The Cannabist reports revenue decline following divestitures

The Cannabist Company Holdings Inc. (Cboe CA: CBST) (OTCQX: CBSTF) reported its financial results for the third quarter that ended September 30, 2024, with revenue falling following divestitures.

The Cannabist reported third-quarter revenue fell 8% to $114.8 million attributed to the sale of Eastern Virginia and Arizona businesses in August. The company noted that excluding the divested assets for the second and third quarters, revenue would have been flat quarter over quarter. Revenue also fell sequentially from the second quarter’s $125 million in sales.

The Cannabist trimmed its net losses to $1.7 million from last year’s net loss of $36.1 million in the same period. The company ended the second quarter with $31.5 million in cash, up from $22 million at the end of the second quarter.

“The results in the third quarter are indicative of the continued transformation that is underway at The Cannabist Company as we strive to build a better business by strategically reshaping our footprint, streamlining operations, and derisking the balance sheet. 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. We have exited, or are in the process of exiting, unprofitable and underperforming locations 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,” said David Hart, CEO of The Cannabist Company.

Divestitures

The sale of operations in Eastern Virginia and Arizona, valued at $105 million, gave the company net cash proceeds of $31 million in the quarter. The company also announced deals to sell all 14 Cannabist dispensaries and three cultivation facilities in Florida for a total consideration of $16.4 million; as part of the transactions, the company will retain an MMTC license that it intends to sell for additional consideration. The Cannabist also told investors today that the deal in Florida with MINT Cannabis and SHANGO has closed. This agreement was previously announced on August 23, 2024.

“As we’ve previously noted, exiting Florida allows us to put cash on the balance sheet and exit a market that, because of an unbalanced portfolio, was not profitable for us. We continue to work towards closing the Lakeland transaction for an additional $11.4 million, and we can now proceed with the planned sale of the MMTC license received in the MINT/SHANGO transaction,” said David Hart, CEO, The Cannabist Company.

Following these sales, the company said its quarter-end active retail count was 74 stores. Since the quarter ended, The Cannabist closed one location in Boston.

The company still has some work to do regarding operations. Cash from operations in the quarter was negative $18 million, compared to negative $3 million in the second quarter and negative $6 million in the first quarter.

Hart continued, “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.”