TerrAscend announces strong increase in revenues

TerrAscend Corp. (CSE: TER) reported strong sales growth as the cross-border operator continues to expand in Pennsylvania's growing medicinal weed market. On Thursday, the company announced its second quarter results for the period ended June 30th, posting a 36 percent sequential growth in net revenue of $ 47.2 million. After its first positive adjusted earnings before interest, taxes, depreciation, and amortization last quarter, TerrAscend said it had reached another significant milestone with positive cash flow from operations of $ 10.4 million. Adjusted EBITDA also increased to a reported $ 11.4 million in the second quarter, up from $ 4.9 million in the previous quarter. The Toronto-based company said its focus on ramping up operations in U.S. markets such as Pennsylvania and California helped transform the company. TerrAscend announced a forecast of net sales of $ 192 million for full 2020, driven by expected growth of at least 34 percent over the next two quarters. Adjusted EBITDA for the year is expected to be at least $ 45 million. "The outlook is driven by the company's continued emphasis on expanding its most profitable business in Pennsylvania and expanding and expanding its retail operations in Pennsylvania, New Jersey and California while maintaining a strict total cost focus," the company said in a statement . CEO Jason Ackerman noted that TerrAscend was the first company to gain approval to grow medicinal cannabis in New Jersey for its 37,000 square foot greenhouse currently under construction. The company opened its first Apothecarium pharmacy in the state, he added, which is due to vote on a recreational cannabis vote in November. But Ackerman says expanding the company's growing capacity in Pennsylvania will be key for the remainder of the year. "Pennsylvania continues to exceed expectations on the demand side. We are therefore confident that we will continue to expand operations because we have full confidence that the market can accommodate the additional capacity," he said during an early morning interview with analysts. Medical weed sales in the state of Keystone are projected to hit $ 800 million this year, up from $ 448 million in 2019. With around 90 pharmacies open in Pennsylvania today, Ackerman said, there is a sizable runway for additional business as the state is projected to be granting a total of 150 store licenses this year. TerrAscend recently opened a third store in Pennsylvania and is planning more as patient numbers continue to grow, according to its financial report. The company competes with a number of America's major cannabis companies operating in the state. At the top is Chicago-based Green Thumb Industries (CSE: GTII) with 10 stores under the Rise banner. TerrAscend's success in the second quarter in that state helped increase gross margin to a reported 56 percent before earnings on the fair value of biological assets. TerrAscend said it is taking a number of initiatives to optimize its Canadian operations to focus on a more sustainable business model as the market lags south of the border. In California, legal cannabis sales hit a record $ 459 million in July. The company says it has now opened four stores in the state.