Cresco Labs Q3 Net Loss Hits $263.45M, Revenue Improves 40.6% YoY, Reaffirms Guidance

Vertically integrated cannabis company Cresco Labs Inc. announced its financial results Thursday for the third quarter ended September 30, 2021, reporting revenue of $215.5 million, up by 40.6% year-over-year.

Q3 Financial Highlights

• Adjusted EBITDA of $56.4 million, or 26.2% of revenue, an increase of 24.0% quarter-over-quarter;
• Gross profitexcluding fair value mark-up for acquired inventory of $116.7 million, or 54.2% of revenue,an increase of 9.0% quarter-over-quarter and 48.3% year-over-year;
• Net loss amounted to $263.45 million, compared to net income of $25.58 million in the same period a year ago;
• Record net wholesale revenue of $109.3 million;
• Record retail revenue of $106.2 million from 37 stores;
• At the end of the reporting period on September 30, 2021, current assets were $449 million, including cash and cash equivalents of $252.8 million.

Financial Outlook

The Company reaffirms the previously provided guidance of:

• Gross profit margins in excess of 50.0% in the remainder of 2021;
• Adjusted EBITDA margin of at least 30.0%by the end of 2021;
• Revenue in the fourth quarter between $235 million and $245 million;

“Q3 was another outstanding quarter at Cresco Labs and a very strong start to the second half of the year,”Charles Bachtell, co-founder and CEO of Cresco Labs stated. “During the quarter, we replenished our balance sheet with non-dilutive capital, we closed a transformative acquisition in Massachusetts creating our third top three market share in a billion-dollar market, we announced several new deals to drive market depth, and we made massive improvements in bottom-line profitability as infrastructure investments began to bear fruit.”

Recent Milestones

• August:The company closed an agreement with lenders to upsize its senior secured term loan, increasing the principal amount by $200 million, and reducing the interest rate to 9.5% per annum, with a maturity date of August 12, 2026.

It has executed a definitive agreement to acquire 100% of the outstanding equity interests in Blair Wellness, LLC,a Baltimore, Maryland medical cannabis dispensary.

• September:Cresco closed the previously announced acquisition of Cultivate Licensing LLC and BL Real Estate LLC,a vertically integrated Massachusetts operator.

It has also executed a definitive agreement to acquire 100% of the outstanding equity interests in Bay, LLC d/b/aCure Pennsylvania, a Pennsylvania retail operator.

• October:Cresco executed a definitive agreement to acquire 100% of the outstanding equity interests in Laurel Harvest Labs, LLC, a Pennsylvania Clinical Registrant and vertically integrated operator.

The company reported that its “Summer of Social Justice” initiative raised over $250,000and supported the expungement process for over 1,000 people with cannabis-related criminal records.