Cresco Labs Reports Record Revenue, But Takes $291 Million Charge

Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) announced its financial results for the third quarter ending September 30, 2021, with revenue growing 2.6% sequentially to $215.5 million, and an increase of 40.6% year-over-year. Still, Cresco recorded a non-cash impairment charge of $291 million in the quarter as a result of the strategic shift in California operations. That resulted in a net loss for the quarter of $263 million.

Cresco reported a record net wholesale revenue of $109.3 million and record retail revenue of $106.2 million from 37 stores.

“Q3 was another outstanding quarter at Cresco Labs and a very strong start to the second half of the year. During the quarter, we replenished our balance sheet with non-dilutive capital, we closed a transformative acquisition in Massachusetts creating our third top three market share in a billion-dollar market, we announced several new deals to drive market depth, and we made massive improvements in bottom-line profitability as infrastructure investments began to bear fruit,” said Charles Bachtell, Co-Founder and CEO of Cresco Labs. “We are very proud of the record performance during a challenging quarter and continue to find that our differentiated strategy, localized for each individual state market, positions us to out-compete in both the current environment and long term. With many more growth initiatives up ahead, 2022 is set to be another record year, and we couldn’t be more excited for what’s to come as we continue driving strategic breadth, depth and execution.”

The company though is sitting pretty comfortably with current assets at $449.0 million, including cash and cash equivalents of $252.8 million. Cresco had working capital of $239.8 million and Senior Loan debt, net of discount and issuance costs, of $376.6 million. Following the end of the quarter, Cresco said it was buying Laurel Harvest Labs, LLC, a Pennsylvania Clinical Registrant and vertically integrated operator.

Outlook

Cresco reaffirmed the previously provided guidance of gross profit margins in excess of 50.0% in the remainder of 2021, adjusted EBITDA margin of at least 30.0% by the end of 2021 and revenue in the fourth quarter between $235 million and $245 million.