Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) released its financial results for the three months ended March 31, 2022, as revenue fell from the fourth quarter’s $217 million to the first quarter’s $214 million. Cresco Labs did note that the revenue increased 20% over last year’s $178 million for the same time period. This also beat the Yahoo Finance average analyst estimate for sales of $213 million.
Net losses for the quarter grew to $23 million over the fourth quarter’s net loss of $11 million. It was down slightly from last year’s net loss of $24 million for the same time period.
“Q1 was a solid quarter for the Cresco Labs team in a challenging environment for all consumer product categories. While our 10-state footprint saw a cumulative sequential contraction of 4.5%, we held or took market share in most of our states and outperformed the markets with our 2% decline. We understand that an emerging industry’s growth trajectory is rarely linear, especially a highly regulated industry with a fragmented state-by-state structure, conflicting federal and state laws, and the addition of general macro pressures. Notwithstanding, we continue to execute with a clear and focused strategy to obtain market leadership with a portfolio of cannabis brands consumers love and a plan to get them on as many shelves as possible. The strategy remains constant, and the Columbia Care acquisition announced in the quarter simply fits these stated priorities hand-in-glove. We are pairing the best consumer brands with a broad, deep and strategic footprint,” said Charles Bachtell, Co-Founder and CEO of Cresco Labs.
Cresco noted that it had wholesale revenue of $95 million and maintains that it has a position as the #1 seller of branded cannabis products in U.S. with leading share in the flower, concentrates, and vape categories. Retail revenue increased 44% year-over-year, to $119 million, or $2.5 million per average store open in the quarter and same-store sales increased 9% year-over-year.
The company is certainly sitting on a comfortable level of cash with $179 million on hand at the end of the quarter. However, the company burned through $44 million in cash in the quarter, a big jump from the cash used in the fourth quarter of $28 million.
“The first quarter showed the resilience and strength of the business we have built over the past few years. We remain focused on playing the long game and building a business that will be a lasting leader in the cannabis industry under any regulatory outcome. The compliance-focused foundation of both Cresco Labs and Columbia Care is helping ensure a smooth progression towards deal approval through a reasonable and manageable regulatory process. We recently crossed our first milestone by passing the federal HSR review process on May 16 and we do not expect state regulatory approvals to be an issue for our closing timeline,” Mr. Bachtell concluded.
On March 23, 2022, the company announced a definitive arrangement agreement whereby Cresco will acquire Columbia Care in an all-stock transaction.