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Terrascend (TSE:TSND)
:TSND
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TerrAscend Corp
(TSX:TSND)
56Neutral
Positive Factors
Financial Strategy
New US$140MM loan facility removes the late-2024 maturity cliff.
Revenue Growth
Ohio acquisition now top priority, Ohio could quickly be a sizable revenue driver.
Negative Factors
Sales Forecast
3Q guidance calls for flat to slightly down sales.
TerrAscend Corp (TSND) vs. S&P 500 (SPY)
Market Cap
C$242.49M
Dividend YieldN/A
Average Volume (3M)131.04K
Price to Earnings (P/E)―
Beta (1Y)1.37
Revenue Growth-1.95%
EPS Growth18.19%
CountryCA
Employees950
SectorHealthcare
Sector Strength65
IndustryDrug Manufacturers - Specialty & Generic
Share Statistics
EPS (TTM)-0.38
Shares Outstanding293,116,180
10 Day Avg. Volume130,653
30 Day Avg. Volume131,041
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.41
Price to Cash Flow (P/CF)3.20
P/FCF Ratio2.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$1.08Price Target Upside58.82% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
TerrAscend Corp Business Overview & Revenue Model
Company DescriptionTerrAscend Corp. cultivates, processes, and sells medical and adult use cannabis in Canada and the United States. The company produces and distributes hemp-derived wellness products to retail locations; and manufactures cannabis-infused artisan edibles. It also operates retail dispensaries under the Apothecarium brand name in California, Pennsylvania, and New Jersey. In addition, the company owns various synergistic businesses under Gage Growth, Pinnacle, TerrAscend NJ, Ilera Healthcare, HMS Health and HMS Processing, Valhalla Confections, State Flower, Arise Bioscience Inc., and TerrAscend Canada brands. It serves medical and legal adult-use markets. The company was incorporated in 2017 and is headquartered in Mississauga, Canada.
How the Company Makes MoneyTerrAscend Corp makes money primarily through the sale of its cannabis products across various markets. The company generates revenue by cultivating and processing cannabis which is then sold through retail dispensaries and wholesale channels. TerrAscend's revenue streams include direct sales to consumers through its branded retail outlets, as well as wholesale transactions with other cannabis businesses. The company also benefits from strategic partnerships and acquisitions that expand its market reach and product offerings, contributing to its overall earnings. Additionally, TerrAscend engages in the development of proprietary cannabis products, which provides a competitive edge and potential for higher margins.
TerrAscend Corp Financial Statement Overview
Summary
TerrAscend Corp shows mixed financial health with improvements in gross profit and cash flows but faces challenges in achieving profitability and reducing high liabilities. Continued focus on operational efficiency and revenue growth is essential for enhancing financial performance.Income Statement
TerrAscend Corp's income statement reveals challenges in achieving profitability, with consistent net losses despite improvements in gross profit over the years. The gross profit margin improved to 48.9% in 2024, indicating efficient cost management. However, the company struggles with negative EBIT and EBITDA margins, reflecting operational inefficiencies. There is also a concerning decline in revenue growth, with a notable drop of 3.4% from 2023 to 2024, which may impact future profitability.45
Neutral
Balance Sheet
The balance sheet shows moderate financial stability with a debt-to-equity ratio of 1.39 in 2024, down from previous years, indicating reduced leverage. Return on equity remains negative due to net losses, but the equity ratio improved to 29.1% in 2024, signifying better equity financing. Despite some improvement, high total liabilities pose a risk to financial flexibility.55
Neutral
Cash Flow
Cash flow analysis highlights positive trends with a significant increase in free cash flow to $27.4 million in 2024, supported by improved operating cash flow. The operating cash flow to net income ratio is strong, suggesting effective cash management. However, the company needs to maintain this trajectory to counterbalance past negative cash flows and ensure sustainable growth.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 306.68M | 317.33M | 433.51M | 310.32M | 198.32M | Gross Profit |
| 149.96M | 159.70M | 160.66M | 170.92M | 26.34M | EBIT |
| -17.11M | -19.86M | -41.53M | 50.91M | -49.26M | EBITDA |
| 6.16M | -1.38M | -431.22M | 133.23M | -96.45M | Net Income Common Stockholders |
| -80.23M | -91.10M | -577.08M | ― | -155.12M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 28.11M | 24.15M | 55.27M | 128.21M | 75.41M | Total Assets |
| 607.23M | 666.52M | 1.28B | 936.84M | 603.88M | Total Debt |
| 246.18M | 255.70M | 449.36M | 340.38M | 271.12M | Net Debt |
| 219.80M | 233.46M | 400.64M | 212.17M | 195.71M | Total Liabilities |
| 430.41M | 425.78M | 692.57M | 568.25M | 592.76M | Stockholders Equity |
| 176.96M | 319.76M | 580.39M | 359.94M | 1.19M |
| Cash Flow | Free Cash Flow | |||
| 27.40M | 18.04M | -118.07M | -113.26M | -28.10M | Operating Cash Flow |
| 37.95M | 27.47M | -44.79M | -49.00M | 33.01M | Investing Cash Flow |
| -12.25M | -16.22M | -49.14M | -213.42M | -251.60M | Financing Cash Flow |
| -24.72M | -12.50M | ― | 291.13M | 284.71M |
TerrAscend Corp Technical Analysis
Negative
0.68
Price Trends
0.74
Negative
0.87
Negative
1.32
Negative
Market Momentum
-0.02
Negative
45.84
Neutral
78.18
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:TSND, the sentiment is Negative. The current price of 0.68 is above the 20-day moving average (MA) of 0.65, below the 50-day MA of 0.74, and below the 200-day MA of 1.32, indicating a bearish trend. The MACD of -0.02 indicates Negative momentum. The RSI at 45.84 is Neutral, neither overbought nor oversold. The STOCH value of 78.18 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:TSND.
