Columbia Care Reports Record Second Quarter 2021 Results

Record Quarterly Revenue of $109.7 Million, an Increase of 232% YoY, 19% QoQ
Record Quarterly Adjusted Gross Profit of $47.7 Million, an Increase of 300% YoY, 26% QoQ
Record Gross Margin of 43%, an Increase of 737bps YoY, 266bps QoQ
Record Adjusted EBITDA of $16.4 Million, an increase of $21.1 Million YoY, 58% QoQ
Record Adjusted EBITDA Margin of 15%, an increase of 2,930bps YoY, 371bps QoQ
Reaffirms 2021 Revenue Guidance of $500 – $530 Million and Adjusted EBITDA Guidance of $95 – $105 Million
Raised $74.5M in Q2 of 6.00% Convertible Debt, reflecting the lowest priced debt in the Company’s history; Ended Q2 with Cash Balance of $149.2M

NEW YORK–(BUSINESS WIRE)– Columbia Care Inc. (NEO: CCHW) (CSE: CCHW) (OTCQX: CCHWF) (FSE: 3LP) (“Columbia Care” or the “Company”) today reported financial and operating results for the second quarter ended June 30, 2021. All financial information is unaudited and provided in U.S. dollars unless otherwise indicated.

“We are pleased to report another record quarter for Columbia Care as we continue to execute on our strategic initiatives and build scale in markets across the country,” said Nicholas Vita, CEO of Columbia Care. “Our results in the second quarter were driven by organic growth in new and maturing markets, increasing wholesale activity, and contribution from our recently closed acquisition of Green Leaf Medical (gLeaf). We saw continued year over year and sequential improvement in both gross and Adjusted EBITDA margins as we leverage the scale of our national portfolio and ramp in newer markets.”

Vita continued, “The ongoing national rollout of our Cannabist retail storefront, with five Cannabist locations open to date, has been very successful and underpins our ongoing initiative to establish a portfolio of national product brands, beginning with our unique store-based experience. We are pleased to report a record number of new product and brand introductions in our markets, such as Seed & Strain flower and vapes, Triple Seven flower, and Plant Sugar edibles.

“Fundamentals continue to improve as we build scale, execute on planned CAPEX expansion projects, and build brand equity at the retail and product levels from coast to coast. We have more growth initiatives underway than ever before, and with New York, New Jersey and Virginia poised to transition to adult use, the opportunities for Columbia Care have never been greater. We have set the stage for a tremendous second half of the year with momentum building into 2022 and look forward to continuing to execute our strategic vision.”

Second Quarter 2021 Financial Highlights¹ (in $ thousands, excl. margin items)

^1] Excludes changes in fair value of biological assets and inventory sold for all periods presented, as well as $1.4 million in Q2 2021 and $0.1 million in Q1 2021 related to the mark-up of inventory acquired in gLeaf, Corsa Verde and The Healing Center San Diego.

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¹		Combined Results include dispensary and manufacturing operations in Ohio.

Second quarter 2021 results include contribution from Green Leaf Medical as of the date of acquisition, June 10, 2021. With the close of the Ohio acquisition in July, all financial reporting will be consolidated under Reported Results going forward.

Operational Update

Lars Boesgaard, Columbia Care’s Chief Financial Officer (“CFO”), will be leaving the Company effective August 31, 2021, to join AM-Pharma, a European late-stage biotechnology company, as their CFO. Vita commented, “We are grateful for Lars’ contributions to Columbia Care, appreciate his support through this current transition and wish him all the best in his new role.”

Beginning on September 1, 2021, Michael Livingstone, the Company’s Vice President and Corporate Controller, will serve as interim CFO. Over the past fifteen years, Michael has developed an extensive operational background serving in finance and accounting leadership roles at Columbia Care and prior employers. A search for the permanent CFO is underway.

Selected State Level Highlights

Top 5 Markets by Combined Revenue: California, Colorado, Massachusetts, Ohio, Pennsylvania

Top 5 Markets by Adjusted EBITDA: Colorado, Illinois, Massachusetts, Ohio, Pennsylvania

Arizona

Sequential revenue growth of 23% as adult use continues to ramp following January implementation; 54% growth YoY
Continued focus on wholesale opportunities to increase gross margin
Third party flower shortage in the market drove Columbia Care brand revenue higher, in particular, for Seed & Strain
Cannabist rebranding of dispensary in Tempe completed in Q2; Prescott to follow in 2H 2021
Reached maximum canopy for best efficiency of plant growth based on current infrastructure; planning upgrades to cultivation facility for additional wholesale and retail supply in Q3

California

Sequential revenue growth of 4%, despite lower wholesale revenue and persistent COVID-19 headwinds
Focused on product launches for Amber vapes and concentrates and Press tablets in Q3 and improved wholesale relationships
Cannabist rebranding of San Diego dispensary completed in Q2
Accelerated CAPEX spend for cultivation upgrades to increase yield, efficiency, and quality of production in light of wholesale market softness experienced in 1H 2021

Colorado

Sequential revenue growth over 7.5% and EBITDA margin increase of 200bps, driven by late quarter impact from ongoing restructuring in cultivation and at retail as average dollar sales trended upwards despite greater than expected impact from inclement weather in Q2
Gross margin stable at 42% as ongoing upgrades for the Steele indoor cultivation facility begin to flow through financials; initial trials indicate significant increases in flower quality, potency, and yield, with first significant harvest expected end of Q3/early Q4
Focused on wholesale of finished goods and oil for 2H 2021

