Cresco Labs Delivers Q3 2023 Results, Execution of Core Market Strategy

NEW YORK– Cresco Labs Inc., a player in the cannabis industry, has unveiled its third-quarter financial and operating results for the period ending September 30, 2023. A leader in branded cannabis products and the operator of Sunnyside dispensaries, Cresco Labs reported all financial information in U.S. GAAP and U.S. dollars.

Financial and Operational Highlights

• Revenue: The company posted a revenue of $191 million for Q3, fueled by retail growth and robust performance in core markets.
• Adjusted Gross Margin: Compared to Q1 2023, the adjusted gross margin surged by over 480 basis points.
• Operating Costs: The company successfully slashed annualized operating costs by over $40 million.
• Gross Profit: Cresco Labs recorded a gross profit of $94 million, constituting 49% of the revenue.
• Adjusted EBITDA: The adjusted EBITDA stood at $49 million, marking a 26% margin on revenue, a sequential increase of 21%.
• Operating Cash Flow: The company generated a positive operating cash flow of $41 million, inclusive of one-time cash charges.
• Net Loss: Despite strong operational performance, Cresco Labs reported a net loss of $113 million, primarily due to one-time, non-cash impairment charges of $129 million.

Operational Milestones

• Cresco Labs retained its top market share position in Illinois, Pennsylvania, and Massachusetts.
• The company’s branded portfolio continued to dominate, with significant year-over-year increases in branded flower and concentrate sales.
• Two new Sunnyside stores were opened in Florida, expanding the total store count to 70 nationwide.

Management’s Perspective

Charles Bachtell, CEO of Cresco Labs, highlighted the company’s effective execution of its Year-of-the-Core strategy, which has led to substantial margin and operating cash flow improvements. Bachtell emphasized the company’s disciplined approach in core markets and products, positioning Cresco Labs competitively for both current and future market opportunities.

Market Milestones and Federal Reform

• Cresco Labs acknowledges Ohio’s legalization of adult-use cannabis as a significant industry milestone.
• The CEO pointed out the inevitable change towards national cannabis reform, given the current support and state-level legalizations.

Financial Stability and Future Plans

• As of September 30, 2023, the company reported current assets of $303 million, including cash and equivalents of $113 million.
• Cresco Labs has been active in capital markets and divestiture activities, including a recent agreement yielding $7 million in cash proceeds from divesting assets in Arizona.

Looking Forward

Cresco Labs is set to continue leveraging its strong market presence and financial stability to navigate the evolving cannabis landscape. The company’s focus remains on optimizing its core operations while being adaptable to new market opportunities and impending federal reforms.