Ayr Wellness Reports Fourth Quarter and Full Year 2020 Results

  • Q4 Revenue up 48% Y/Y to $47.8 Million; Full Year Revenue up 25%1 Despite Covid-Related Shutdowns in 2Q
  • Q4 Adjusted EBITDA up 111% Y/Y to $19.4 Million; Full Year Adjusted EBITDA up 63%1
  • Successfully Raised $110 Million in Debt and $48 Million in Warrant Exercise, Ending 2020 with $127 Million of Cash; Raised Additional $118 Million in Equity Subsequent to Year-End
  • Generated Over $7 Million in Cash from Operations in Q4 and $36 Million for the Year
  • Closed on its Two Acquisitions in Pennsylvania in Q4; Opened Second Pennsylvania Dispensary in February
  • Recently Closed Acquisition of Liberty Health Sciences, Adding 31 Retail Dispensaries, the Fourth Largest Footprint in Florida
  • Arizona and Ohio Acquisitions Expected to Close Later this Month
  • Pending Acquisitions in Arizona, Ohio and New Jersey Will Bring Addressable Market to Over 73 Million in Seven States

TORONTO, March 10, 2021 (GLOBE NEWSWIRE) -- Ayr Wellness Inc. (CSE: AYR.A, OTCQX: AYRWF) (“Ayr” or the “Company”), a vertically-integrated cannabis multi-state operator (MSO), is reporting financial results for the three months and full-year ended December 31, 2020. Unless otherwise noted, all results are presented in U.S. dollars.

“2020 was a year of transformation for Ayr,” said Jon Sandelman, CEO of Ayr Wellness. “We are excited to report a strong finish to the year with fourth quarter revenues up 48% year-over-year and adjusted EBITDA up over 100% and we continue to maintain margins at the high end of the industry. And while we continued to deliver strong operating results throughout the year at our market leading operations in Massachusetts and Nevada, the Ayr story of 2020 was about building a foundation for a new Ayr Wellness, a bigger and better MSO. We spent the end of 2020 aggressively expanding our footprint and investing in our business to be positioned for exceptional growth in 2021 and 2022. We began 2020 as a 2-state MSO and we begin 2021 as a seven-state, top-5 MSO and we aren’t done yet.

“2020 was also a year of great change for the industry as new states moved forward with adult-use programs and the federal election shifted the tides in Washington. We enter 2021 with leading scale, talent and a recently bolstered balance sheet, that currently has more than $236 million of cash. The investments we made in the fourth quarter in additional infrastructure and people will prove critical as our new operations in Pennsylvania, Florida, New Jersey, Arizona and Ohio begin to ramp in 2021. We opened our second Ayr Wellness dispensary in Pennsylvania a couple weeks ago and the cultivations are on track for first harvest this spring. Our remaining four stores in Pennsylvania will open throughout 2021 and as the cultivation expands further, we expect Pennsylvania to be a meaningful contributor to our top and bottom line in the back half 2021.”

Mr. Sandelman continued, “We firmly believe that everything we do starts with the plant. We continue to demonstrate our commitment to this belief by investing additional resources in our cultivation facilities and team. These investments will prove to be impactful as we begin the integration efforts in Florida to bring that important asset up to the productivity level we know is achievable. The same will be true when we close on Arizona and Ohio later this month and New Jersey this summer. We expect to realize the benefit of these investments with strong growth as we move through 2021. The full impact will be realized with even stronger growth in 2022.”

Fourth Quarter Financial Highlights ($ in millions, excl. margin items)

 Q4 2019Q3 2020Q4 2020% Change
% Change
Revenue$32.3 $45.5 $47.8 48% 5% 
Gross Profit before Fair Value Adj.$11.4 $27.4 $27.5 142% 0% 
Gross Profit$8.3 $40.8 $18.6 125% -54% 
Operating Income/(Loss) $(16.9)$22.0 $(2.2) N/M N/M 
Adj. EBITDA$9.2 $19.3 $19.4 111% 0% 
AEBITDA Margin 28.6% 42.4%  40.5% 1190 bps -190 bps 

Full Year 2020 Financial Highlights ($ in millions, excl. margin items)

 FY 2019
FY 2019
FY 2020% Change
Revenue$75.2 $124.2 $155.1 25% 
Gross Profit before Fair Value Adj.$34.4 $63.0 $88.6 41% 
Gross Profit$26.3 N/M $103.1 293% 
Operating Income/(Loss) $(37.5) N/M $16.0 N/M 
Adj. EBITDA$20.9 $34.5 $56.2 63% 
AEBITDA Margin 27.8%  27.8%  36.2% 840 bps 

1Due to the qualifying transaction completed on May 24, 2019, the 2019 annual results have been normalized by taking the 221-day period and annualizing it to produce a full year of results.

