Jushi Holdings’ Second Quarter Earnings Fall Below Revenue Projections

BOCA RATON, Fla., Aug. 07, 2024 (GLOBE NEWSWIRE) — Jushi Holdings Inc. (“Jushi” or the “Company”) (CSE: JUSH) (OTCQX: JUSHF), a vertically integrated, multi-state cannabis operator, is pleased to announce its financial results for the second quarter ended June 30, 2024 (“Q2 2024”). All financial information is unaudited and provided in U.S. dollars unless otherwise indicated and is prepared under U.S. Generally Accepted Accounting Principles (“GAAP”).

Second Quarter 2024 Financial Highlights 

• Total revenue of $64.6 million
• Gross profit and gross profit margin of $32.6 million and 50.4%, respectively
• Net loss of $1.9 million
• Adjusted EBITDA¹ of $14.5 million
• Adjusted EBITDA¹ margin of 22.4%
• Cash, cash equivalents, and restricted cash of $35.0 million as of quarter end
• Net cash flows provided by operations of $5.5 million

¹ See “Use of Non-GAAP Financial Information” and “Unaudited Reconciliation of Net Income (Loss) to Adjusted EBITDA and Calculation of Adjusted EBITDA Margin” below.

Second Quarter 2024 Company Highlights

• Appointed Todd West as Chief Operating Officer, adding over 25 years of experience in retail, manufacturing, and wholesale operations experience within the food and beverage and cannabis industries.
• Debuted 308 new unique SKUs across the Company’s five vertical markets, including the introduction of The Lab 2g vape carts in Pennsylvania, The Lab and Tasteology brands full product suites in Nevada, as well as new flavors, ratios, and potencies of Tasteology troches in Pennsylvania and edibles in Virginia and Massachusetts.
• Advanced to build-out phase of an additional adult-use retail dispensary in Illinois, enabling the Company to open the fifth Beyond Hello™ location in the state with Beyond Hello™ Peoria, which is anticipated to become operational in the fourth quarter of 2024, subject to final regulatory approvals.
• Expanded Jushi-branded product sales as a percentage of total retail revenue to 55.9% across the Company’s five vertical markets, a 920 basis point improvement compared to Q2 2023.

Post Quarter-End Developments

• Completed the refinancing of our first lien debt with SunStream Bancorp Inc. (the “Acquisition Facility”) through the issuance of a $48.5 million principal amount of secured term loans from a syndicate of lenders and approximately $4.3 million of cash on hand.
• Strengthened our balance sheet through additional debt repayments, resulting in our short-term debt subject to scheduled repayments being reduced from $10.0 million as of June 30, 2024 to less than $1.0 million.
• Awarded non-medical retail sales license in Ohio for the Company’s planned Beyond Hello™ dispensary in Springdale, which is expected to open in the first quarter of 2025 and be the Company’s second Ohio location.
• Executed an agreement for the sale of one of our dispensaries at a sale price of $3.0 million. This sale is subject to regulatory approvals and customary closing conditions, and is expected to be completed by the first quarter of 2025.

Management Commentary
“Our second quarter performance underscores our efforts to strengthen our asset base while maintaining prudent cost-saving measures, and we believe this will help position us on a steady path to sustained profitability,” said Jim Cacioppo, Chief Executive Officer, Chairman, and Founder of Jushi. “Our organization-wide operational improvement plan is yielding promising results, with gross margin reaching 50.4% and Adjusted EBITDA further improving to 22.4% of revenue for the quarter. These successes were driven by efficiencies achieved mainly at our Virginia grower-processor facility and our ability to maintain a consistent output of our high-margin, top-selling product offerings. Additionally, Todd West, our newly appointed COO, has already played a crucial role in guiding additional enhancements across our business and we anticipate further progress throughout the remainder of the year under his direction.”

