Despite Missing Estimates, Columbia Care Delivers Strong Quarter

Columbia Care Inc.  (OTCQX: CCHWF) reported financial and operating results for the first quarter ended March 31, 2021, with revenue increasing 220% to $92.5 million year-over-year and growing by 13% over the previous quarter. Columbia Care missed the Yahoo Finance average analyst estimate for revenue of $94.1 million.

The net losses were trimmed to $15.3 million from last year’s $20.6 million for the same time period. The earnings per share also improved to ($0.05) from last year’s ($0.09.), however, it wasn’t enough to meet the average analyst estimate for ($0.04) per share. Analysts give the stock a price target of $11.65 on average. Shares have been in an overall uptrend over the past six months and were lately selling at $6.17.

“We sustained our record 2020 momentum into the first quarter of 2021, with significant growth across both the top and bottom line,” said Nicholas Vita, CEO of Columbia Care. “Our combined revenue results reflect organic growth and further integration progress on key California and Colorado acquisitions. We continue to build scale and leverage in our existing markets, leading to positive trendlines for growth and profitability. The sequential increase in combined revenue and Adjusted EBITDA more than offset expected seasonality in Colorado and recently lifted COVID restrictions in California and was driven by substantial growth in Florida, Arizona, Illinois, and Ohio. Legacy Columbia Care’s same-store sales increased 60 percent year over year.

Indeed, in Arizona, same-store sales increased approximately 70% from the same period last year, driven largely by the accelerated statewide roll-out of adult-use sales in January. In Ohio, Columbia Care said that same-store sales were up more than 3x YoY and with wholesale relationships with more than 85% of dispensaries in the state. In Florida, the company said that revenue rose 58% sequentially and experienced significant same-store sales expansion, due to dispensary-level supply chain improvements and flower availability. California also saw its sales jump towards the end of the quarter as pandemic restrictions began lifting. The company noted that there was sequential revenue growth of nearly 3x with addition of acquisitions, increasing wholesale momentum throughout the first quarter.

In Colorado, revenue improved 27% over last year, but sequential results slowed in the first quarter due to expected seasonality and decision to partially take off-line and upgrade largest indoor grow in preparation for ‘100 days of heat’ during the second quarter and third quarter leading to accelerated GM and EBITDA expansion in the second quarter and back half of 2021.

Vita added, “Recognizing the tremendous opportunity we have before us, we continue to deepen our state, regional and national footprint by adding scale to capitalize on additional upside in rapidly expanding medical programs and, in particular, in markets transitioning to adult-use across the country. Significant strategic investments in markets such as New York, New Jersey and Virginia will enable us to be the most efficient and scaled leaders in those markets and will cement our position as the industry leader on the east coast.”

In New Jersey, retail sales growth outperformed expectations year-over-year and doubled sequentially. There was a significant drag on overall gross margin due to accelerated development of cultivation and manufacturing fixed assets; however, the first significant harvest from the legacy Vineland facility expected in the third quarter. Plus, two additional dispensaries will open in 2021 and become new Cannabist stores. In New York, revenue rose +60% over last years and was due in part to the wholesale business and strong home delivery program.

Cannabist Launch

The company recently rebranded its stores as the Cannabist. The first location to launch under the Cannabist brand is the recently opened dispensary in Springville, Utah, which had its first sale Friday, April 30. By the end of May, three existing Columbia Care locations, in Tempe, Arizona, Villa Park, Illinois, and San Diego, California, will become Cannabist branded retail locations, with a pipeline of more than 80 new and existing locations to follow over the next 24 months.

Columbia Care said it reaffirms guidance for the 2021 combined revenue of $500 – $530 million and Adjusted EBITDA guidance of $95 – $105 million as the Green Leaf Acquisition remains on track for closing at beginning of the third quarter.

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