The Cannabist Revenue Flat as Maryland Market Grows

The Cannabist made numerous moves during the quarter to improve the company's finances.

The Cannabist Company Holdings Inc. (NEO: CBST) (OTCQX: CBSTF), formerly known as Columbia Care, reported its financial results for the third quarter ended Sept. 30. Revenue dropped slightly from last year’s $135 million to this year’s $129 million, it was also essentially flat from the second quarter.

It also missed the Yahoo Finance average analyst estimate for revenue of $131 million.

The company continues to record net losses with this quarter’s $36 million loss, an increase over the second quarter’s net loss of $29 million and last year’s net loss of $35 million for the same time period.

Maryland For The Win

The Cannabist noted that it enjoyed outsize growth in Maryland and an increase in overall transactions. However, that was offset by a decline in average basket size across the company’s portfolio.

Maryland’s revenue increased 55% sequentially, boosted by the start of adult-use sales on July 1. The company said that one additional Maryland retail location is in development, and one existing retail location will be relocated and expanded in the first half of 2024.

The company’s New Jersey retail locations remain among the top dispensaries in Cannabist’s portfolio. There are currently two active stores, with a third New Jersey retail location in development for the first half of 2024.

Virginia, another top market by revenue for the company, is home to 10 operational retail locations, with two more in development.

Other top markets for the company include Colorado and Ohio.

“The third-quarter results demonstrate consistent execution, with stable revenue of more than $129 million and adjusted EBITDA of more than $20 million, in a complicated quarter rife with corporate actions and changes to the business, in only 8 weeks of operating as an independent company,” CEO Nicholas Vita said.

“In July, we announced the mutual agreement to terminate the pending merger agreement after 16 months, and immediately announced a corporate restructuring and operational changes to launch the company into our next chapter, focused on resetting manufacturing priorities, managing the balance sheet, and beginning the process of restructuring elements of COGS to drive gross margin improvement in 2024,” he added.

The operating cash flow in the quarter was $1.8 million as the company said it continues to focus on cash flow generation. Cannabis said it now expects to reach its 2024 financial target of positive operating cash flow one quarter early. The company ended the quarter with $60.3 million in cash, compared to $37 million in the second quarter, an increase of over 60%.

Righting The Ship

The Cannabist made numerous moves during the quarter to improve the company’s finances.

In September it closed on a $25 million offering to redeem part of the outstanding 13% notes due May 2024. That reduced interest expenses of $3.25 million per year.

The company also said it cut more than $38 million, net, in annual operating expenses.

In a statement, The Cannabist said that it intends to pursue additional alternatives to reduce debt, reduce interest expense, and extend maturities on the remaining instruments due 2024, 2025, and 2026.

The company also agreed to divest its Utah license and retail location for $6.6 million.

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.

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