Mr. Cacioppo continued, “Our commercialization strategy remains a pivotal driver of our performance improvements, particularly in markets such as Ohio and Virginia. This includes the diversification of our brands and product offering with new, exclusive cultivars, and consistent enhancements to quality, potency, and yields. Throughout the second quarter, we launched an additional 308 new, high-margin SKUs across our footprint, bringing our year-to-date total to an impressive 751 new SKUs. We were thrilled to bring our full offerings of The Lab and Tasteology brands to Nevada to bolster our presence in this market, as well as launch our highly anticipated The Lab 2g vape cartridges in Pennsylvania. Our wholesale business also continues to perform well, particularly in Ohio which saw a 110% sequential and 76% year-over-year sales increase, signaling an encouraging trajectory following yesterday’s launch of non-medical sales in the commonwealth. We will continue to scale our operations in Ohio, with plans to expand our capacity by approximately 15,000 square feet of double stacked cultivation, upgrades to our newly enhanced processing operations, as well as the anticipated opening of a non-medical dispensary in Springdale during the first quarter of 2025.”

Revenue in Q2 2024 decreased 2.8% to $64.6 million as compared to $66.4 million in Q2 2023. The year-over-year decrease in revenue can be attributed to:

• A decline in sales Illinois of 4% – while the number of units sold increased approximately 12%, the average price per unit declined as a result of pricing pressures due to the neighboring state of Missouri moving to recreational use;
• A decline in sales in Massachusetts of 6% and in Nevada of 13% – while the number of units sold in Massachusetts increased approximately 2% and in Nevada approximately 4%, the average price per unit declined due to market price compression and continued competition; and
• A decline in sales in Pennsylvania of 11% due to a decline in units sold of approximately 13% driven by increased competition. However, average price per unit remained stable year-over year.

These declines were partially offset by an increase in sales in Virginia of 18% primarily due to the opening of one new store in August 2023. The Company ended the quarter with thirty-five operating dispensaries in seven states, as compared to thirty-four in seven states at the end of Q2 2023.

Wholesale revenue increased 11.6% year-over-year to $7.6 million in Q2 2024 as compared to $6.8 million in Q2 2023. The increase is primarily attributable to wholesale revenue growth in Virginia of 72% as the cultivation and processing facility in Virginia matured and had more product available for sale to third-parties. The growth in Virginia was partially offset by a 37% decline in wholesale revenue in Massachusetts due to continued competition.

Gross profit in Q2 2024 was $32.6 million, or 50.4% of revenue, compared to $30.6 million, or 46.0% of revenue in Q2 2023. The increase in gross profit and gross profit margin was driven by efficiencies at our cultivation and processing facilities which have enabled us to be more competitive on cost. During Q2 2024, we generated positive gross profit and gross profit margin from our wholesale revenue whereas in Q2 2023, we generated a loss. In our retail channel, gross profit declined due to lower sales; however, gross profit margin improved 110 basis points as a result of increased sell-through of Jushi branded products at our retail stores. Jushi branded product sales as a percentage of total retail revenue were 56% in Q2 2024 across the Company’s five vertical markets compared to 47% in the prior year.

Operating expenses for Q2 2024 were $24.2 million, compared to $27.2 million in Q2 2023, a reduction of $3.0 million or 11.0% year-over-year. The decrease was due primarily to (i) lower share-based compensation expense which reflects lower value of share-based compensation granted as well as forfeitures; and (ii) gains on the sale of certain non-core assets and operating lease terminations. These declines were partially offset by an increase in depreciation and amortization expense due to the expansion of our retail operations which resulted in certain fixed assets placed into service, as well amortization of our business licenses which commenced during the current quarter as we concluded, based on our assessment, that the Company’s business licenses no longer have indefinite useful lives.

Net loss for Q2 2024 was $1.9 million, primarily due to other expense, net of $1.0 million and income tax expense of $9.3 million, which was partially offset by income from operations of $8.4 million. Other expense, net, included interest expense of $9.1 million, which was partially offset by fair value gain on derivatives of $5.3 million and other income, net of $2.7 million.

Adjusted EBITDA¹ in Q2 2024 was $14.5 million compared to $12.6 million in Q2 2023, representing an improvement of $1.9 million year-over-year.