Ayr Wellness Reports Third Quarter 2021 Results


  • Q3 Revenue up 111% Y/Y to $96.2 Million, up 5% sequentially
  • Q3 Adjusted EBITDA of $26.0 million, up 40% Y/Y and down 5% sequentially as the Company Invests in Future Growth
  • US GAAP Operating Loss of $8.9 Million Included Non-Cash, One-Time Expenses, and Non-Operating Adjustments totaling $34.9 Million
  • Raised $50 Million in Cash with Early Call of Outstanding Warrants and $150 Million in Offering of Additional Senior Notes
  • Company Provides Q4 2021 Guidance for over 10% Sequential Revenue Growth with Adjusted EBITDA Flat Sequentially
  • Proposing to Add Two Dispensaries in Chicago with Announced Agreement to Acquire Dispensary 33, Which Would Increase Illinois Retail Footprint to Five Stores
  • Revising 2022 Adjusted EBITDA Target to $250-300 Million, and Maintaining 2022 Revenue Target of $800 Million to Reflect Revised Timing for Capital Projects and Recent Changes in Wholesale Market Conditions
  • Acquisitions of Levia, a Leading Branded Cannabis Beverage Company, Herbal Remedies (IL) and Tahoe Hydro (NV) Expected to Close in Q1 2022, Followed by Dispensary 33 (IL) in the First Half of 2022

MIAMI, Nov. 22, 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 and nine months ended September 30, 2021. Unless otherwise noted, all results are presented in U.S. dollars.

Jonathan Sandelman, CEO of Ayr Wellness, said, “We are pleased to report another great quarter of growth at Ayr, more than doubling our revenue from last year’s third quarter and up 5% sequentially in a flat cannabis market. We have been able to maintain or grow share in competitive markets with pricing discipline because, by design, we have focused on quality and consumers continue to show a willingness to pay for quality. As we’ve said again and again, we seek to be the largest scale cultivator of high-quality cannabis in the United States. First and foremost, this is because we want to produce the best product for our customers. But also, because quality serves as a mitigant to pricing pressure that can result from supply and demand imbalances. Quality matters.”

“Today we are unveiling our new corporate, retail and CPG brands which represent the next phase in the evolution of our company. These brands are designed to represent the quality of what’s inside the box. Our portfolio of power brands, which consists of Kynd premium flower, Origyn Extracts, Stix Pre-Roll Company, and (on closing) Levia, reflects the very best of cannabis and represents leading market categories for current and future consumers. We’re also unveiling a collection of core brands to offer variety in form, dose and experience. These core brands address a broader audience in those same power categories,” Mr. Sandelman continued.

“Lastly, we are unveiling our updated Ayr retail concept. We have built this retail concept very intentionally for the experience in our stores to reflect the quality of our products and our commitment to our local communities. At Ayr, we are committed to thinking long-term. We will continue to invest in our quality and our brands. We understand that brand building in this industry is still in its early stages but the reason that we’re committed to this path is because we know that great products and great brands create their own categories and consumer segments,” Mr. Sandelman concluded.

Third Quarter and Recent Highlights:

  • Closed on acquisition of Garden State Dispensary, adding New Jersey to Ayr’s growing footprint with three open dispensaries and 24,000 sq. ft. of operational cultivation and production facilities, with an additional 75,000 sq. ft. of cultivation under development coming online with sales in Q2 2022
  • Completed combination with PA Natures Medicine, adding three dispensaries in central Pennsylvania, including the college towns of Bloomsburg and State College
  • Organic revenue growth from Massachusetts and Nevada was 18% year-over-year
  • Hired over 300 new employees across all levels, deepening our bench in marketing, human resources, technology and operations professionals focused on driving scalable processes across our regional footprint
  • Florida:
    • Completed construction of 10 acres of hoop house cultivation on the Gainesville campus with a further 10 acres under development, adding an estimated 40,000 lbs. of annual biomass cultivation capacity commencing in 2022
    • Continue to expand and improve the assortment and availability of products at retail with the launch of Secret Orchard fruit forward vapes and Sun Gems gummies
    • Since closing on February 26, 2021, the Company has opened 11 retail locations, bringing total store count to 42, the second largest retail footprint in Florida
    • An additional three stores are expected to open by the end of the year, with five more in Q1 2022; the Company has sited a further 15 new locations, bringing its year-end 2022 Florida dispensary target to at least 65
  • Western Region:
    • Retail trends in Nevada remain robust and Ayr market share continues to rise in this competitive market, reaching over 13.7% in September, according to BDSA
    • Completed 20,000 sq. ft. processing facility upgrade outside of Las Vegas and expanded production in July of manufactured products such as edibles, concentrates and vapes
    • Arizona retail market was seasonally soft over Q3, however wholesale revenues partially offset the retail softness as the Chandler, AZ facility came on-line, adding 10,000 sq. ft. of cultivation capacity
    • Construction of 80,000 sq. ft. Phoenix cultivation expected to be completed in Q4, with revenues commencing in Q2 2022
  • Northeast:
    • Closed on Garden State Dispensary in New Jersey, adding three dispensaries, 24,000 sq. ft. of existing cultivation and production and over 75,000 sq. ft. of cultivation under development, making Ayr one of 12 vertical operators in the state serving over 9 million people with adult use slated to begin in H1 2022
    • Pennsylvania combined retail revenues reached $1.9 million per month in September, excluding the three dispensaries added in central PA post the end of Q3
    • One additional Pennsylvania Ayr Wellness store opened in November, bringing total store count to seven; eighth store expected to open later this year, followed by the ninth in early 2022
    • Construction continues on Adult Use dispensaries in Greater Boston (Watertown and Boylston Street)
    • Selling to 137 of Massachusetts’ 177 dispensaries
    • Construction of 100,000 sq. ft. double-stacked cultivation and production facility in Milford, MA expected to be completed in early 2022
  • Midwest:
    • Added eighth state, Illinois, to growing footprint with the proposed acquisition of Herbal Remedies Dispensaries, today’s announcement of the agreement to acquire Dispensary 33 (see details below) and license win by affiliated company, Land of Lincoln, LLC
    • Began production of vape carts, concentrates, RSO, and tinctures as well as Highly Edible gummies at processing facility in Ohio

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

  Q3 20201 Q2 2021 Q3 2021 % Change
Y/Y
% Change
Q/Q
Revenue $45.5   $91.3   $96.2   111.4%   5.4%  
Adjusted Gross Profit1 $28.6   $53.1   $56.6   97.9%   6.6%  
Operating Income/(Loss) $8.5   $(24.9 ) $(8.9 ) NM   NM  
Adj. EBITDA1 $18.6   $27.4   $26.0   39.8%   -5.0%  
AEBITDA Margin1 40.8%   30.0%   27.0%   -1380bps   -300bps  

1For comparison purposes, Q3 2020 has been restated to be consistent with US GAAP. Adjusted EBITDA and Adjusted Gross Profit are non-GAAP measures. See Definition and Reconciliation of Non-GAAP Measures below. For a reconciliation of Operating Loss to Adjusted EBITDA as well as Gross Profit to Adjusted Gross Profit, see reconciliation table appended to this release.

Outlook:
Based on the results to date, management is forecasting Q4 2021 revenue growth of over 10% sequentially. Adjusted EBITDA is expected to remain roughly flat sequentially, as the Company continues its investments in branding, new markets and growth projects, and the centralized corporate resources to support growth.

The Company is revising its 2022 Adjusted EBITDA guidance to a range of $250-300 million reflecting delays in capital projects and the impact on results should recent wholesale market price volatility persist into 2022. It is reiterating its target for 2022 revenue of $800 million.

The Company’s expectations for Q4 2021 and 2022 are based on the assumptions and risks detailed in the MD&A for the period ending September 30, 2021 as filed on SEDAR.

Summary of the Dispensary 33 Acquisition:
Ayr has entered into a definitive agreement to acquire Gentle Ventures, LLC d/b/a Dispensary 33 (“Dispensary 33”), and certain of its affiliates that collectively own and operate two licensed retail dispensaries in Chicago, Illinois, one in the Andersonville neighborhood and the other in West Loop.

Purchase consideration will consist of $55 million upfront, including $12 million in cash, $3 million sellers notes and $40 million in stock. An earn-out is payable if certain EBITDA performance is achieved through Q3 2022. The acquisition is subject to customary closing conditions and regulatory approvals.