Ayr Wellness Footprint (Pro-forma)

Population 6.9 M9.2 M12.7 M11.7 M21.5 M7.4 M3.1 M72.5 M
Adult Use or MedicalAUAUMedMedMedAUAU4 AU/ 3 Med
Est. 2021 Market Size4$1 B$1 B$1 B$400 M$1.5 B$1 B$800 M$6.7 B
Forward AEBITDA Mult. PaidN/A4.0x3.2x1.0x4.8x53.1xN/A 
Planned Capex$38 M$15 M$24 M$20 M$20 M$10<$1 M$127 M
Current → YE 2021
2 → 4132 → 6-31 → 423 36243 → 64
Key Retail MarketsGreater BostonCentral
PhoenixLas Vegas
Current → YE 2021 Sq Ft
50K → 140K30K → 105K83K → 253K9K → 67K300K10K → 90K72K554K → 1,027K
Employees2671137210349 1654781,454

1) Includes two co-located AU/Med dispensaries (Somerville and Watertown), one AU-only dispensary in Boston and one Med-only dispensary in Needham
2) Five dispensaries currently open; pending final approvals additional LV dispensary expected to open shortly
3) 31 currently open, four complete and pending OMMU approval; seven are currently under construction
4) Source:  Arcview, MJBiz Daily, Company estimates
5) Based on purchase price and forecasted 2022 AEBITDA at the time of announcement

Fourth Quarter Operational Highlights

Nevada Results

  • Average daily retail revenues were over $290,000 in the fourth quarter; daily transaction volumes of 4,685, with an average ticket of $62 per transaction
  • Sales increased 21% year-over-year, driven by a 15% increase in transaction volumes and 6% increase in average ticket
  • Recently opened sixth dispensary in Nevada, in Clark County
  • Increased market share despite increased competition in the locals’ market and difficult economic environment due to COVID-19

Massachusetts Results

  • Average daily retail revenues (medical only) increased to over $64,000 in the fourth quarter; daily transaction volumes of ~410, with an average ticket of $157 per transaction
  • Retail sales increased 136% year-over-year, driven by a ~90% increase in transactions and ~45% increase in average ticket
  • Selling to 78 of the state’s 110 adult-use dispensaries, and Ayr remains one of the market share leaders in flower, vapes and concentrates according to BDS Analytics
  • Wholesale revenues ramped to over $13.4 million in the quarter, growth of 109% y/y reflecting the increase in capacity brought on in May 2020

Pennsylvania Update

  • Ayr closed its two acquisitions in Pennsylvania during the fourth quarter
  • Completed first phase of cultivation construction; 15,000ft2 of canopy due for first harvest this spring
  • 21,000 ft2 of addition space approved for cultivation in February and first harvest expected in early summer
  • Two dispensaries recently opened under the Ayr Wellness banner, in New Castle and Plymouth Meeting

Conference Call

Ayr CEO Jonathan Sandelman, COO Jennifer Drake and CFO Brad Asher will host the conference call, followed by a question and answer period.

Conference Call Date: Thursday, March 11, 2021
Time: 8:30 a.m. Eastern time
Toll-free dial-in number: (877) 282-0546
International dial-in number: (270) 215-9898
Conference ID: 2287507

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at (949) 574-3860.

The conference call will be broadcast live and available for replay here.

A telephonic replay of the conference call will also be available after 11:30 a.m. Eastern time on the same day through March 18, 2021.

Toll-free replay number: (855) 859-2056
International replay number: (404) 537-3406
Replay ID: 2287507

Financial Statements

Certain financial information reported in this news release is extracted from Ayr’s Consolidated Financial Statements for the year ended December 31, 2020 and 2019. Ayr files its annual financial statements on SEDAR. All such financial information contained in this news release is qualified in its entirety by reference to such financial statements.

Definition and Reconciliation of Non-IFRS Measures

The Company reports certain non-IFRS measures that are used to evaluate the performance of its businesses and the performance of their respective segments, as well as to manage their capital structures. As non-IFRS measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Securities regulators require such measures to be clearly defined and reconciled with their most comparable IFRS measure.

The Company references non-IFRS measures and cannabis industry metrics in this document and elsewhere. Non-IFRS measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these are provided as additional information to complement those IFRS measures by providing further understanding of the results of the operations of the Company from management’s perspective. Accordingly, these measures should not be considered in isolation, nor as a substitute for analysis of the Company’s financial information reported under IFRS. Non-IFRS measures used to analyze the performance of the Company’s businesses include “adjusted EBITDA.”

