NEW YORK, Nov. 7, 2024 – PRESS RELEASE – The Cannabist Co. Holdings Inc., one of the most experienced cultivators, manufacturers and retailers of cannabis products in the U.S., reported its financial and operating results for the third quarter ended Sept. 30, 2024. All financial information presented in this release is in U.S. generally accepted accounting principles (GAAP) and in thousands of U.S. dollars, unless otherwise noted.
“The results in the third quarter are indicative of the continued transformation that is underway at The Cannabist Co. as we strive to build a better business by strategically reshaping our footprint, streamlining operations and derisking the balance sheet,” The Cannabist Co. CEO David Hart said.
“In the third quarter, we closed on significant transactions with the sale of Arizona and Eastern Virginia assets for total consideration of approximately $105 million, bringing a significant capital infusion into the business and strengthening our balance sheet,” he said. “We have exited, or are in the process of exiting, unprofitable and underperforming location in Florida; Washington, D.C.; and Boston. We achieved continued improvement in wholesale and will continue to lean into markets where we have additional capacity and opportunity to grow. In addition, we were extremely well prepared for the transition to adult use in Ohio, which drove an outstanding performance in the quarter.
“Our optimization work is not yet done. Moving ahead into the fourth quarter and next year, we are continuing on our path to enhanced profitability. Our adjusted EBITDA margin target during 2025 remains above 20%. We will have a smaller, leaner operating footprint and scaled corporate overhead to match. We have exciting growth catalysts in 2025, including adult use in Delaware and additional retail locations in top markets such as New Jersey, Virginia and Ohio.”
Top 5 Markets by Revenue and Adjusted EBITDA in Q3[3]: Colorado, Maryland, New Jersey, Ohio, Virginia.
[3] Markets are listed alphabetically
Financial Highlights for Third Quarter 2024
- Third quarter revenue of $114.8 million, a decrease of 8% from the second quarter, primarily as a result of the sale of Eastern Virginia and Arizona businesses in August; excluding divested assets for both Q2 and Q3, revenue would have been flat quarter over quarter.
- Adjusted EBITDA in Q3 was $14.8 million, down from $17.5 million in Q2, adjusted EBITDA margin of 13%, compared to 14% in the second quarter; sequential contraction in adjusted EBITDA and adjusted EBITDA margin is a result of sale of businesses in Virginia and Arizona.
- The company ended the quarter with $31.5 million in cash, up from $22 million at the end of Q2.
- On Aug. 22, company closed on the sale of assets and operations in Eastern Virginia and Arizona for total consideration of $105 million, with net cash proceeds in the quarter of $31 million.
- On Aug. 23, company announced definitive agreements for the sale of all 14 Cannabist dispensaries and three cultivation facilities in Florida for a total consideration of $16.4 million; as part of the transactions, company will retain an MMTC license that it intends to sell for additional consideration.
- In Q3 2024, cash from operations was negative $(18) million, compared to negative $(3) million in Q2 and negative $(6) million in Q1.
- Capital expenditures in the third quarter were $1.5 million; capital expenditures are expected to average $2 million to $3 million per quarter over the medium-term, largely for new store openings and manufacturing upgrades.
- Subsequent to quarter close, company submitted an amended tax return and refund claim for $5 million associated with 280E for the 2020 tax year.
Operational Highlights for Third Quarter 2024
- Wholesale revenue increased 2% in Q3 and represented 17% of total revenue, up from 15% of total revenue in Q2.
- Company participated in day one of adult-use sales in Ohio, with volume nearly doubling for the five active retail locations; Ohio demonstrated largest increase in revenue and adjusted EBITDA quarter over quarter.
- As a result of the sale of retail locations in Arizona (2) and Eastern Virginia (6), the quarter-end active retail count was 74; subsequent to quarter close, the company closed one location in Boston and closed on the sale of 14 locations in Florida, as previously announced.
- Company has additional retail locations in development, including in New Jersey (1), Virginia (1) and Ohio (3).