More details can be found in separate the press release dated November 22, 2021, available here.

Ayr Wellness Footprint (Pro-forma)1

  MA NJ PA OH FL AZ NV IL TOTAL
Population2 6.9 M 9.2 M 12.8 M 11.7 M 21.9 M 7.5 M 3.1 M 12.6 M 85.7 M
Adult Use or Medical AU AU Med Med Med AU AU AU 5 AU/ 3 Med
Est. 2021 Market Size3 $1.4 B $1 B $750 M $500 M $1.8 B $1.6 B $1 B $1.3 B $9.4 B
Dispensaries:
Current → YE 2022
2 → 44 3 7 → 9 42 → 655 3 6 4→ 56 67 → 95
Key Retail Markets Greater Boston Central NJ Pittsburgh
Philadelphia
Miami
Tampa
Orlando
Phoenix Las Vegas
Reno
Chicago
Quincy
 
Cultivation-Production:
Current → Targeted YE22 Sq. Ft.
50 → 142K 24 → 100K 83 → 120K 9 → 67K 308 → 622K 10 → 90K 72K→ 106K NA 557 → 1,200K+
Biomass Production:
Current → Targeted YE22 Lbs./yr.
16 → 70K 4 → 50K 15 → 45K 0 → 10K 37 → 90K 10 → 36K 14 → 20K   96 → 320K+
                   
Employees 265 110 350 25 555 185 560 100 ~2,150
Planned 2021-2022
Cap Exp
~$24M ~$12M ~$27M ~$33M ~$32M ~$3M <$1M <$1M $125-150M

1) Pro-forma for the closing of pending transactions in IL and NV
2) Source: United States Census Bureau 2020
3) BDSA estimate
4) Includes two co-located Adult Use/Medical dispensaries (Somerville and Watertown), one Adult Use-only dispensary in Boston and one Medical-only dispensary in Needham
5) 42 currently open, eight under development, 15 under LOI
6) Includes dispensary 51% owned by social equity partner

Conference Call

Ayr CEO Jonathan Sandelman, Co-COOs Jason Griffith and Jennifer Drake, and CFO Brad Asher will host the conference call, followed by a question and answer period.

Conference Call Date: Monday, November 22, 2021
Time: 8:30 a.m. Eastern time
Toll-free dial-in number: (800) 319-4610
International dial-in number: (604) 638-5340

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 MATTIO Investor Relations at IR@mattio.com.

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 December 21, 2021.

Toll-free replay number: (855) 669-9658
International replay number: (412) 317-0088
Replay ID: 8071

Financial Statements
Certain financial information reported in this news release is extracted from Ayr’s Unaudited Interim Consolidated Financial Statements for the three and nine months ended September 30, 2021 and 2020. Ayr files its financial statements on SEDAR and with the SEC. All financial information contained in this news release is qualified in its entirety by reference to such financial statements and MD&A.

Definition and Reconciliation of Non-GAAP Measures

The Company reports certain non-GAAP 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-GAAP 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 GAAP measures.

Rather, these are provided as additional information to complement those GAAP 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 GAAP. Non-GAAP measures used to analyze the performance of the Company’s businesses include “Adjusted EBITDA” and “Adjusted Gross Profit.”

The Company believes that these non-GAAP 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 GAAP measures.

Adjusted EBITDA

“Adjusted EBITDA” represents loss from operations, as reported, before interest and tax, adjusted to exclude non-recurring items, other non-cash items, including depreciation and amortization, and further adjusted to remove non-cash stock-based compensation, the accounting for the incremental costs to acquire cannabis inventory in a business combination, acquisition related costs, and start-up costs.

Adjusted Gross Profit

“Adjusted Gross Profit” represents gross profit, as reported, adjusted to exclude the accounting for the incremental costs to acquire cannabis inventory in a business combination, interest, depreciation and amortization, and start-up costs.

A reconciliation of how Ayr calculates Adjusted EBITDA and Adjusted Gross Profit is provided in the tables appended below. Additional reconciliations of Adjusted EBITDA, Adjust Gross Profit and other disclosures concerning non-GAAP measures are provided in our MD&A for the three and nine months ended September 30, 2021 and 2020.

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.

