Ascend Wellness Holdings Inc. (CSE: AAWH.U) (OTCQX: AAWH) reported revenue for the fourth quarter that ended on Dec. 31, 2024, fell 3% from the previous year, but the company still posted an 8.3% year-over-year grain for the full year.

Fourth-quarter earnings

Total net revenue declined 4% quarter-over-quarter to $136 million, which was also lower than last year’s revenue of $140 million for the same period. The company also missed the Yahoo Finance average analyst estimate for revenue of $140 million.

The company attributed the decline in retail revenue to the softening of sales in Illinois, Massachusetts, Michigan and New Jersey, driven by a combination of pricing pressure and volume. The decline was partially offset by the contribution of adult-use sales in Ohio that began in the prior quarter and the ramp up of new partner stores in Illinois.

Third-party wholesale revenue totaled $45.6 million, which represented a 5% decrease compared to the prior quarter, attributable to declines in Illinois and New Jersey, partially offset by improvements in Massachusetts.

Ascend reported a net loss of $16.8 million for the quarter, which was an improvement over the third quarter net loss of $28.3 million and last year’s net loss of $19 million. The company said the improvements were primarily due to the absence of certain one-time costs recognized in the third quarter of 2024, the contribution of higher margins and a benefit from certain cost-savings initiatives.

Full-year earnings

For the full year, Ascend reported that net revenue increased 8.3% year-over-year to $561.6 million. Retail revenue increased 0.3% year-over-year to $372.2 million, and wholesale revenue increased 28.5% year-over-year to $189.4 million.

Still, the company reported a net loss of $85 million versus a net loss of $48.2 million for 2023.

“The fourth quarter marked the first full quarter with our new management team in place, and I am pleased with the initial progress we made on our key initiatives – improving profitability, maximizing asset efficiency and driving cash flow generation,” CEO Sam Brill said. “This was achieved through our team’s success in substantially completing our $30 million in annualized cost savings target, ahead of plan, and with this milestone completed we have turned our efforts to driving revenue growth.”

Total general and administrative expenses were $40.8 million in the quarter, or 30.0% of revenue, compared to $46.1 million, or 32.6% of revenue, for the third quarter of 2024. The company attributed the improvement of G&A expenses as a percentage of revenue primarily due to certain cost-savings initiatives, lower headcount in the current quarter, and the absence of certain one-time expenses recognized in the third quarter of 2024.

As of Dec. 31, 2024, cash and cash equivalents were $88.3 million, a sequential increase of $23 million. The company’s net debt was $220.2 million.

“Significant progress has been made in strengthening our balance sheet and improving our margins and profitability. This has resulted in a 450 basis point sequential improvement in Adjusted EBITDA margin and $30.1 million in Free Cash Flow generated in the quarter,” CFO Roman Nemchenko said. “Additionally, we have taken steps to rationalize our inventory levels through more rigorous purchase planning meant to clear the backlog.”

There is a tsunami of debt headed straight for the cannabis industry.

When capital dried up a few years ago, many publicly traded cannabis companies turned to debt for needed funding. Now, roughly $1.83 billion of that debt is set to come due by 2026.

Facing the wave

There’s no way to know exactly how much debt is held by private cannabis companies, but regulatory filings for the publicly traded firms paints a stark picture.

For example, Ascend Wellness Holdings (OTC: AAWH) was staring down $275 million in debt due in August 2025, which made up 89% of its overall debt​. Green Thumb Industries (OTC: GTBIF) was facing $225 million senior secured debt due April 30, 2025.

The good news: Both of these companies took preemptive action to address these massive bills.  In July, Ascend completed a private placement of $235 million of 12.75% senior secured notes, due in 2029, to pay down at least $215 million of its 2025 debt. Meanwhile, Green Thumb Industries closed on a $150 million five-year syndicated credit facility led by Valley National Bank in September and was able to retire that debt.

“We’ve got two companies that have given themselves time on that front,” Emily Paxhia of Poseidon Asset Management told Green Market Report. “And the GTI thing was interesting. It was the first syndicated, truly syndicated bank financing.”

Paxhia noted that while debt is available for some companies to restructure, the health of some of these companies isn’t attractive to the lenders.

“You’ve got all these debt funds and there’s this mythology that debt is safe. But would you want those assets if it doesn’t work out? No, that sounds like a nightmare to me,” she said.

Several other companies are still staring down the debt wave. Cansortium, which operates as Fluent, faces a $56 million debt maturity in April 2025, 53% of its total debt. The fair value is $52 million, but the company said in its latest earnings release that it could prepay the loan or increase its term loan by up to $20 million.

Jushi Holdings (OTC: JUSHF) had $58 million due December 2024, but it extended its runway by two years with a new $48.5 million senior secured term loan due in December 2026. With that, Jushi also pulled down some cash to pay its existing first lien credit facility.

Watching the wave

Several other large cannabis companies will face significant debt maturities in 2026, including:

• Curaleaf Holdings: $475 million in 8.0% senior secured notes due December.
• Cresco Labs: $400 million in senior secured term loans maturing in August.
• Trulieve Cannabis: $350 million in notes, divided into two tranches, both maturing in October.
• Verano Holdings: $350 million credit agreement maturing in October.

In the second quarter, Curaleaf reported that it paid $15 million of its debt, but the company still owes $25 million in 2024, $87 million in 2025 and $460 million in 2026.

Cresco Labs has yet to publicly address its mountain of debt, and its CFO, Dennis Olis, plans to retire soon. Sharon Schuler will take on that role and likely is counting on the company’s millions in sales to help pay the looming debt.

Trulieve also hasn’t dealt with its $368 million in notes due in 2026. Unlike many other companies, however, it is also sitting on $200 million in cash and forecasted $1 billion in sales for 2024. That means Trulieve could probably address its debt whenever it desires. But it may be a bit preoccupied right now with Amendment 3 in Florida.

Verano has been paying $350,000 per month on its debt, with the remaining principal balance due on Oct. 30, 2026. As of June, the credit facility still had $296 million due.

What the bankers see

Banks are taking hard looks at the assets of these companies and how they are valued, Paxhia said.

“I think the banks are going to put pressure on the underwriting process, and I think they’re putting the balance sheet at risk and syndicating these deals,” she said. That could mean a tougher road ahead for MSOs looking to refinance.

For higher quality companies, like Green Thumb, they’ll be able to refinance “on their timeline,” Paxhia noted. “GTI won the day on that, but they’re the most underwriteable of all the MSOs.”

What banks will want to assess is the actual value of the company assets – and if they’re at all sellable, which isn’t at all assured in the current climate.