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Marijuana multistate operator The Cannabist Co. is trying to improve its wholesale business as it moves on from what CEO David Hart described as “an arduous 2023.”
“I have committed to the team that this business will look very different by the end of 2024,” Hart said during prepared remarks on a Wednesday conference call discussing The Cannabist’s fourth-quarter and full-year 2023 earnings.
Hart took the helm at The Cannabist in January, not long after the company rebranded from Columbia Care following an aborted merger with Cresco Labs.
Wholesale revenue comprised 12% of The Cannabist’s revenue in 2023.
“We are looking to change that,” Hart said, explaining that The Cannabist undertook significant capital expenditure in certain markets to prepare for transitions to adult-use cannabis.
“However, at present, many of our largest facilities are underutilized, creating a significant drag on our gross margin …
“To address that, you should expect to see us strategically ramping up wholesale across the portfolio and continuing to engage in key partnerships that will complement our own in-house brands to complete our product mix in retail and strengthen our wholesale product offerings.”
The Cannabist posted $128.4 million in revenue for the quarter ended Dec. 31, down 0.6% from the preceding quarter and up 1.7% from the same quarter in 2022.
Chief Financial Officer Derek Watson said The Cannabist is experiencing smaller average basket sizes “caused by ongoing pricing pressures, offset by transaction volume growth over the prior quarter and the prior year.”
The New York-based company’s quarterly net loss was $72.5 million, 75.9% less than its net loss for the fourth quarter of 2022.
For the full 2023 fiscal year, revenue was $511.3 million, barely changed from $511.6 million in 2022.
The Cannabist’s full-year net loss was $174.3 million, compared with $421.5 million in 2022.
The Cannabist said it completed its exit from Utah during the current quarter, divesting a license and retail location for gross proceeds of $6.5 million.
The company reported $39.3 million in cash on hand at the end of 2023.
“This was achieved after paying down $30.6 million of senior debt in the fourth quarter: $25 million to redeem the bulk of our 13% notes due May 2024, and $5.6 million to fully settle the convertible note that matured in December of 2023,” CFO Watson said Wednesday.
The Cannabist currently has 85 retail locations in 15 markets across the United States.
Solomon Israel can be reached at solomon.israel@mjbizdaily.com.
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