Cresco Labs Reports Slight Sequential Improvement In Q2, YoY Drop In Revenue And Gross Profit As Net Loss Grows

Cannabis company Cresco Labs Inc. CL CRLBF 6CQ reported its financial and operating results on Wednesday for the second quarter ended June 30, 2023, revealing a 2% sequential increase and 9.3% year-over-year drop in revenue to $198 million.

Q2 2023 Financial Highlights

• Gross profit totaled $87 million or 43.8% of revenue, compared to $86 million or 44.2% of revenue in the prior quarter and $112.8 million or 51.7% of revenue in the prior year’s period.
• Adjusted gross profit amounted to $93 million and adjusted gross margin was 47%, up 100 bps from the first quarter and down from $115.6 million and 53%, respectively, in the second quarter of last year.
• Loss from operations amounted to $10.7 million, compared to operating income of $3.6 million in the prior quarter and $22.7 million in the same period of 2022.
• Net loss totaled $43.5 million, up from $27.8 million net loss in the first quarter of 2023 and $8.3 million net loss in the corresponding quarter of last year.
• Adjusted EBITDA came in positive at $40.5 million, up from positive adjusted EBITDA of $29.3 million in the first quarter of 2023 and down from $50.6 million adjusted EBITDA gain in the same period of last year.
• Adjusted SG&A expenses amounted to $61.1 million, down from $67.8 million in the prior quarter and $70.6 in the same period of 2022.
• As of June 30, 2023, current assets were $265 million, including cash, cash equivalents and restricted cash of $75 million. The company had senior secured term loan debt, net of discount and issuance costs, of $384 million.

“Our Year-of-the-Core commitment to rationalizing and optimizing our core markets, core stores, core brands and core products is reflected in our Q2 results with growth in our top line, gross margin, Adjusted EBITDA and operating cash flow,” said Charles Bachtell, CEO of Cresco Labs, who will join a slew of other top cannabis executives, experts and entrepreneurs at the upcoming Benzinga Cannabis Capital Conference in September as a keynote speaker. “With our focus on driving scale and efficiencies across the entire organization, we’ve been accomplishing more with less – leading to a 38% sequential improvement in Adjusted EBITDA.”

No Deal With Columbia Care

On July 30, Cresco Labs and Columbia Care Inc. CCHWF CCHW CCHW (FSE:3LP) mutually announced they had terminated the deal under which Cresco agreed to acquire all of the issued and outstanding shares of Columbia Care. No penalties or fees were related to the mutual agreement to terminate the transaction.

An update showed definitive agreements dated November 4, 2022, to divest certain New York, Illinois and Massachusetts assets of Cresco and Columbia Care to an entity owned and controlled by Sean “Diddy” Combs were also terminated.

Bachtell said at the time this was “not the outcome we originally hoped for,” adding that he is “confident Cresco Labs is in a stronger position moving forward.”

The Benzinga Cannabis Capital Conference, the place where deals get done, is returning to Chicago this Sept 27-28 for its 17th edition. Get your tickets today before prices increase and secure a spot at the epicenter of cannabis investment and branding.

Photo: Benzinga edit of photo by Shutterstock