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Columbia Care Inc. (CCHWF) reported its financial results this past Wednesday for the fourth quarter (Q4) that ended December 31, 2022.

Q4 Financial Highlights

Financial results are reported in U.S. dollars and are in comparison to those reported in Q3.

• Revenue: DOWN 4.9% to $126.2M
• Gross Profit: DOWN 20.2% to $41.6M
  • Adj. Gross Margin: DOWN to 37.4% from 42.8%
• Adj. EBITDA: DOWN 17.1% to $17.4M
• Net Income (Loss): $(301.1)M
• Cash on Hand: DOWN 3.6% to $48.2M

Q4 Operational Highlights

• Opened two Cannabist retail locations in Virginia and closed 1 unprofitable retail location, ending the year with 84 active dispensaries.
• Announced that it would by closing 4 additional unprofitable locations (2 in Colorado, 1 in California and 1 in Missouri).
• Retail revenue remained flat in Q4 2022, with a slight improvement in same store sales, in spite of pricing headwinds.
• Wholesale revenue declined 30% sequentially due to pricing pressure and intentional inventory management, which negatively impacted Q4 gross margin.
• Decreased its weighted average production cost per pound by 8% across the portfolio.
• Shifted its retail revenue product mix to include more concentrates, evidenced by a 5-percentage point increase in Q4 2022
• Launched Hedy, a new cannabis-infused edibles brand, in six markets and in a variety of form factors and flavors.
• Saw continued growth of Stash Cash, the loyalty program and mobile application that launched in 14 markets in Q3 2022 and provides the Company with enhanced opportunities to engage and retain customers and patients, as well as provide insight into customer behaviors and preferences.
• In-house brands accounted for 61% of all flower sold at Columbia Care dispensaries in Q4 2022.
• Now has 33 Cannabist locations in the U.S. with 5 additional openings planned in 2023.
• Generated $5.2 million of positive cash flow from operations in Q4 2022.
• Reduced its cash expenditure from $31.4M in Q3 to only $1.9 million in Q4 as a result of cost-savings, low CAPEX and improved working capital management.
• The Company has reported that its exit from several markets and assets that were not accretive to positive cash flow, including closing of its CBD and European business, selling of its assets in Puerto Rico, and its recent exit of Missouri, will generate an incremental savings of approximately $3 million annually going forward.

Management Commentary

Nicholas Vita, the CEO, said:

“We are focusing our footprint on those markets that can drive the most value for our patients, customers, and shareholders – and reducing exposure in markets that do not contribute to the bottom line. The ongoing operational and financial reprioritization of resources we began implementing in the fourth quarter of 2022, which included:

• a targeted corporate restructuring,
• multiple cost-reduction measures,
• several non-core asset divestitures,
• implementing improvements in cultivation and manufacturing quality and efficiency,
• and optimizing our liquidity position,

will provide a pathway to free cash flow generation in 2023. We are confident in the embedded growth in our strategic footprint and in the expected impact of the improvements we are making to influence our profitability, cash flow and liquidity position.”

Stock Performance

Columbia Care's stock price was DOWN 39.5%% during Q4 (October, November, December) but has gone DOWN a further 32.0% as of yesterday, March 30th on its extremely disappointing Q4 results.

Wall Street 12-Month Forecast

3 Wall Street analysts cover Columbia Care and have a consensus Strong Buy on the stock with a 12-month forecast, ranging from a high of $8.37/share to "only" $1.00/share, which represents a 676% increase from today's price.

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