Quarterly Revenue of $133 Million, an Increase of 2.4% QoQ
Gross Profit of $52 Million, an Increase of 2.5% QoQ
Adjusted Gross Margin1 of 43%, an increase of 33bps QoQ
Adjusted EBITDA1 of $21 Million, an Increase of 74.5% QoQ, and Adjusted EBITDA Margin1 of 16%, an Increase of 653bps QoQ
NEW YORK–(BUSINESS WIRE)–Nov. 14, 2022– Columbia Care Inc. (NEO: CCHW) (CSE: CCHW) (OTCQX: CCHWF) (FSE: 3LP) (“Columbia Care” or the “Company”) today reported financial and operating results for the third quarter ended September 30, 2022. All financial information presented in this release is in U.S. GAAP, unaudited and in thousands of U.S. dollars, unless otherwise noted, and comparisons to prior quarter and prior year are made on an as-converted basis under U.S. GAAP, unless otherwise noted.
“Our third quarter results are a testament to the embedded growth in our strategic footprint and the operational excellence we have developed over time. We achieved solid sequential topline growth and standout profitability improvements in another challenging quarter, with revenue increasing 2.4% sequentially to $133 million in the quarter. Adjusted EBITDA improved 74% over Q2 to $21 million, with sixteen of our seventeen markets generating positive EBITDA in the quarter. We continue to drive revenue and EBITDA growth in our emerging markets such as New Jersey, Virginia, and West Virginia, two of which are now among our top five markets by revenue and EBITDA. Based on the operational changes we’ve made, we’ve seen stabilization in our most mature markets – California and Colorado – materialize,” said Nicholas Vita, CEO of Columbia Care.
Vita continued, “We have made strategic operational decisions to prioritize quality production and efficiency, and redoubled efforts to manage costs as we face persistent macroeconomic headwinds that directly and materially impact the consumer wallet. Although we continue to anticipate a more challenging operating environment over the next 12-18 months, we are encouraged by the ongoing resilience we’ve seen throughout our markets and by the enthusiasm of the cannabis community. Furthermore, the difficult decisions we made 12-18 months ago are beginning to pay dividends as the efficiencies in cultivation and manufacturing positively impact our wholesale ramp while continued rationalization of SG&A amplifies the EBITDA improvements. The diversity of our footprint, including meaningful operations in the markets that are transitioning to adult use, is key to our growth. As we near the end of 2022, we are excited about the journey ahead where, together with Cresco Labs, we will create the leading company in cannabis.”
| Third Quarter 2022 U.S. GAAP Financial Highlights (in $ thousands, excl. margin items): | ||||||||
| Q3 2022 | Q2 2022 | Q3 2021[3] | % QoQ | % YoY | ||||
| Revenue | $ | 132,733 | $ | 129,571 | $ | 132,322 | 2.4% | 0.3% |
| Gross Profit | $ | 52,135 | $ | 50,848 | $ | 61,367 | 2.5% | -15.0% |
| Adj. Gross Profit[1,2] | $ | 56,895 | $ | 55,118 | $ | 62,797 | 3.2% | -9.4% |
| Adj. Gross Margin[1,2] | 42.86% | 42.54% | 47.46% | 33 bps | -459 bps | |||
| EBITDA[1] | $ | 4,419 | $ | (3,996) | $ | (33,236) | N/A | N/A |
| Adj. EBITDA[1] | $ | 20,993 | $ | 12,029 | $ | 24,777 | 74.5% | -15.3% |
| [1] See “Non-GAAP Financial Measures” in this press release for more information regarding the Company’s use of non-GAAP financial measures. |
| [2] Excludes $4.8 million in Q3 2022 relating to a one-time write-off in Colorado to reduce outdoor capacity, $4.3 million in Q2 2022 related to inventory revaluation adjustments and $1.4 million in Q3 2021 related to the mark-up of inventory acquired in acquisitions. |
| [3] Figures for Q3 2021 are Combined, including dispensary and manufacturing operations in Ohio, Non-GAAP. Gross Profit is as reported in Q3 2021. |
Top 5 Markets by Revenue in Q3[4]: California, Colorado, New Jersey, Ohio, Virginia
Top 5 Markets by Adjusted EBITDA in Q3[4]: Colorado, New Jersey, Ohio, Pennsylvania, Virginia
| [4] Markets are listed alphabetically |
Operational Highlights for Third Quarter 2022
Enhancing and implementing scale with continued retail and wholesale growth:
- Retail revenue increased modestly, 0.4% over Q2 2022, while wholesale revenue increased 14% sequentially – meaningful contributor to EBITDA
- New Jersey retail locations expanded to full adult use hours in June 2022, market revenue increased more than 75% sequentially, with growth in wholesale of nearly five times the prior quarter, driven by the ramping scale in the new Vineland facility