The Company believes that these non-IFRS financial measures provide meaningful supplemental information regarding the Company’s performances and may be useful to investors because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. These financial measures are intended to provide investors with supplemental measures of the Company’s operating performances and thus highlight trends in the Company’s core businesses that may not otherwise be apparent when solely relying on the IFRS measures.

Adjusted EBITDA

“Adjusted EBITDA” represents income (loss) from operations, as reported, before interest and tax, adjusted to exclude non-recurring items, other non-cash items, including stock-based compensation expense, depreciation and amortization, the adjustments for the accounting of the fair value of biological assets, and further adjusted to remove acquisition related costs.

A reconciliation of how Ayr calculates adjusted EBITDA is provided below. Additional reconciliations of adjusted EBITDA and other disclosures concerning non-IFRS measures will be provided in our MD&A for the three and twelve months ended December 31, 2020. As well, the Company reminds you that adjusted EBITDA is a non-IFRS measure.

Forward-Looking Statements

Certain information contained in this news release may be forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are often, but not always, identified by the use of words such as “target”, “expect”, “anticipate”, “believe”, “foresee”, “could”, “would”, “estimate”, “goal”, “outlook”, “intend”, “plan”, “seek”, “will”, “may”, “tracking”, “pacing” and “should” and similar expressions or words suggesting future outcomes. This news release includes forward-looking information and statements pertaining to, among other things, Ayr’s future growth plans. Numerous risks and uncertainties could cause the actual events and results to differ materially from the estimates, beliefs and assumptions expressed or implied in the forward-looking statements, including, but not limited to: anticipated strategic, operational and competitive benefits may not be realized; events or series of events, including in connection with COVID-19, may cause business interruptions; required regulatory approvals may not be obtained; acquisitions may not be able to be completed on satisfactory terms or at all; and Ayr may not be able to raise additional debt or equity capital. Among other things, Ayr has assumed that its businesses will operate as anticipated, that it will be able to complete acquisitions on reasonable terms, and that all required regulatory approvals will be obtained on satisfactory terms and within expected time frames. In particular, there can be no assurance that we will complete the pending acquisitions in or enter into agreements with respect to other acquisitions.

Forward-looking estimates and assumptions involve known and unknown risks and uncertainties that may cause actual results to differ materially. While Ayr believes there is a reasonable basis for these assumptions, such estimates may not be met. These estimates represent forward-looking information. Actual results may vary and differ materially from the estimates.


Forward-looking information in this subject to the assumptions and risks as described in our MD&A for December 31, 2020. For more information about the Company’s 2020 operations and outlook, please view Ayr’s corporate presentation posted in the Investors section of the Company’s website at www.ayrwellness.com. As well, we remind you that adjusted EBITDA is a non-IFRS measure. Additional reconciliations and other disclosures concerning non-IFRS measures will be provided in our MD&A for the three and twelve months ended December 31, 2020.

About Ayr Wellness Inc.

Ayr is an expanding vertically integrated, U.S. multi-state cannabis operator, focused on delivering the highest quality cannabis products and customer experience throughout its footprint. Based on the belief that everything starts with the quality of the plant, the Company is focused on superior cultivation to grow superior branded cannabis products. Ayr strives to enrich consumers’ experience every day through the wellness and wonder of cannabis.

Ayr’s leadership team brings proven expertise in growing successful businesses through disciplined operational and financial management, and is committed to driving positive impact for customers, employees and the communities they touch. For more information, please visit www.ayrwellness.com.

Company Contact:

Megan Kulick
Head of Investor Relations
T: (646) 977-7914
Email: IR@ayrwellness.com

Investor Relations Contact:

Sean Mansouri, CFA
Gateway Investor Relations
T: (949) 574-3860
Email: IR@ayrwellness.com

Ayr Wellness Inc. (formerly, Ayr Strategies Inc.)

Unaudited Condensed Interim Consolidated Statements of Financial Position

(Expressed in United States Dollars)