TerrAscend Corp Risk Analysis
TerrAscend Corp disclosed 76 risk factors in its most recent earnings report. TerrAscend Corp reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
TerrAscend Corp Peers Comparison
Overall Rating
UnderperformOutperform
Sector (48)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $990.75M | 17.45 | 3.80% | ― | 35.87% | ― | |
56 Neutral | C$242.49M | ― | -38.42% | ― | -1.95% | 18.19% | |
52 Neutral | $183.01M | ― | -18.27% | ― | 7.33% | 84.41% | |
48 Neutral | $6.86B | 1.11 | -51.04% | 2.47% | 16.66% | 1.53% | |
47 Neutral | $347.96M | 27.10 | 4.78% | ― | 16.39% | -98.10% | |
36 Underperform | $257.15M | ― | -84.50% | ― | -16.27% | 76.17% |
* Healthcare Sector Average
Performance Comparison
TSE:TSND
TerrAscend Corp
0.65
-2.07
-76.10%
TSE:WEED
Canopy Growth
1.46
-9.86
-87.10%
TSE:CRON
Cronos Group
2.56
-1.03
-28.69%
TSE:ACB
Aurora Cannabis
6.27
-0.51
-7.52%
TSE:OGI
OrganiGram Holdings
1.48
-1.29
-46.57%
TerrAscend Corp Earnings Call Summary
Earnings Call Date: Mar 6, 2025 | % Change Since: 15.25% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a mixed sentiment with strong market positions and strategic expansions tempered by revenue declines and competitive pressures. While the company has shown resilience with positive cash flows and strategic positioning, challenges in certain markets and increased competition present headwinds.Highlights
Market Leadership in Key Regions
TerrAscend maintained its #1 market share in New Jersey and significant positions in Maryland and Pennsylvania, emphasizing strong brand performance across multiple product categories.
Positive Cash Flow and Financing
The company reported its ninth consecutive quarter of positive cash flow from continuing operations and fifth consecutive quarter of positive free cash flow. Additionally, TerrAscend secured a $140 million non-dilutive debt financing maturing in 2028, enhancing financial flexibility.
Expansion into Ohio
TerrAscend announced a definitive agreement to enter the Ohio market via the acquisition of a high-performing dispensary, marking its first entry into the sixth state.
Strong Wholesale Revenue Growth in Maryland
Wholesale revenue in Maryland increased by 26% sequentially, reaching a $20 million annualized run rate.
Stock Buyback Program
The company initiated a $10 million stock buyback program, demonstrating confidence in its future and commitment to enhancing shareholder value.
Lowlights
Revenue Decline
Net revenue for Q3 2024 was $74.2 million, down from $77.5 million in Q2, primarily due to declines in wholesale revenue in New Jersey and retail revenue in Michigan.
Increased Competition and Wholesale Pressure
In New Jersey, wholesale revenue was down due to increased competition and a decline in average order size despite an all-time high in points of distribution.
Net Loss Increase
Net loss from continuing operations for Q3 2024 was $21.4 million, compared to $6.2 million in the previous quarter, driven by reduced adjusted EBITDA and several onetime noncash accounting items.
Guidance for Potential Revenue Decrease
Guidance for Q4 suggests revenue could be flat to down by mid-single digits, with ongoing pricing pressure in Pennsylvania and competition in New Jersey.
Company Guidance
During the third quarter of 2024, TerrAscend maintained its market leadership, notably holding the #1 market share in New Jersey, and reported net revenue of $74.2 million. The company achieved a gross profit margin of 48.8% and an adjusted EBITDA of $13.7 million, marking its ninth consecutive quarter of positive cash flow from continuing operations and its fifth of positive free cash flow. TerrAscend also strengthened its balance sheet with a $140 million non-dilutive debt financing, maturing in August 2028. Looking ahead to Q4, the company anticipates flat to mid-single-digit revenue declines, with stable gross margins and reduced G&A expenses. The expansion into Ohio through a recent acquisition is expected to leverage existing infrastructure and enhance profitability, while the company remains active in pursuing additional M&A opportunities. The company has also been executing a $10 million stock buyback program, demonstrating confidence in its future and commitment to enhancing shareholder value.TerrAscend Corp Corporate Events
Business Operations and StrategyFinancial Disclosures
TerrAscend Reports Steady Q4 Growth Amid Market Challenges
Positive
Jan 31, 2025
TerrAscend Corp. has announced its preliminary fourth-quarter 2024 financial results, showcasing a slight revenue increase and improved gross profit margin despite challenging market conditions. The company reported a 0.3% rise in net revenue to $74.4 million and a gross profit margin increase to 50.2%. Additionally, TerrAscend achieved positive cash flow from operations, reduced operating expenses, and maintained strong market positions in New Jersey and Maryland. The company is also preparing for potential adult-use cannabis legislation in Pennsylvania, which could significantly enhance its operational capacity. These results reinforce TerrAscend’s confidence in pursuing growth and expansion opportunities in 2025.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.