Acreage Holdings Reports 27% Revenue Decline, Net Loss Widens in Latest 10-Q Filing

Acreage Holdings, Inc. reported significant financial challenges in its latest 10-Q filing for the nine months ended September 30, 2024. The company experienced a total revenue decline of 27% year-over-year, with revenues dropping from $170.6 million in 2023 to $123.9 million in 2024. Retail revenue also saw a substantial decrease, falling from $130.7 million to $85.6 million over the same period. The gross profit for the nine months ended September 30, 2024, was $29.3 million, down from $69.0 million in 2023, reflecting a gross margin contraction from 40% to 24%.

The net loss attributable to Acreage Holdings increased significantly, reaching $68.5 million for the nine months ended September 30, 2024, compared to a loss of $38.4 million in the prior year. The net loss per share also widened, from $(0.34) to $(0.58). The company reported a net loss of $22.2 million for Q3 2024, compared to $7.9 million in Q3 2023.

Acreage's total assets decreased from $320.3 million at the end of 2023 to $293.1 million as of September 30, 2024. Current liabilities rose to $65.3 million, up from $57.7 million, while non-current debt increased from $232.8 million to $272.2 million. The company’s cash and cash equivalents slightly improved to $13.8 million from $13.6 million at the end of 2023.

Strategically, Acreage has focused on cash flow generation and growth in core markets, particularly following its entry into the New York adult-use market in January 2024. The company also relocated a Connecticut dispensary, which began adult-use sales in March 2024. However, the company did not complete any acquisitions during the reporting period, although it had previously acquired cultivation and retail operations in Maine in January 2023.

Acreage's financial position raises concerns about its ability to continue as a going concern, with management acknowledging substantial doubt regarding its financial viability for at least the next year. The company is implementing plans to mitigate these concerns, including expense reduction strategies and leveraging public equity markets for financing.

In terms of operational adjustments, Acreage has changed its inventory costing method to a three-month rolling average, which resulted in a $13.8 million charge to cost of goods sold. The company also reported a material weakness in its internal controls over financial reporting, attributed to staffing challenges and turnover, which it aims to address by 2024.