Weekly Valuation Tracker
Viridian highlights a specific industry sector and provides a deep dive into valuation metrics and comparable company valuations for public companies operating in that sector. The Weekly Valuation Tracker provides proprietary, actionable valuation data.
Weekly Valuation Report – Valuation of Middle-Sized MSOs (between $25M-$200M Mkt Cap)
- The table below presents the valuation metrics for the five U.S. MSOs with market caps ranging from $25M to $200M. We ran this screen to get perspective on the valuation of Ascend Wellness, which did a $50M debt deal this week. We have been fascinated to see the divergence between our favorite leverage indicator, total liabilities to market cap, and apparent valuations. Ascend has a total liabilities to market cap ratio of 13.68x as of May 23, 2025, indicating credit impairment and a high risk of distress. Conversely, our multivariate credit model does not indicate the company to be nearly as bad a credit as the market leverage suggests. Therefore, the possibilities are that the stock might be highly undervalued, distorting the market leverage number, or perhaps there is more risk than meets the eye.
- The chart below shows the valuation metric quartiles for the 5 group members. The median EV/ 2025 EBITDA is 5.11x, and the lowest quartile is 4.41x. The Adj EV/ 2025 EBITDAR is 7.65x, and the lower quartile is 6.12x. Recall that the adjusted number is typically higher because it includes in EV both all operating leases and the tax debt, both of which are material for several companies in the group.
- In contrast to these norms, Ascend trades at only 2.59x 2025 EBITDA and 4.56x Adjusted EV/EBITDAR. Why are Ascends multiples so low? One factor could be the negative tangible net worth: Ascend has book equity of $52.6 million but intangibles of $ 210 million. This implies that tangible assets are lower than liabilities. Most of AAWH’s intangible are licenses and permits. So perhaps the market is questioning the value paid for the licenses? But wouldn’t this hold for most MSOs faced with the maturation of markets and the inevitable price compression that comes with it?
- Bottom line. We do not see a negative trigger event for the credit, particularly since the company has successfully pushed almost all maturities to 2029. Liquidity seems reasonable, if not top-of-the-class. We conclude that Ascend appears to be significantly undervalued.
- See our detailed valuation report for the individual companies that comprise this group.
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Valuation Tracker By Sector
The Viridian Value Tracker is the most comprehensive valuation product in the industry.
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- A broad set of 12 valuation measures assures applicability, regardless of whether the company has analyst coverage or revenues. The typically presented EV/ Projected Revenues and EV/ Projected EBITDA are available for less than 1/3 of the cannabis companies we track.
- Most valuation studies present only the average valuation measures, while the Tracker goes one step further and shows the distribution of values (the quartiles, median, and dispersion) for each measure. This gives users a more complete view of how companies in the cohort group are valued.
Sector Valuation – Cultivation & Retail sector
- The number of cultivation and retail companies in our public company database has decreased to 79 from 82 a year ago due to mergers and delistings.
- The valuation metrics are in a holding pattern, with the group median EV/2025 EBITDA at 5.2x, roughly unchanged over the last month. Adj. EV/EBITDA tells a more accurate story, in our opinion. The 6.49x median, including tax liabilities and operating leases, is more in keeping with the true nature of the cannabis capital stack. Cannabis companies rely on long-term leases for a significant part of their core operating assets, and leaving out these obligations as the standard EV/EBITDA does is hard to defend.
- We have recently shown that U.S. companies in the group trade at substantially lower multiples, reflecting illiquid stocks and the 280E provision. However, the upside leverage to any meaningful cannabis legal reform continues to be enormous. We continue to be bullish.
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Sector Valuation – Cultivation & Retail sector
- The number of cultivation and retail companies in our public company database has decreased to 79 from 82 a year ago due to mergers and delistings.
- The valuation metrics are in a holding pattern, with the group median EV/2025 EBITDA at 5.2x, roughly unchanged over the last month. Adj. EV/EBITDA tells a more accurate story, in our opinion. The 6.49x median, including tax liabilities and operating leases, is more in keeping with the true nature of the cannabis capital stack. Cannabis companies rely on long-term leases for a significant part of their core operating assets, and leaving out these obligations as the standard EV/EBITDA does is hard to defend.
- We have recently shown that U.S. companies in the group trade at substantially lower multiples, reflecting illiquid stocks and the 280E provision. However, the upside leverage to any meaningful cannabis legal reform continues to be enormous. We continue to be bullish.
