Columbia Care Inc. (NEO: CCHW) (OTCQX: CCHWF) reported its financial results for the second quarter ended June 30, 2023, as revenue fell slightly to $129.2 million from last year’s $129.5 million, but improved over the previous quarter’s revenue of $124.5 million. However, it beat the Yahoo Finance average analyst estimate for revenues of $124 million.
Columbia Care also reported a net loss in the quarter of $28 million, an improvement over last year’s net loss of $53 million and better than the previous quarter’s net loss of $37 million. The earnings per share for the quarter were ($0.07) per share, which just missed the analyst estimate of ($0.06) per share.
The company ended the quarter with $36 million in cash versus $40.2 million at the end of the first quarter. The company has continued its expansion while addressing debt demands.
“Our second quarter results were solid, as we achieved more than $129 million in revenue, representing 4% sequential growth, confirming that we have kept our foot on the accelerator over the past 16 months,” said Nicholas Vita, CEO of Columbia Care. “The financial impact of the measures we have taken to optimize our outstanding footprint and right-size operations are leading to increased profitability, with an 11% increase in gross profit over the first quarter and Adjusted EBITDA increasing 24% sequentially to over $20 million. We continue to focus on generating positive cash flow.”
The company continued to open stores in Virginia, expand its reach in New Jersey, and recently launched in Maryland with the start of adult-use sales. Columbia Care said its top five markets by revenue in the quarter were California, Colorado, New Jersey, Ohio, and Virginia.
Vita went on to say, “Growing markets on the east coast fueled our sequential topline growth, counterbalancing further price compression in certain markets such as Florida, Illinois, and Massachusetts. We continued to reduce costs in the quarter, having now eliminated over $38 million, net, in annual expenses, as we prioritize cash flow generation. We have announced the initial steps to manage our balance sheet in collaboration with our bondholders and are actively reviewing and considering additional refinancing alternatives. To enhance liquidity and improve operating efficiency, we have continued divesting non-core assets and pursuing commercial mortgages on eligible properties.”
Cutting Costs
The most pressing issues for Columbia Care were cutting costs and addressing its debt. The company said it cut corporate operating expense by 3% sequentially. Following the organizational changes announced in July and the recent integration of Green Leaf Medical since December 2022, the company said it has eliminated over $38 million, net, in annual expenses.
Debt Issues
In addition to cutting costs, Columbia Care has been working on addressing its debt payment. The company reiterated that it has received commitments from several of its largest holders of its 13% senior secured notes due May 2024 to exchange into 9.5% senior secured notes due February 2026, on a one-for-one basis.
The company also said it is in ongoing discussions with a limited group of additional bondholders to exchange more 2024 notes under the same structure. The company said in a statement, “These private exchange agreements will reduce the amount of the $38.2 million principal of notes due in May 2024, reduce the cash interest cost for the exchanged notes by 350 basis points, and extend the maturity of the converted notes to February 2026. More details will be provided upon closing of the exchange which will be in the third quarter.”
The company did not mention its recent decision to end the potential deal with Cresco Labs.
Vita continued, “As we turn our attention to the next 12 months, the operational leverage created by the steps we have already initiated to reduce corporate SG&A, reduce leverage, enhance cash flow from operations and drive innovation through technology and product/brand development will continue in the second half of 2023. We are excited to re-introduce you to Columbia Care and are confident in the future of the Company.” (Full Story)