  As of
  December 31, 2020December 31, 2019
 Cash and cash equivalents$ 127,238,165 $8,403,196 
 Accounts receivable 3,464,401  2,621,239 
 Due from related parties 135,000  85,000 
 Inventory 28,257,942  13,718,840 
 Biological assets 12,069,851  2,935,144 
 Prepaid expenses, deposits, and other current assets 5,270,381  2,163,329 
   176,435,740  29,926,748 
 Property, plant, and equipment 69,104,080  37,152,861 
 Intangible assets 252,357,676  189,802,136 
 Right-of-use assets 22,604,065  12,315,417 
 Goodwill 92,321,934  84,837,304 
 Equity investments 503,509  427,399 
 Deposits and other assets 2,540,675  638,394 
Total assets 615,867,679  355,100,259 
 Trade payables 8,899,786  6,806,053 
 Accrued liabilities 8,706,813  5,123,865 
 Lease obligations - current portion 866,304  1,087,835 
 Purchase consideration payable 9,053,057  9,831,700 
 Income tax payable 21,585,523  5,202,943 
 Debts payable - current portion 8,644,633  6,628,843 
   57,756,116  34,681,239 
 Deferred tax liabilities 47,935,998  41,077,761 
 Warrant liability 151,949,611  36,874,124 
 Lease obligations - non-current portion 23,864,059  13,033,310 
 Contingent consideration 22,961,412  22,656,980 
 Debts payable - non-current portion 53,587,948  37,366,818 
 Senior secured notes - non-current portion 103,652,963  - 
 Accrued interest payable 3,301,155  815,662 
Total liabilities 465,009,262  186,505,894 
 Share capital 518,992,215  382,210,006 
 Treasury stock (556,899) (245,469)
 Contributed surplus 60,035,984  28,879,225 
 Accumulated other comprehensive (loss) income (5,765,218) 3,265,610 
 Deficit (421,847,665) (245,515,007)
Total shareholders' equity 150,858,417  168,594,365 
Total liabilities and shareholders' equity 615,867,679  355,100,259 

Ayr Wellness Inc. (formerly, Ayr Strategies Inc.)

Unaudited Condensed Interim Consolidated Statements of Loss and Comprehensive Loss

(Expressed in United States Dollars)

 Three Months Ended Year Ended 
 December 31, 2020December 31, 2019December 31, 2020December 31, 2019 
Revenues, net of discounts$ 47,764,775 $32,282,616  $ 155,114,454 $75,195,556  
Cost of goods sold before biological asset adjustments 20,298,130  17,158,918   66,555,710  37,009,909  
Incremental costs to acquire cannabis inventory in a business combination -  3,764,678   -  3,764,678  
Cost of goods sold 20,298,130  20,923,596   66,555,710  40,774,587  
Gross profit before fair value adjustments 27,466,645  11,359,020   88,558,744  34,420,969  
Fair value adjustment on sale of inventory (12,971,862) (4,838,814)  (34,147,938) (18,272,212) 
Unrealized gain on biological asset transformation 4,115,927  1,765,527   48,690,657  10,108,105  
Gross profit 18,610,710  8,285,733   103,101,463  26,256,862  
General and administrative 9,258,098  7,248,271   36,342,955  19,036,452  
Sales and marketing 563,686  463,452   2,150,536  1,345,009  
Depreciation 714,933  1,017,198   2,364,224  1,392,994  
Amortization 3,028,714  2,434,288   12,024,715  7,222,595  
Stock-based compensation 5,207,204  13,296,643   31,156,759  28,879,225  
Acquisition expense 1,890,428  724,139   2,945,194  5,847,800  
Total expenses 20,663,063  25,183,991   86,984,383  63,724,075  
Income (Loss) from operations (2,052,353) (16,898,258)  16,117,080  (37,467,213) 
Other (expense) income      
Share of loss on equity investments (2,208) 241,115   (33,591) (72,600) 
Foreign exchange 1,256  (17,904)  (7,782) (141,106) 
Fair value loss on financial liabilities (134,720,905) 2,771,673   (164,042,264) (119,235,147) 
Interest expense (1,867,275) (1,176,278)  (4,115,775) (3,035,492) 
Interest income 5,625  8,483   10,112  404,835  
Other 84,960  185,458   104,931  202,610  
Total other (expense) income (136,498,547) 2,012,547   (168,084,369) (121,876,900) 
Loss before income tax  (138,550,900) (14,885,711)  (151,967,289) (159,344,113) 
Current tax [Note 20] (7,035,194) (3,795,071)  (21,976,761) (8,728,061) 
Deferred tax [Note 20] 2,005,050  1,216,549   (2,388,608) 3,892,570  
Net loss (143,581,044) (17,464,233)  (176,332,658) (164,179,604) 
Foreign currency translation adjustment (8,611,181) 468,229   (9,030,828) (156,510) 
Net loss and comprehensive loss (152,192,225) (16,996,004)  (185,363,486) (164,336,114) 
Basic and diluted loss per share (4.82) (0.65)  (6.32) (9.43) 
Weighted average number of shares outstanding (basic and diluted) 29,814,594  26,672,864   27,892,441  17,404,742  

Ayr Wellness Inc. (formerly, Ayr Strategies Inc.)

