American cannabis operator Acreage Holdings (CSE: ACRG.U) saw its shares slump 8 per cent Thursday after reporting disappointing fourth quarter results.
The New York-based company announced Wednesday it absorbed US$50.6 million and US$150.3 million net losses for the fourth quarter and full year ended Dec. 31, 2019, respectively.
Acreage attributed the sizable fourth quarter loss to regulatory delays preventing it from opening eight cannabis stores in several U.S. states.
CEO Kevin Murphy said in a Wednesday earnings call the company has a total of 30 operational dispensaries. He said the eight new stores are fully constructed and will be up and running as soon as they are licensed.
Murphy added that sales at dispensaries open for more than a year have showed significant growth. On a pro forma basis for 2019 same store sales were up more than 40 per cent, he said.
Acreage reported fourth quarter revenue of US$21.1 million and full-year 2019 revenue of US$74.1 million.
“While 2019 was a challenging year for the industry, I am pleased with the many accomplishments we delivered for shareholders including: launching three award-winning brands, implementing our Canopy Growth strategies, and significantly growing our retail and wholesale businesses,” Murphy said in a statement.
The company is targeting positive pro-forma adjusted EBITDA in the second half of the year.
Its pro forma adjusted EBITDA for the quarter was a loss of US$15.8 million and US$44.4 million for the full year versus a loss of US$6.82 million and a loss of US$9.24 million, respectively, in the same periods of 2018.
Acreage said it has implemented general and administrative cost savings initiatives, leading to nearly US$7 million in yearly savings, or 12 per cent of reported G&A in 2019.
In Q4 2019, we launched @CanopyGrowth’s #Tweed brand and are currently retailing and wholesaling the branded flowers in Illinois, Maine, Massachusetts and Oregon. https://t.co/rI0s1qhsRb $ACRGF $ACRG.U $ACRG #AcreageEarnings #AcreageHoldings pic.twitter.com/HYJI9XODUy
— Acreage Holdings (@AcreageCannabis) February 26, 2020
Acreage said it launched Canopy Growth’s (TSX: WEED) Tweed brands in the fourth quarter, including branded flower in Illinois, Maine, Massachusetts and Oregon.
The company plans to build out 10 to 15 new retail dispensaries and focus on its existing footprint to scale operations as quickly as possible in 2020.
During the fourth quarter, Murphy said the company closed an initial sale-leaseback transaction of US$90 million with potential for future transactions. More recently, he said Acreage secured a series of comprehensive financing transactions, giving us access to up to US$150 million in capital.
The company says it operates in 20 U.S. states and has 500,000 square feet of cultivation and processing space across the country.
Last June, Acreage shareholders voted overwhelmingly in favour of being acquired by Canada’s largest cannabis company, Canopy Growth. That deal is contingent on U.S. federal legalization of cannabis.
Top photo via Deposit Photos