- No additional retail locations opened in Q3. Subsequent to quarter end, opened Carytown, Virginia Cannabist location, the Company’s fifth retail location in Virginia, bringing total dispensaries to 85
- Additional dispensaries in development include 7 in Virginia, 1 in West Virginia, and 1 in New Jersey
- Sixteen of seventeen markets produced positive EBITDA in the third quarter
Proven cultivation expertise and execution:
- In Q3, completed first harvest out of the second cultivation facility in Vineland, New Jersey, which added approximately 270,000 square feet of cultivation and production capacity to the New Jersey footprint, as well as post-harvest automation equipment to support retail and wholesale growth
- Cultivation efficiency and standardization across markets continued to improve, with focus on optimizing production planning, genetics selection, environmental controls, and plant management leading to improved potency and productivity; flower production costs declined approximately 5% sequentially across the national portfolio
- In Ohio, the Mt. Orab cultivation facility expansion contributed to sequential improvement in Gross Margin
- In Virginia, the expansion of Portsmouth facility led to a 4X increase in harvested plants; there is additional capacity to expand the current garden as demand increases in market
Sustained momentum on branding initiatives at retail and product levels:
- Owned brands made up over 60% of all flower sales at Columbia Care locations in Q3
- In Q3, launched a new loyalty program and mobile application, Stash Cash, in 14 markets
- In August, launched the first pre-rolls in the New York market, marking Seed & Strain’s 14th market
- Triple Seven, an award-winning premium brand, launched in Pennsylvania in August, bringing the footprint to ten markets
- In October, launched Hedy, a new cannabis-infused edibles brand in six markets and a variety of form factors and flavors; Hedy is now available in Arizona, Colorado, Delaware, Massachusetts, Missouri and Virginia
- With the opening of Carytown, Virginia Cannabist in October, there are now 32 Cannabist locations in the U.S.
Update on Cresco Transaction & Milestones Achieved
- Cleared federal Hart Scott Rodino antitrust review in May
- Received overwhelming approval from our shareholders, with over 98% of the votes cast in July in favor of the transaction
- Final order granted by the Supreme Court of British Columbia in July
- Announced execution of agreement relating to first asset divestiture on November 4, with Illinois, Massachusetts, and New York assets being sold to Sean “Diddy” Combs, via Combs Enterprises
- The remainder of the asset divestiture process is continuing to move forward with additional announcement expected soon
- Closing of Cresco transaction anticipated to be around the end of the first quarter of 2023
2022 Outlook
Columbia Care expects sequential topline performance to be flat to low-single digit growth in the fourth quarter. In addition, the Company expects an Adjusted EBITDA margin in the mid-to-high teens in the fourth quarter.
At this time, Columbia Care’s 2022 outlook does not assume any additional changes in the regulatory environment in markets where Columbia Care currently operates. This also excludes potential future market changes where a conversion from medical only to adult use is under consideration by a governor and/or legislature. The outlook does not assume any asset sales prior to Q1 2023. See “Caution Concerning Forward-Looking Statements” below for further discussion. This new revised outlook replaces all prior outlook and guidance provided by the Company.
Conference Call and Webcast Details
The Company will host a conference call on Monday, November 14, 2022 at 4:30 p.m. ET to discuss financial and operating results for the third quarter.
To access the live conference call via telephone, participants must pre-register at https://register.vevent.com/register/BIc703b752599546a7a28197c8bf33e7ad. After registering, instructions will be shared on how to join the call for those who wish to dial in. A live audio webcast of the call will also be available in the Investor Relations section of the Company’s website at https://investors.columbia.care/ or at https://edge.media-server.com/mmc/p/j9ac4cjf.
A replay of the audio webcast will be available in the Investor Relations section of the Company’s website approximately 2 hours after completion of the call and will be archived for 30 days.