Assumptions and Risks

Forward-looking information in this subject to the assumptions and risks as described in our MD&A for the three and nine months ended September 30, 2021.

Additional Information

For more information about the Company’s Q3 2021 operations and outlook, please view Ayr’s corporate presentation posted in the Investors section of the Company’s website at www.ayrwellness.com.

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

Media Contact:
Robert Vanisko
VP, Corporate Communications
Email: robert.vanisko@ayrwellness.com

Investor Relations Contact:

Brian Pinkston
MATTIO Communications
T: (703) 926-9159
Email: ir@mattio.com
Email: IR@ayrwellness.com

Ayr Wellness Inc. (formerly, Ayr Strategies Inc.)
Unaudited Interim Condensed Consolidated Balance Sheet
(Expressed in United States Dollars)

    As of
    September 30, 2021 December 31, 2020
ASSETS    
Current    
  Cash $ 94,402,438   $ 127,238,165  
  Accounts receivable, net   9,246,803     3,464,401  
  Due from related parties       135,000  
  Inventory   80,480,693     22,919,605  
  Prepaid expenses, deposits, and other current assets   9,444,220     5,270,381  
    $ 193,574,154   $ 159,027,552  
Non-current    
  Property, plant, and equipment   229,410,215     69,104,080  
  Intangible assets   884,096,067     252,357,677  
  Right-of-use assets – operating   82,110,613     22,546,256  
  Right-of-use assets – finance, net   13,995,000     877,310  
  Goodwill   231,123,969     57,963,360  
  Equity investments   553,448     503,509  
  Deposits and other assets   3,414,970     2,540,674  
Total assets $ 1,638,278,436   $ 564,920,418  
       
LIABILITIES    
Current    
  Trade payables $ 23,096,809   $ 8,899,786  
  Accrued liabilities   20,050,253     8,706,813  
  Lease liabilities – operating – current portion   4,195,672     740,864  
  Lease liabilities – finance – current portion   3,185,460     125,440  
  Purchase consideration payable   148,416     9,053,057  
  Income tax payable   21,398,821     21,379,351  
  Debts payable – current portion   7,732,508     8,644,633  
  Accrued interest payable – current portion   4,214,966      
    $ 84,022,905   $ 57,549,944  
Non-current    
  Deferred tax liabilities   76,287,771     14,677,991  
  Lease liabilities – operating – non-current portion   80,621,059     23,474,726  
  Lease liabilities – finance – non-current portion   7,402,531     446,585  
  Contingent consideration   199,428,011     22,961,411  
  Debts payable – non-current portion   103,514,323     53,587,948  
  Senior secured notes, net of debt issuance costs – non-current portion   104,745,717     103,652,963  
  Accrued interest payable – non-current portion   3,166,381     3,301,155  
Total liabilities $ 659,188,698   $ 279,652,723  
       
       
SHAREHOLDERS’ EQUITY    
  Multiple Voting Shares: no par value, unlimited authorized.
Issued and outstanding – 3,696,486 shares
       
  Subordinate, Restricted, and Limited Voting Shares: no par value, unlimited authorized.
Issued and outstanding – 55,580,226 & 28,873,641 shares, respectively
       
  Exchangeable Shares: no par value, unlimited authorized.
Issued and outstanding – 7,368,927 & 2,127,543 shares, respectively
       
  Additional paid-in capital   1,265,679,907     530,808,494  
  Treasury stock   (867,617 )   (556,899 )
  Accumulated other comprehensive income   3,265,610     3,265,610  
  Deficit   (288,988,162 )   (248,249,510 )
Total shareholders’ equity $ 979,089,738   $ 285,267,695  
Total liabilities and shareholders’ equity $ 1,638,278,436   $ 564,920,418  

Ayr Wellness Inc. (formerly, Ayr Strategies Inc.)
Unaudited Interim Condensed Consolidated Statements of Loss and Comprehensive (Loss) Income
(Expressed in United States Dollars)

  Three Months Ended   Nine Months Ended
  September 30, 2021 September 30, 2020   September 30, 2021 September 30, 2020
           
Revenues, net of discounts $ 96,189,359   $ 45,486,365     $ 245,839,290   $ 107,349,679  
           