Unaudited Condensed Interim Consolidated Statements of Cash Flows

(Expressed in United States Dollars)

 Year Ended 
 December 31, 2020December 31, 2019 
Operating activities   
Net loss$ (176,332,658)$(164,179,604) 
Adjustments for:   
Acquisition costs associated with financing activities -  129,235  
Net fair value loss on financial liabilities 164,042,264  119,235,147  
Stock-based compensation 31,156,759  28,879,225  
Depreciation 4,720,198  2,172,373  
Amortization on intangible assets 13,716,502  8,137,864  
Share of loss on equity investments 33,591  72,600  
Incremental costs to acquire cannabis inventory in a business combination -  3,764,678  
Fair value adjustment on sale of inventory 34,147,938  18,272,212  
Unrealized gain on biological asset transformation (48,690,657) (10,108,105) 
Deferred tax expense (benefit) 2,388,608  (3,892,570) 
Amortization on financing costs 90,858  -  
Interest accrued 2,214,061  1,652,510  
Changes in non-cash operations, net of business acquisition:   
Accounts receivable (843,162) (1,308,328) 
Inventory and biological assets (8,876,748) (5,809,848) 
Prepaid expenses and other assets (2,529,212) (1,459,072) 
Trade payables 1,616,253  2,992,073  
Accrued liabilities 3,274,488  (179,574) 
Income tax payable 16,382,580  5,202,943  
Cash provided by operating activities 36,511,663  3,573,759  
Investing activities   
Transfer of restricted cash and short term investments held in escrow and interest income -  99,684,243  
Purchase of property, plant, and equipment (14,367,690) (14,417,635) 
Purchases of intangible assets (400,000) -  
Deferred underwriters commission paid -  (3,457,154) 
Cash paid for business combinations and asset acquisitions, net of cash acquired (35,174,880) (74,714,171) 
Cash paid for business combinations and asset acquisitions, bridge financing (8,040,804) -  
Cash paid for business combinations and asset acquisitions, working capital (2,354,375) (547,042) 
Payments for interests in equity accounted investments (109,700) (500,000) 
Advances to related corporation (50,000) (809,191) 
Deposits for business combinations (1,750,000) -  
Cash (used in) provided by investing activities (62,247,449) 5,239,050  
Financing activities   
Proceeds from exercise of Warrants 48,483,750  2,460,150  
Proceeds from senior secured notes, net of financing costs 103,571,105  -  
Redemption of Class A shares -  (7,519) 
Repayments of debts payable (5,615,225) (2,879,329) 
Repayments of lease obligations (principal portion) (1,557,445) (763,878) 
Repurchase of Subordinate Voting Shares (311,430) (311,674) 
Cash provided by (used in) financing activities 144,570,755  (1,502,250) 
Net increase in cash 118,834,969  7,310,559  
Effect of foreign currency translation -  982,685  
Cash and cash equivalents, beginning of the year 8,403,196  109,952  
Cash and cash equivalents, end of the year 127,238,165  8,403,196  
Supplemental disclosure of cash flow information:   
Interest paid during the year 2,526,294  1,679,612  
Taxes paid during the year 5,594,181  3,525,118  

Ayr Wellness Inc. (formerly, Ayr Strategies Inc.)

Unaudited Condensed Interim Consolidated Adjusted EBITDA Reconciliation

(Expressed in United States Dollars)

 Three Months ended December 31, Year ended December 31,
 2020  2019  2020  2019 
(Loss) Income from operations(2,052,353) (16,898,258) 16,117,080  (37,467,213)
Non-cash items accounting for biological assets and inventory       
Incremental costs to acquire cannabis inventory in business combination-  3,764,678  -  3,764,678 
Fair value adjustment on sale of inventory12,971,862  4,838,814  34,147,938  18,272,212 
Unrealized gain on biological asset transformation(4,115,927) (1,765,527) (48,690,657) (10,108,105)
 8,855,935  6,837,965  (14,542,719) 11,928,785 
Interest258,077  295,630  986,870  295,630 
Depreciation and amortization (from statement of cash flows)5,017,319  4,511,734  18,436,700  10,310,237 
Acquisition costs1,890,428  724,139  2,945,194  5,847,800 
Stock-based compensation expense, non-cash5,207,204  13,296,643  31,156,759  28,879,225 
Other non-operating1182,343  472,326  1,089,912  1,105,694 
 12,555,371  19,300,472  54,615,435  46,438,586 
Adjusted EBITDA (non-IFRS)19,358,953  9,240,179  56,189,796  20,900,158 
1 Other non-operating adjustments made to exclude the impact of non-recurring items