In an effort to cut costs and try to become profitable, Columbia Care Inc. (CSE: CCHW) (OTCQX: CCHWF) has closed four unprofitable dispensaries and cut its headcount by 25%. Col-Care said it closed one dispensary in California and three in Colorado. In addition, the company also consolidated cultivation operations in California, Colorado and Pennsylvania to improve their Adjusted EBITDA contribution.
Col-Care said that excluding the impact of today’s announced changes, the company closed out 2022 with more than $48 million in cash on the balance sheet, highlighting a free cash flow burn rate of less than $2 million in the fourth quarter, a sequential improvement of approximately $30 million. The company posted a $38 million loss for the third quarter of 2022, despite a slight surge in revenue for the same three months. That brings Columbia Care’s losses for the calendar year to $120.4 million.
CEO Nicholas Vita said, “As Columbia Care continues to grow and evolve, we constantly reassess our operations to objectively determine whether changes are required to drive the business forward. In light of unprecedented inflation and persistent economic headwinds, the current dislocation in the capital markets, and the political and regulatory structures that allow the illicit market to proliferate in some jurisdictions, we have made the decision to restructure targeted areas of our business. As a result, we have elected to proactively manage our operations to enhance profitability, competitiveness and overall success as a market leader in a hyper-dynamic environment.”
The moves are expected to increase efficiency, decrease expenses, and transition to cash flow positive in order to further strengthen its operations and financial performance. As a result, the company said it expects to show a sustained improvement in its long-term expense ratio and a decrease in its cash burn.
Vita added, “As we have previously indicated, one of our operational priorities is to position our organization as a market leader by achieving capital self-sufficiency. As one of the largest operators in the industry, we remain more optimistic than ever for the future of cannabis. We continue to look forward to our merger with Cresco Labs and to providing updates as the transaction progresses, and as we deliver on our commitment to be one of the best companies in the sector.”
Just 10 days ago, Green Market Report reported that Col-Care announced that it would lay off 73 workers at one of its Pennsylvania cannabis production facilities, effective Feb. 28, in order to get the appropriate supply and demand levels of the market.” According to the Bedford Gazette, the facility in question is run by Green Leaf Medical LLC, a subsidiary of Columbia Care, in Saxton, Pennsylvania.
Green Leaf was acquired by Columbia Care in 2021 for approximately $240 million, and Columbia Care itself is set to be acquired by Illinois-based Cresco Labs this year for about $2 billion. That deal is expected to close in the first quarter of this year.