Cost of goods sold excluding fair value items   47,083,902     18,079,291       117,566,890     46,118,237  
Incremental costs to acquire cannabis inventory in a business combination   9,022,291           41,410,732      
Cost of goods sold $ 56,106,193   $ 18,079,291     $ 158,977,622   $ 46,118,237  
           
Gross profit $ 40,083,166   $ 27,407,074     $ 86,861,668   $ 61,231,442  
           
Operating expenses          
General and administrative   30,365,072     9,834,051       72,099,023     28,596,451  
Sales and marketing   1,919,150     643,005       4,433,435     1,586,849  
Depreciation   548,555     139,464       1,268,173     530,143  
Amortization   10,394,164     2,998,666       25,656,830     8,996,000  
Stock-based compensation   5,013,055     4,700,795       20,388,406     25,949,556  
Acquisition expense   742,779     557,457       5,164,361     1,054,766  
Total operating expenses $ 48,982,775   $ 18,873,438     $ 129,010,228   $ 66,713,765  
           
(Loss) Income from operations $ (8,899,609 ) $ 8,533,636     $ (42,148,560 ) $ (5,482,323 )
           
Other income (expense)          
Share of loss on equity investments   (12,868 )   (8,244 )     (31,671 )   (31,382 )
Foreign exchange   (7,891 )   (6,419 )     (61,183 )   (9,038 )
Fair value gain (loss) on financial liabilities   19,266,690     (368,103 )     30,811,752     (1,312,402 )
Interest expense   (4,281,448 )   (518,581 )     (10,852,170 )   (1,585,088 )
Interest income   36,513     5,033       160,616     5,034  
Other, net   525,262     (141,079 )     1,015,723     19,971  
Total other income (expense) $ 15,526,258   $ (1,037,393 )   $ 21,043,067   $ (2,912,905 )
           
Income (Loss) before income tax $ 6,626,649   $ 7,496,243     $ (21,105,493 ) $ (8,395,228 )
           
Current tax (provision) benefit   (14,166,631 )   (6,786,311 )     (29,986,046 )   (14,989,700 )
Deferred tax benefit (provision)   4,160,854     (89,559 )     10,352,887     (268,679 )
           
Net (loss) income and comprehensive (loss) income $ (3,379,128 ) $ 620,373     $ (40,738,652 ) $ (23,653,607 )
           
Basic (loss) earnings per share $ (0.06 ) $ 0.02     $ (0.76 ) $ (0.87 )
Diluted (loss) earnings per share $ (0.06 ) $ 0.02     $ (0.76 ) $ (0.87 )
           
Weighted average number of shares outstanding (basic)   59,566,341     27,909,251       53,951,612     27,247,047  
Weighted average number of shares outstanding (diluted)   59,566,341     30,000,149       53,951,612     27,247,047  

Ayr Wellness Inc. (formerly, Ayr Strategies Inc.)
Unaudited Interim Condensed Consolidated Statements of Cash Flows
(Expressed in United States Dollars)

  Nine Months Ended
  September 30, 2021 September 30, 2020
Operating activities    
Net loss $ (40,738,652 ) $ (23,653,607 )
Adjustments for:    
Net fair value (gain) loss on financial liabilities   (30,811,752 )   1,312,402  
Stock-based compensation   20,388,406     25,949,556  
Depreciation   5,296,317     1,896,150  
Amortization on intangible assets   32,528,350     10,136,000  
Share of loss on equity investments   31,671     31,382  
Gain on disposal of equity investments   (1,000,000 )    
Incremental costs to acquire cannabis inventory in a business combination   41,410,732      
Loss on disposal of property, plant, and equipment   50,483      
Deferred tax (benefit) expense   (10,352,887 )   268,679  
Amortization on financing costs   1,228,752      
Interest accrued   3,927,135     1,079,085  
Changes in operating assets and liabilities, net of business acquisition:    
Accounts receivable   (5,749,915 )   (308,283 )
Inventory   (37,743,165 )   (5,627,037 )
Prepaid expenses and other current assets   13,602     (1,693,308 )
Trade payables   2,376,682     2,900,278  
Accrued liabilities   2,780,200     2,036,501  
Lease liabilities – operating   1,293,821     83,820  
Income tax payable   (7,115,530 )   13,985,820  
Cash (used in) provided by operating activities   (22,185,750 )   28,397,438  
     
