The Cannabist Company Holdings Inc. (Cboe CA: CBST) (OTCQX: CBSTF) reported its revenue fell slightly for the first quarter ending March 31, 2024. The Cannabist delivered revenue of $122 million, which was less than last year’s $124 million for the same period.
It also fell sequentially from the fourth quarter revenue of $128 million. The company blamed seasonal lulls for the decline. The company also acknowledged it has more work to do to improve its numbers.
On a positive note, the net losses were trimmed to $34 million for the quarter versus last year’s net loss of $36 million for the same period.
“Our first quarter results demonstrate an improvement over the prior quarter on a margin basis, and we are encouraged by the green shoots that are evident in several critical areas of the business. As we have emphasized, this year we are committed to building a better business, with a focus on improving our margins as we target free cash flow generation,” said David Hart, CEO of The Cannabist Company.
He continued, “We have demonstrated early successes in better utilizing our footprint and existing cultivation and manufacturing facilities, evidenced by a decrease in the overhang on gross margin in the quarter. We are transforming the wholesale business, including shifting the wholesale mix toward finished goods and building strategic brand partnerships that are helping to recapture margin across the portfolio.”
With regard to the wholesale business, gross margins for the wholesale segment improved approximately 1,000 basis points over the prior quarter, driven by the mix shift towards finished goods. When it came to partnership deals, Cannabist chose Old Pal, Airo Brands, ButACake, Revelry Herb Co., and Edie Parker Flower to work with.
Markets
The quarter-end active retail count was 85 locations across 15 markets, with one location in Utah that was divested. The too five markets for the company were Colorado, Maryland, New Jersey, Ohio, Virginia.
Hart added, “As we look ahead, we are preparing for the upcoming adult use transition in Ohio and are continuing to capitalize on growth opportunities in markets like Virginia and New Jersey. Though we are encouraged by the results of the first quarter, we know there is more work to do. We look forward to enacting additional changes to the business so that we end 2024 having a materially improved financial position and are poised to compete more effectively.”
The Cannabist closed out the first quarter with $44.5 million in cash. On March 19, the company announced the closing of a $25.75 million private placement offering of 9% convertible notes due 2027, for which the primary use of proceeds is to settle the remaining $13.2 million of the 13% notes due May 2024.
Capital expenditures in the first quarter were $0.9 million and the company said they are expected to be in the range of $2 to $3 million per quarter for the remainder of 2024, largely for new store openings and manufacturing upgrades.
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