase in fair value gain on derivative warrants, revenue, and gross profit.
Adjusted EBITDA(1) in Q3 2021 was $6.4 million, an increase of 38.5% as compared to Q2 2021. The sequential increase in Adjusted EBITDA(1) was driven by higher revenues and gross profit. Adjusted EBITDA increased by 124.9%, as compared to Q3 2020, driven by significantly higher revenue and gross profit, primarily due to continued growth related to the Company’s expansion of operations and acquisitions.
Balance Sheet and Liquidity
As of September 30, 2021, the Company had $59.1 million of cash and short-term investments, total current assets of $139.3 million and current liabilities of $79.2 million. Net working capital at the end of September 30, 2021 was $60.1 million. The Company incurred approximately $14.8 million in capital expenditures during Q3 2021 and $56.4 million year to date. The Company expects to incur approximately $35 million to $40 million in capital expenditures in the fourth quarter 2021, subject to market conditions and regulatory changes, of which a portion will be funded by an existing financing arrangement. As of September 30, 2021, the Company had $102.1 million principal amount of total debt, excluding leases and property, plant and equipment financing obligations.
Subsequent to the quarter ended September 30, 2021, the Company has drawn $40.0 million from the Acquisition Facility to fund the cash portion of the recently completed acquisition of Nature’s Remedy. As of October 31, 2021, the Company had approximately $94 million in cash and short-term investments, and approximately $142 million principal amount of total debt, excluding leases and property, plant and equipment financing obligations on the balance sheet.
Mr. Cacioppo commented, “Looking ahead to the remainder of the year, we expect to open an additional two BEYOND/HELLOTM dispensaries for a total of four in Q4 and continue to build-out our Pennsylvania and Virginia grower-processor facilities, which will increase our margins and substantially grow our wholesale sales in 2022 and beyond.”
Mr. Cacioppo added, “We are revising our full year 2021 revenue guidance range to $205 to $215 million, and our 2021 Adjusted EBITDA guidance range to $21 to $25 million on an IFRS basis. The reduction in revenue and Adjusted EBITDA guidance was driven by (1) delays in new store openings, due to unforeseen regulatory approval timing-related delays; (2) slower than expected ramp-up of wholesale activity in Massachusetts due to the lack of wholesale operating infrastructure by the previous operator; (3) ongoing regulatory complexities that have impeded our ability to introduce our full suite of flower products in Virginia; and (4) a delay in signing and closing of acquisitions in Nevada. We also incurred greater than expected corporate overhead as we have ramped up hiring to support our continued growth.”
Mr. Cacioppo concluded, “While the pace at which we have been able to open new stores and launch new products has been slower than we initially anticipated, I am pleased with the progress we have made to date, and I am encouraged by our industry-leading organic growth as we continue to expand our footprint. We are also reaffirming guidance for 2022, as the challenges we have been experiencing will be substantially behind us by Q1 2022. Lastly, I am excited for what the future brings as we continue to forge our leadership position in the cannabis industry, all while driving long-term value for our shareholders.”
The Company’s MD&A and consolidated financial statements for the third quarter ended September 30, 2021, once filed, along with all previous public filings of the Company, may be found on SEDAR at www.SEDAR.com.
Conference Call and Webcast Information
The Company will host a conference call to discuss its financial results for the third quarter 2021 at 9:00 a.m. ET today, Wednesday, November 17, 2021.
Event: Third Quarter 2021 Financial Results Conference Call
Date: Wednesday, November 17, 2021
Time: 9:00 a.m. Eastern Time
Live Call: +1-877-407-0792 (U.S.Toll-Free) or+1-201-689-8555 (International)
For interested individuals unable to join the conference call, a dial-in replay of the call will be available until December 17, 2021 and can be accessed by dialing + 1-844-512-2921 (U.S. Toll Free) or + 1-412-317-6671 (International) and entering replay pin number: 13722969.
About Jushi Holdings Inc.
We are a vertically integrated cannabis company led by an industry leading management team. In the United States, Jushi is focused on building a multi-state portfolio of branded cannabis assets through opportunistic acquisitions, distressed workouts and competitive applications. Jushi strives to maximize shareholder value while delivering high quality products across all levels of the cannabis ecosystem. For more information please visit www.jushico.com or our social media channels, Instagram, Facebook, Twitter and LinkedIn.
JUSHI HOLDINGS INC.(1)
RECONCILIATION OF NON-IFRS FINANCIAL MEASURES
In addition to providing financial measurements based on IFRS, the Company provides additional financial metrics that are not prepared in accordance with IFRS. Management uses non-IFRS financial measures, in addition to IFRS financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes and to evaluate the Corporation’s financial performance. These non-IFRS financial measures are EBITDA and Adjusted EBITDA (both defined below). Management believes that these non-IFRS financial measures reflect the Company’s ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as they facilitate comparing financial results across accounting periods and to those of peer companies. As there are no standardized methods of calculating these non-IFRS measures, the Company’s methods may differ from those used by others, and accordingly, the use of these measures may not be directly comparable to similar measures used by others, thus limiting their usefulness. Accordingly, these non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
EBITDA and Adjusted EBITDA are financial measures that are not defined under IFRS. Management believes EBITDA is a useful measure to assess the performance of the Company as it provides meaningful operating results by excluding the effects of expenses that are not reflective of our operating business performance. Management defines EBITDA as net income (loss), or “earnings”, before interest, income taxes, depreciation and amortization. Management believes Adjusted EBITDA is a useful measure to assess the performance of the Company as it provides more meaningful operating results by excluding the effects of expenses that are not reflective of the Company’s operating business performance and other one-time or non- recurring expenses. Management defines Adjusted EBITDA as EBITDA before: (i) fair value changes included in inventory sold and biological assets; (ii) share-based compensation expense; (iii) fair value changes in derivatives; (iv) gains/losses on debt and warrant modifications; (v) net gains on business combinations; (vi) gains/losses on investments and financial assets; (vii) acquisition and deal costs; (viii) severance costs; (ix) start-up costs; (x) gains/losses on legal settlements; (xi) inventory step-up on business combination and (xii) registration statement costs.