TerrAscend Reports Q1 2023 Earnings: $69.4 Million Net Revenue
TerrAscend (CSE: TER) (OTCQX: TRSSF), a leading cannabis operator based in North America last week reported their financial results for the first quarter of 2023. The company reported a net revenue of $69.4 million which was a 42.8% year-over-year increase. This was the first time that the company generated a positive free cash flow since the first quarter of 2021.
First Quarter 2023 Financial Highlights
In the first quarter of 2023, the net revenue amounted to $69.4 million, showing a 0.6% sequential growth compared to the fourth quarter of 2022, and a significant 42.8% year-over-year growth. This increase was primarily driven by strong performance in New Jersey and the completion of the Allegany dispensary acquisition in Maryland, partially offset by the usual seasonal variations between the first and fourth quarters.
The gross margin for the first quarter of 2023 improved to 48.8% compared to 44.6% in the fourth quarter of 2022 and 32.1% in the first quarter of 2022. Adjusted gross profit margin, a non-GAAP financial measure, reached 49.0% for the first quarter of 2023, compared to 45.3% in the fourth quarter of 2022 and 40.3% in the first quarter of 2022. The 420 basis point sequential improvement in gross profit margin from the fourth quarter of 2022 to the first quarter of 2023 was mainly attributed to increased yields, optimized product mix, and improved utilization of capacity in New Jersey, Michigan, and Maryland.
During the first quarter of 2023, General & Administrative (G&A) expenses, excluding share-based compensation expense, amounted to $26.0 million, down from $33.6 million in the fourth quarter of 2022 and up from $18.1 million in the first quarter of 2022. Excluding one-time items of $1.9 million primarily related to SOX implementation and legal settlements in the first quarter, and $9.9 million mainly related to bad debt in the fourth quarter as previously disclosed, G&A expenses were $24.1 million and $23.7 million, respectively. The modest increase can be attributed to the acquisition of the AMMD dispensary in Maryland. Share-based compensation expense for the first quarter of 2023 amounted to $1.7 million, compared to $1.6 million in the fourth quarter of 2022 and $3.4 million in the first quarter of 2022.
In terms of GAAP net loss from continuing operations, we reported a loss of $19.2 million in the first quarter of 2023, compared to a loss of $2.0 million in the fourth quarter of 2022 and $13.8 million in the first quarter of 2022. The increase in net loss of $17.2 million quarter over quarter primarily stems from a $21.2 million reversal of goodwill and intangible impairments in the fourth quarter of 2022 related to the finalization of the Gage acquisition accounting.
The adjusted EBITDA from continuing operations for the first quarter of 2023, a non-GAAP measure, was $12.2 million, representing a margin of 17.6%. This is consistent with the $12.2 million and 17.7% margin reported in the fourth quarter of 2022, and a significant improvement compared to the $4.9 million and 10.1% margin in the first quarter of 2022.