Investing activities    
Purchase of property, plant, and equipment   (58,632,196 )   (6,291,344 )
Cash paid for business combinations and asset acquisitions, net of cash acquired   (59,971,979 )    
Cash paid for business combinations and asset acquisitions, bridge financing   (22,750,176 )    
Cash paid for business combinations and asset acquisitions, working capital   (4,025,139 )   (603,092 )
Payments for interests in equity accounted investments   (46,610 )   (91,700 )
Cash received in disposal of equity investment   1,000,000      
Advances to related corporation   135,000      
Cash paid for bridge financing   (1,200,000 )   (3,000,000 )
Deposits for business combinations   (571,810 )   (400,000 )
Cash used in investing activities   (146,062,910 )   (10,386,136 )
     
Financing activities    
Proceeds from exercise of Warrants   56,033,833     361,043  
Proceeds from exercise of options   305,093      
Proceeds from equity offering, net of expenses   118,052,400      
Payments of financing costs   (135,998 )    
Tax withholding on stock-based compensation awards   (28,510,821 )    
Repayments of debts payable   (6,280,119 )   (3,282,737 )
Repayments of lease liabilities – finance (principal portion)   (3,740,737 )   (1,176 )
Repurchase of Subordinate Shares   (310,718 )   (311,430 )
Cash provided by (used in) financing activities   135,412,933     (3,234,300 )
     
Net (decrease) increase in cash   (32,835,727 )   14,777,002  
Cash, beginning of the period   127,238,165     8,403,196  
Cash, end of the period   94,402,438     23,180,198  
     
Supplemental disclosure of cash flow information:    
Interest paid during the period   12,187,062     861,812  
Income taxes paid during the period   37,998,621     1,003,880  
Non-cash investing and financing activities:    
Recognition of right-of-use assets for operating leases   61,629,419     687,917  
Recognition of right-of-use assets for finance leases   13,364,616     16,993  
Issuance of Subordinate Shares related to business combinations and make-whole   556,720,196     3,765,927  
Issuance of Subordinate Shares related to equity component of debt   7,429,389      

Ayr Wellness Inc. (formerly, Ayr Strategies Inc.)
Unaudited Interim Condensed Consolidated Adjusted EBITDA Reconciliation
(Expressed in United States Dollars)

  Three Months Ended
September 30,
Nine Months Ended
September 30,
    2021     2020   2021     2020  
Loss (Income) from operations $ (8,899,609 ) $ 8,533,636 $ (42,148,560 ) $ (5,482,323 )
         
Non-cash items accounting for inventory        
Incremental costs to acquire cannabis inventory in business combination   9,022,291       41,410,732      
         
Interest   464,328     116,119   921,278     356,356  
Depreciation and amortization (from statement of cash flows)   15,761,003     4,172,518   37,824,667     12,032,150  
Acquisition costs   742,779     557,457   5,164,361     1,054,766  
Stock-based compensation expense, non-cash   5,013,055     4,700,795   20,388,406     25,949,556  
Start-up costs1   3,463,939       6,437,125      
Other2   432,558     487,105   1,840,512     907,569  
    34,899,953     10,033,994   113,987,081     40,300,397  
         
Adjusted EBITDA (non-GAAP)   26,000,344     18,567,630   71,838,521     34,818,074  
         
1 These are set-up costs to prepare a location for its intended use. Start-up costs are expensed as incurred and are not indicative of ongoing operations  
2 Other non-operating adjustments made to exclude the impact of non-recurring items      
         
         
  Three Months Ended
September 30,
Nine Months Ended
September 30,
    2021     2020   2021     2020  
Gross Profit $ 40,083,166   $ 27,407,074 $ 86,861,668   $ 61,231,442  
         
Incremental costs to acquire cannabis inventory in business combination   9,022,291       41,410,732      
Interest (within COGS)   464,328     116,119   921,278     356,356  
Depreciation and amortization (within COGS)   4,818,285     1,034,387   10,899,665     2,506,007  
Start-up costs (within COGS)   2,249,533       3,833,701      
    16,554,437     1,150,506   57,065,376     2,862,363  
         
Adjusted Gross Profit (non-GAAP)   56,637,603     28,557,580   143,927,044     64,093,805  

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