Columbia Care Inc. (NEO: CCHW) (CSE: CCHW) (OTCQX: CCHWF) saw its net loss for the fourth quarter ballooned to an eye-popping $300 million, compared with last year’s net loss of $53 million for the same quarter.
The company reported its financial results for the fourth quarter and full year ended Dec. 31, 2022.
Revenue for Columbia Care in the fourth quarter was $126 million, down from third-quarter revenue of $132 million. Sales also fell from last year’s fourth-quarter figure of $139 million.
For the full year of 2022, Columbia Care’s sales hit $511 million, which topped 2021’s sales of $460 million. The net losses for the full year were $416 million versus the net loss in 2021 of $143 million.
“Columbia Care achieved record financial results again in 2022, as we continued to build scale and optimize our portfolio of assets within our strategically diverse retail footprint,” CEO Nicholas Vita said. “Despite cyclicality in the fourth quarter coinciding with ongoing macroeconomic headwinds that impacted both the consumer, and in particular, wholesale market pricing, topline revenue grew to more than $511 million, up 11% over 2021, and we improved our adjusted EBITDA margin by 60 basis points during that same time period.”
Vita also cited increased contributions from new markets, such as New Jersey and Virginia.
The company reviewed its various efforts to exit underperforming businesses with restructuring initiatives announced in January 2023. This resulted in reduced or exited cultivation operations in six markets.
The company also closed four unprofitable retail stores in Colorado and California and eliminated approximately 25% of its corporate positions. The cuts are expected to generate a net $35 million in annualized savings.
In addition, Col-Care left several markets and assets that were not accretive to positive cash flow, including closing its CBD and European business and selling its assets in Puerto Rico, which when combined with recent exit of Missouri, will generate an incremental savings of approximately $3 million annually going forward.
On March 13, the company agreed to sell its interests in the Missouri market for approximately $7 million. Missouri market generated $1 million in EBITDA loss in 2022.
Vita continued, “We are focusing our footprint on those markets that can drive the most value for our patients, customers, and shareholders – and reducing exposure in markets that do not contribute to the bottom line. The ongoing operational and financial reprioritization of resources we began implementing in the fourth quarter of 2022, which included a targeted corporate restructuring, multiple cost-reduction measures, several non-core asset divestitures, implementing improvements in cultivation and manufacturing quality and efficiency, and optimizing our liquidity position, will provide a pathway to free cash flow generation in 2023.”
Despite the company’s mass exodus from many markets, it continues to strategically open stores. The company opened two Cannabist retail locations in Virginia (Carytown and Williamsburg) at the end of the fourth quarter in 2022. During the first quarter of 2023, the company opened another two locations in Virginia (Hampton and Colonial Heights), bringing the current active retail location count to 83.
Additional dispensaries in development include four in Virginia (scheduled to open in 2023), one in West Virginia (expected to open this week), one in New Jersey (expected to open in the second half of 2023), and one currently in pursuit in Maryland.
On March 28, Col-Care exercised its unilateral right to extend the maturity date of its 13% senior secured notes in the amount of $38.2 million, originally due May 14, 2023, to May 14, 2024. The company said it has no debt maturities prior to that date other than approximately $5.6 million convertible note in December 2023.
The company reported that it generated $5.2 million of positive cash flow from operations in the fourth quarter and exited the year with $48.2 million in cash. The company has burned through prodigious amounts of cash. At the end of the first quarter in 2022, Col-Care had $168 million in cash.
The company made no mention of its impending deal with Cresco Labs in its earnings press release.