Columbia Care Archives - Green Market Report

Columbia Care Inc.  (OTCQX: CCHWF)  released preliminary results for the fourth quarter and full year ended December 31, 2020 and issued 2021 guidance. Actual revenue rose 228% in the fourth quarter to $76 million versus $23 million for the same time period in 2019. 

While this is a solid performance, it does miss the analyst estimates for revenue of $79 million in the fourth quarter according to Yahoo Finance. The combined results for the fourth quarter are listed as $81 million. 

“Our record breaking fourth quarter and full year performance was driven by continued revenue growth and margin expansion. We generated robust sequential and year-over-year increases in Combined Revenue, Gross Profit and Adjusted EBITDA,” said Nicholas Vita, CEO of Columbia Care. “Including the full fourth quarter’s financial contribution of Project Cannabis, Columbia Care generated approximately $87M in Combined Revenue and $12M in Adjusted EBITDA. We have continued to see sequential revenue growth and margin improvements in the first quarter 2021, affirming Columbia Care’s position as the fastest growing top-tier multi-state operator.”

The company’s full-year 2020 actual revenue increased 132% to $179 million versus $77 million in 2019. The combined results for revenue were $197 million, which was a 151% increase over 2019’s $78 million. 

The company’s guidance for combined revenue in 2021 is in the range of $500 million to $530 million. Columbia Care said this outlook assumes its  pending acquisition of Green Leaf Medical closes in the third quarter, “ but does not include any contribution from future acquisitions nor does it assume any changes in the regulatory environment in markets where Columbia Care currently operates, such as the pending adult-use program in New Jersey. This also excludes markets where a conversion from medical only to adult use is under consideration by the Governor and/or legislature, such as New York and Virginia.”

Vita added, ““We effectively navigated the challenges of the COVID-19 pandemic and, in spite of those headwinds, delivered an exceptional year as we exceeded every milestone target set forth in our 2020 outlook. Highlighting our position as an industry consolidator, we closed key acquisitions with The Green Solution and Project Cannabis and announced the transformational acquisition of Green Leaf Medical, which remains on target to close in the 3 rd quarter of this year. Most notably, corporate profitability continued to expand as we further leverage our national scale.”

Columbia Care Inc. (OTCQX: CCHWF) has entered into an agreement with Canaccord Genuity Corp. to purchase for resale, on a bought deal private placement basis, 2,800,000 common shares at a price of C$9.00 per share for aggregate gross proceeds of C$25,200,000. It is expected that the offering will be primarily sold to one large institutional investor. The deal is expected to close on or about February 25, 2021. The net proceeds will be used for working capital and general corporate purposes.

Credit Drawdown

The announcement comes days after equipment finance and leasing company XS Financial Inc. (OTCQB: XSHLF) said it had advanced approximately $3,200,000 to Columbia Care representing Columbia Care’s first and second drawdowns against the $5.0 million leasing facility announced on December 3, 2020. This second tranche has a term of 48 months.

At the time Joshua Snyder, VP Business Development of Columbia Care said, “This non-dilutive equipment financing from XS Financial provides us with increased flexibility and allows us to more quickly acquire and deploy cultivation and manufacturing hardware needed to increase our capacity in advance of market expansions and adult-use transitions. XS Financial has been a terrific partner ensuring that funding is properly matched to equipment needs at attractive rates, while freeing up our cash for acquisitions and other growth initiatives.”

David Kivitz, CEO of XS Financial said, “Our advances to Columbia Care demonstrate XS Financial’s ability to support industry-leading companies by rapidly deploying capital for equipment and CapEx. The amount announced today will finance the equipment Columbia Care needs for its operations in New Jersey, Virginia, Florida, and Massachusetts. We look forward to expanding our financing relationship with Columbia Care as they achieve significant growth and increase the depth of their nationwide footprint.”

West Virginia

The moves come on the heels of Columbia Care’s expansion into West Virginia. Just 10 days ago the company said it had been awarded five medical dispensary permits by the West Virginia Office of Medical Cannabis (“OMC”). Columbia Care said it currently holds one of only 10 cannabis processing licenses and one of 10 cultivation licenses, in addition to a hemp cultivation license. The OMC has also awarded a dispensary permit to Green Leaf Medical, the private cannabis multi-state operator that Columbia Care remains on track to acquire in Summer 2021 pending regulatory approval.

“We are grateful to the decision-makers in West Virginia, in particular the OMC, for selecting us to bring our high-touch patient-focused dispensary experience and premium product portfolio to best serve patients across West Virginia,” said Nicholas Vita, CEO of Columbia Care. “Being selected for up to six dispensary permits, as well as cultivation and processing licenses, is a great honor and enables us to pursue key retail and wholesale market opportunities within this limited-license state. In conjunction with our acquisition of Green Leaf, building out our vertically integrated West Virginia operations will further enhance our scale and footprint in the mid-Atlantic. We look forward to enhancing the lives of our West Virginia patients and, by doing so, solidifying our market-leading position in the region to continue to serve those who choose to include cannabis in their journey back to restored health and wellness.”

These permits will allow Columbia Care to operate retail dispensaries in the cities of Beckley, Fayetteville, Morgantown, St. Albans, and Williamstown, giving patients access to Columbia Care’s leading portfolio of pharmaceutical-grade products, and its wholesale partners, across the central and northern regions of the state. In addition, the company’s cultivation and processing capacity will also allow for a robust wholesale program that will bring Columbia’s products to the rest of the state. Green Leaf’s dispensary permit in Charleston will also deepen the company’s presence in the state’s capital and most populous city.