Florida

Largest single market contributor to sequential revenue growth as a result of increased flower production and new product launches, achieving 46% increase in revenue sequentially and 335% over Q2 2020
Adj. EBITDA positive in Q2 and 1,200bps increase in gross margin quarter over quarter due to continued scale and yield improvements
Focused on expanding product lines, increasing supply of edibles and other manufactured products across retail footprint in 2H 2021
Alachua greenhouse completed first harvest out of 38,280sqft facility in June

Illinois

Cannabist rebrand at Villa Park dispensary and launch of new products such as Triple Seven flower and Seed & Strain vapes drove foot traffic and positive reviews, with sequential revenue increasing 15% in Q2 and 397% YoY
Margin improvement due to focus on manufacturing automation and increasing delivery schedules; gross margin and Adj. EBITDA margin each increased 600bps sequentially
Production efficiencies resulting in >30% THC flower and strong terpene profiles
Jefferson Park dispensary expansion to triple the size of the space is under construction and expected to be completed in 2H 2021

Massachusetts

Sustained YoY revenue growth trajectory with 85% increase over Q2 2020 and 6% sequentially, driven by earlier than expected contributions from wholesale revenue
Q2 implementations, such as institutionalization of wholesale supply chain and addition of automation equipment for flower and pre-roll, are expected to show financial impact in Q3
Ongoing conversion of all 3 dispensaries to Cannabist branding, complemented by Q2 introduction of Seed & Strain, Triple Seven, Press, Amber and Plant Sugar brand products
Adult-use sales commenced in downtown Boston co-located dispensary as of August 10, 2021

New Jersey

Revenue increased 20% sequentially; gross margin turned positive in Q2, increasing by 7200bps sequentially
Cultivation facility completed first harvest in July, allowing establishment of multiple wholesale partnerships to ensure products are available for patients throughout the state
Two additional dispensary locations in southern NJ region in development: Deptford location will open in Q3 2021, and Hamilton Township location will open in Q1 2022; both will be Cannabist locations
Second cultivation and production facility in Vineland is under development and will provide 250,000sqft of additional canopy, manufacturing, and distribution space to support medical and adult-use in 2022

New York

Revenue up 11% sequentially and 72% YoY, despite lingering COVID-19 impacts in Manhattan and Brooklyn locations
Progress with cultivation preparations at new Long Island cultivation facility (~1Msqft), targeting initial harvest in Q4, as preliminary approval has been received to begin cultivation operations on site
Continued focus on wholesale opportunities and new product launches, such as new flavor chews ahead of adult use
As an existing Registered Organization, we are in the process of locating four incremental medical dispensaries to add to our current four medical dispensaries; three of the added dispensaries will be co-located with adult use for a total of eight dispensaries in New York

Ohio

Revenue increased 18% sequentially and 110% YoY, including gLeaf dispensary contribution following June 10 acquisition closing
Patient satisfaction with strains improved; number of transactions increased 15% QoQ
CannAscend, Corsa Verde and gLeaf acquisitions closed, with integration now underway
Strong wholesale relationships continue, with Columbia Care flower in more than 90% of all dispensaries in state
Mt. Orab cultivation facility to have incremental canopy available by Q4 in a phased approach with final completion in Q1 2022; increased canopy will drive increased gross margin and EBITDA, and incremental biomass will allow for continued brand and SKU launches for wholesale and retail

Pennsylvania

Revenue increased 28% sequentially and 46% YoY, including gLeaf contribution following June 10 acquisition closing
With close of gLeaf transaction, Columbia Care will be vertically integrated in PA with the largest cultivation operation in the state upon completion of gLeaf’s 174,000sqft expansion for a total of 274,000sqft
gLeaf currently wholesales to nearly all dispensaries in Pennsylvania (+95%), and gLeaf’s wholesale operations will be margin accretive to the Company’s PA operations

Virginia

Revenue grew 227% QoQ, including gLeaf contribution following June 10 acquisition closing
Positive Adj. EBITDA margin increased 200bps; sequential gross margin improvement of approximately 400bps in Columbia Care operations
Columbia Care completed first wholesale transactions in Q2; working with all licensed operators in VA to advance wholesale opportunities
Focused on integration of gLeaf operations and increasing intra-company wholesale since close of transaction on June 10; gLeaf currently has largest cultivation and delivery operations in the state
Flower sales to begin in Virginia in September; increasing canopy and building inventory in preparation
Actively pursuing 5 additional dispensary locations for each license, for a total of 12 dispensaries between Columbia Care and gLeaf; 3 additional dispensaries to open by year end

Columbia Care’s 2021 outlook is based on current trends and is consistent with the forecast previously provided on March 16, 2021. Columbia Care’s pro forma 2021 outlook does not assume any future changes in the regulatory environment in markets where Columbia Care currently operates. See “Caution Concerning Forward-Looking Statements” below for further discussion.

Conference Call and Webcast Details

The Company will host a conference call on Thursday, August 12, 2021, at 8:00 a.m. ET to discuss its financial and operating results for the second quarter of 2021.

To access the live conference call via telephone, please dial 1-877-407-8914 (US callers) or 1-201-493-6795 (international callers). A live audio webcast of the call will also be available in the Investor Relations section of the Company’s website at https://ir.col-care.com/ or at https://78449.themediaframe.com/dataconf/productusers/colc/mediaframe/45712/indexl.html.

A replay of the audio webcast will be available in the Investor Relations section of the Company’s website approximately two hours after completion of the call and will be archived for 30 days.

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