Debra Borchardt
Columbia Care Inc. (NEO: CCHW) (CSE: CCHW) (OTCQX: CCHWF) reported financial results for the first quarter ended March 31, 2022. Revenue for Columbia Care fell sequentially by 11% to $123 million from $139 million in the fourth quarter. It was a 43% increase over last year’s revenue of $86 million for the same time period. It missed the Yahoo Finance average analyst estimates for revenue of $138 million.
The net loss was trimmed slightly to $27 million from last year’s $29 million for the same time period. The earnings per share were ($0.07) versus last year’s ($0.10). This was in line with analyst expectations.
“The results of the first quarter of 2022 demonstrate how Columbia Care overcame a number of macro-economic headwinds by exercising strong operational discipline. We materially increased our gross and EBITDA margins, as we continued leveraging the scale we have built across our strategic national platform. During the first quarter, we drove a revenue increase of 43% over the prior year, achieved nearly 700 basis points of improvement in Adjusted Gross Margin and more than 930 basis points in Adjusted EBITDA Margin. As our recent capital investments yield enhanced efficiencies throughout the value chain, this will not only allow us to capitalize on our growth opportunities throughout the country, but continue to further improve profitability,” said Nicholas Vita, CEO of Columbia Care. “As 2022 continues to unfold, our priority is on driving profitability. We expect market specific cyclicality to be surpassed by the standout growth in several key markets in our diversified portfolio. Having new, high growth markets come on line, beginning in 2Q, will provide a strong counterbalance as several maturing markets show the impact of inflationary and competitive pressures.”
Top Markets
Col-Care noted that its top five markets by revenue in the quarter were California, Colorado, Massachusetts, Pennsylvania, and Virginia. Virginia is now a top market for both revenue and Adjusted EBITDA with four active retail locations, with significant expansion of the medical program to begin July 1. Col-Care opened 5 additional retail locations in the quarter: four in West Virginia and one in Virginia Beach, VA to bring active total to 84. Additional dispensaries in development include eight in Virginia, one in West Virginia, and one in New Jersey.
Vita continued, “We are excited about recent achievements and progress thus far in 2022, including our fourth dispensary in the rapidly expanding market of Virginia, opening four retail locations and launching the leading wholesale operation in West Virginia, and the launch of adult-use in New Jersey in mid-April. As we look ahead to the remainder of the year, we are leaning into the markets that will propel growth such as New Jersey, Virginia, West Virginia, and New York, making ongoing operational improvements to drive efficiencies in new and maturing markets, and focusing on driving free cash flow to fund our growth strategy. We also remain determined to deliver the best outcome for our stakeholders as we progress towards a successful close of the transaction with Cresco Labs, with the shared vision of creating the definitive market leader in the cannabis industry.”
Outlook
Columbia Care said that it expects revenue in 2022 to range between $625 million and $675 million. At this time, the company said its 2022 outlook does not include any contribution from future acquisitions, nor does it assume any additional changes in the regulatory environment in markets where Columbia Care currently operates or the anticipated impact of the pending Cresco Labs transaction. 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.
