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Earnings Call Transcripts·

Jushi Holdings Inc. Q3 2026 Earnings Conference Call - Jushi Holdings Inc.

JUSHF

  • Financial Performance:

    • Q3 2026 revenue reached $70.5 million (up 7.3% YoY), marking the second consecutive quarter exceeding $70 million.
    • Retail revenue grew 3.5% YoY to $60.8 million; wholesale revenue surged 40% YoY to a record $9.7 million.
    • Gross profit increased to $32.3 million (45.9% margin), down 80 basis points from 46.7% in the prior year due to pricing pressure.
    • Adjusted EBITDA rose to $13.6 million (19.3% margin), excluding $108,000 in employee retention credit income (vs. $790,000 prior year).
    • Net loss narrowed to $12.5 million from $23.7 million in the prior year quarter, benefiting from federal rescheduling to Schedule 3 which removed Section 280E restrictions.
    • Cash flow from operations for the first nine months of 2026 was $12.9 million.
    • Balance sheet holds $30.9 million in cash; $215.6 million in debt remains subject to repayment (excluding disputed promissory notes and lease financing).
    • Capital expenditures totaled $2.9 million in Q3, with full-year 2026 guidance of $12–$15 million.

  • Guidance and Future Outlook:

    • Virginia adult use sales are targeted to commence July 1, 2027; current medical market is approximately $180M annually versus a projected $3B unregulated potential.
    • Anticipates a 300% increase in Virginia annual harvest (from ~29 to >115 units) upon completion of three expansion projects in 2027–2028.
    • Virginia cultivation expansion projects include indoor facility doubling (late 2026 construction start), 10-acre greenhouse (Q1 2027), and new warehouse (2028); estimated construction cost ~$40 million plus equipment.
    • Financing for Virginia expansion being explored with conventional banks to improve cost of capital; term sheet expected to be finalized in Q4 2026.
    • Pennsylvania remains a secondary priority for cultivation expansion, awaiting adult use regulatory clarity and midterm election outcomes.
    • Ohio retail growth expected to continue driven by intoxicating hemp restrictions and new dispensary maturity.
    • Management expects "boring" quarters between now and Virginia's adult launch, with the transition representing the primary long-term growth catalyst.

  • Business Segments and Product Lines:

    • Retail: 42 stores across 8 states; Ohio and Virginia drove growth. Pennsylvania store relocated from Johnstown to Belle Vernon with strong initial performance; 5–7 additional relocations planned over next 2+ quarters.
    • Wholesale: Second consecutive quarter of record revenue; 44 new dispensaries added as wholesale partners YoY. Strongest growth in MA, PA, VA, and OH; NV flat.
    • Virginia: Six existing "superstore" locations designed for adult use; minimal incremental retail capex required for launch due to existing capacity.
    • Product: Jushi-branded products accounted for 55.7% of retail revenue. Focus on improving yields, product quality, and diversifying offerings (e.g., hydrocarbon extraction).
    • New Developments: Completed redomiciling from British Columbia to Nevada in July 2026 to align with U.S. operations.

  • Market and Competitive Landscape:

    • Virginia projected to become a multi-billion dollar regulated market; supply expected to be constrained for 24–36 months post-launch.
    • Pennsylvania political landscape monitored; potential Democratic control of governorship and legislature could accelerate adult use legalization.
    • Competitive pressure persists via pricing wars and illicit/unregulated products, particularly in mature markets.
    • Ohio's ban on intoxicating hemp products demonstrated consumer shift toward licensed operators, reinforcing the value of regulatory enforcement.
    • Federal rescheduling of state-licensed medical cannabis to Schedule 3 effective April 28, 2026, removed Section 280E tax disallowance.

  • Risks and Challenges:

    • Execution risks regarding timing of capital-intensive cultivation expansions and securing debt financing in current markets.
    • Regulatory uncertainty in Pennsylvania and at the federal level regarding the finalization of the rescheduling process and potential delays.
    • Continued pricing pressure and margin compression due to competition and lower average selling prices.
    • Supply chain constraints expected in Virginia during the initial 24–36 months of adult use launch.
    • Potential delays in Pennsylvania adult use implementation despite favorable political speculation.

  • Management Commentary and Tone:

    • Tone was optimistic yet disciplined, emphasizing "persistent execution" and "capital discipline."
    • Management highlighted the strategic importance of Virginia as the "big kahuna" and primary growth driver.
    • CEO Jim Cassiopoe expressed confidence in the verticals' ability to capitalize on the Virginia transition and Ohio's regulatory advantages.
    • CFO Michelle Mosier noted improved operational efficiency and successful debt reduction regarding Ohio acquisitions.
    • Emphasis placed on aligning cultivation capacity with product availability to maximize the first-mover advantage in Virginia.

  • Analyst Questions and Answers:

    • Wholesale Growth: Management indicated significant runway remains, particularly in Pennsylvania (adding flowering rooms) and Massachusetts (increasing yields/bulk sales), with Ohio dependent on future capital investment.
    • Store Relocations: Relocations generally yield strong immediate performance compared to closing locations (which had low profitability/sales); payback periods vary but are viewed as highly accretive vertically.
    • Pennsylvania Politics: While Democrats may control the trifecta, management cautioned against assuming immediate legislation; noted potential linkage between cannabis and skill game taxation in budget negotiations.
    • Virginia Store Revenue: Avoided specific per-store revenue modeling; cited historical Illinois data where a 2-store system scaled to 4, with peak revenue of $82M, noting store performance will vary.
    • Financing Timeline: Confirmed targeting finalization of the term sheet for the $40M+ Virginia expansion financing in Q4 2026.

  • Other Key Points:

    • DEA registration process is advancing with inspections ongoing; administrative law judge denied request to reopen hearings, potentially accelerating the Schedule 3 rescheduling timeline.
    • Jushi remains actively engaged in opposing the closure of the "farm bill loophole" regarding synthetic cannabinoids.
    • Three cultivation expansion projects in Virginia are designed to double flowering canopy to ~45,000 square feet.
    • The company completed the acquisition of Mansfield/Oxford and Toledo/Warren dispensaries in Ohio, satisfying associated promissory notes totaling $7 million.
    • Revenue per unit growth is being supported by increased delivery adoption in Virginia (29% growth in health service area).