After a slew of acquisitions, Columbia Care Inc. (OTCQX: CCHWF) entered into an agreement with Canaccord Genuity Corp. on a bought deal for 16,150,000 common shares at a price of C$8.05 per share for aggregate gross proceeds of C$130,007,500. The closing is expected to occur on or about January 13, 2021. The net proceeds will be used for working capital and general corporate purposes.

Acquisitions

Over the past few months, Columbia Care has been on a buying binge. Yesterday the company announced it was buying California-based dispensary The Healing Center San Diego (THCSD) for approximately $15.0 million. The deal consists of $3.0 million in cash, $6.0 million in Columbia Care stock, and $6.0 million in seller promissory notes. The company said in a statement that excluding any revenue or margin synergies, the purchase price represents approximately 1.2x and 4.7x estimated 2021 revenue and Adjusted EBITDA, respectively.

Earlier in December Columbia signed a definitive agreement to acquire Green Leaf Medical, LLC which is a privately held, fully-integrated cannabis multi-state operator (MSO) based in the mid-Atlantic region, for approximately $240 million with the potential for additional performance-based milestone payments. Green Leaf is one of the largest private MSOs in the United States and a market leader in the mid-Atlantic region with cultivation, extraction, processing, and retail operations across its four-state footprint. In addition to its dispensary footprint, Green Leaf also brings a leading wholesale market position in both Pennsylvania and Maryland, where its products are most widely sold under its nationally recognized gLeaf brand, including extracts and pre-rolls.

At the time CEO Nicholas Vita said, “This combination affirms Columbia Care’s position as one of the largest cultivators, manufacturers, and retailers in four key states – PA, VA, OH and MD – three of which are expected to convert from medical to adult use in the next 24 months. Green Leaf complements our retail footprint and brings wholesale leadership through which we can drive our portfolio of brands and unique products. The transaction is immediately accretive to gross margin, Adjusted EBITDA and Cash Flow from Operations. Ohio and Pennsylvania are already two of our top-performing markets by revenue and Adjusted EBITDA, and this transaction makes us one of the largest, most scaled wholesale and retail operators. In Maryland and Virginia, Green Leaf materially expands our wholesale footprint, retail dispensary network and the scope of our home delivery services. Acquiring Green Leaf immediately converts Maryland to an Adjusted EBITDA positive market. In addition, it accelerates our growth and profitability in Virginia, Ohio and Pennsylvania. No organization in the industry will be better positioned to serve patients and customers in the mid-Atlantic than Columbia Care.”

This was also at the same time Columbia closed its acquisition of Project Cannabis, a leading cannabis cultivator, wholesaler, and retailer based in Los Angeles, California. Total transaction consideration included approximately $52.5 million in Columbia Care stock and additional consideration of $16.5 million anticipated to be paid to the sellers from the proceeds of a subsequent sale of Project Cannabis’ real estate assets.

Columbia Care Inc.  (OTCQX: CCHWF) is buying California-based dispensary The Healing Center San Diego (THCSD) for approximately $15.0 million. The deal consists of $3.0 million in cash, $6.0 million in Columbia Care stock, and $6.0 million in seller promissory notes. The company said in a statement that excluding any revenue or margin synergies, the purchase price represents approximately 1.2x and 4.7x estimated 2021 revenue and Adjusted EBITDA, respectively.

“Expanding the retail footprint in our operational markets enhances scale, improves consumer access, leverages Columbia Care brands, drives margin expansion through the supply chain and delivers outsized shareholder returns – pillars of our stated growth strategy. Being a leader in California enables us to continue building brand equity and awareness across our product portfolio and solidify consumer loyalty and trust, which are the cornerstones of our success,” said Nicholas Vita, CEO of Columbia Care. “THCSD has been a cannabis bellwether since its founding and has built a business with a loyal customer base. We are thrilled they have entrusted us to accelerate the excellence THCSD is known for. We share a mutual commitment to quality and customer service, and THCSD customers can expect that to continue.”

THCSD was founded by Ray Taylor and Jim Dickinson in 2016 as one of the first dispensaries to operate in San Diego, a limited license market. The dispensary offers a wide selection of products, high touch customer service, outstanding access, and an expanded sales floor that will be open soon. THCSD said it continually receives some of the highest online customer ratings in California’s second-largest metropolitan market.

This latest move by Columbia Care demonstrates its plan to plant a flag in the California market as it follows the recent acquisition of Project Cannabis. Columbia Care now has three dispensaries and one state-of-the-art indoor cultivation facility in Los Angeles; two dispensaries and one GMP quality manufacturing facility in San Diego; several acres of outdoor cultivation capacity in Desert Hot Springs; and one dispensary in San Francisco. The Company also has state-wide distribution and wholesale relationships with more than 100 dispensaries.

Last week the company opened its first dispensary in Virginia as the only vertically integrated medical cannabis provider in the Hampton Roads/Norfolk region. “We are so grateful for the opportunity to serve the patients of Virginia. The team has been working hard to open our Portsmouth dispensary and we are all so excited to be able to serve the Hampton Roads patient community,” said Vita. “We are very proud to support economic growth in the region as part of our service to the community. Our dispensary and cultivation teams, as residents themselves, reflect the incredible diversity of Hampton Roads, and we are thrilled to have such strong leadership in place to establish our presence and become rooted in our community as we continue to grow together.”

Columbia Care has four analysts following the stock according to Yahoo Finance. They all have Buy ratings and an average target price of $$7.75. The stock was lately selling at $6.54.