Columbia Care Inc: Overlooked U.S. Pot Stock Reports Record Q2

Columbia Care Stock Up 37% Year-Over-Year; More Gains Coming

With a market cap of $1.4 billion, Columbia Care Inc (CNSX:CCHW, OTCMKTS:CCHWF) isn’t exactly a tiny U.S. pot stock. At the same time, it isn’t a marijuana play that you hear pot investors talking about much. But they should be.

Over the last couple of months alone, Columbia Care has announced:

• Another quarter of record financial results
• The launch of its West Virginia market operations
• Completion of its acquisition of CannAscend (owner of four dispensaries in Ohio)
• Plans to acquire Denver-based Medicine Man Technologies Inc
• Completion of its acquisition of Green Leaf Medical, cementing a market-leading position in the Mid-Atlantic
• The launch of a record number of new products and brand introductions

This helps explain why Columbia Care’s share price has been on a great trajectory since bottoming in March 2020. Since then, Columbia Care stock has rallied 498%. Furthermore, CCHWF stock is up 32% year-over-year.

The company’s share price has traded in a tight range over the last couple of months, but there is plenty of room for growth. Columbia Care stock needs to climb 70% to reach its February 2021 record high of $7.89. A round of additional record financial results could be just what CCHWF stock needs to get there.

Chart courtesy of StockCharts.com

Columbia Care Inc Overview

Columbia Care Inc is one of the largest cultivators, manufacturers, and providers of cannabis products and related services with licenses in 18 jurisdictions (including California, Colorado, Ohio, Illinois, Massachusetts, New York, and Pennsylvania), and Europe. (Source: “Investor Presentation Second Quarter 2021,” Columbia Care Inc., last accessed August 12, 2021.)

The company operates 99 U.S. dispensaries (73 active and 26 under development), 31 U.S. cultivation and manufacturing facilities (covering two million-plus square feet), more than 300 acres of outdoor cultivation capacity, and wholesale distribution in 13 operational markets.

As one of the largest and most experienced multi-state operators, Columbia Care’s strategic footprint encompasses more than 53% of the U.S. population.

Not only that, but Columbia Care Inc was one of the original providers of medical marijuana in the U.S. This experience has helped it seamlessly transition to recreational sales. The company has experienced top-line revenue growth by three to four times in states that have already converted from medical-use to adult-use.

And with more and more states legalizing recreational cannabis use, the company continues to have excellent upside potential. Adult-use sales have begun in Arizona and are expected in New Jersey in 2021, New York in 2022, and Virginia in 2024.

The company offers products like flower, edibles, oils, and tablets. It also manufactures popular brands such as “Seed & Strain,” “Triple Seven,” “gLeaf,” “Classix,” “Plant Sugar,” “Press,” “Amber,” and “Platinum Label CBD.”

In May 2021, Columbia Care launched “Cannabist,” its new retail brand, creating a national dispensary network. In April, the first dispensary to launch under the Cannabist brand was in Springville, UT.

By the end of May, three existing Columbia Care locations in Tempe, AZ, Villa Park, IL, and San Diego, CA became Cannabist-branded retail locations. The company has a pipeline of more than 80 new and existing locations to follow over the next 24 months.

Record Q2 2021 Results

For the second quarter, which ended June 30, 2021, Columbia Care announced that revenue jumped 232% year-over-year and 19% sequentially to a record $109.7 million. (Source: “Columbia Care Reports Record Second Quarter 2021 Results,” Columbia Care Inc., August 12, 2021.)

The company reported a second-quarter net loss of $10.8 million, or a loss of $0.03 per share, versus a second-quarter 2020 net loss of $27.3 million, or $0.11 per share.

Columbia Care announced that quarterly adjusted gross profit increased 300% increase year-over-year and 26% sequentially to a record $47.7 million.

It also reported record adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $16.5 million. This figure represents a $21.1-million increase year-over-year, up 58% quarter-over-quarter.

Columbia Care Inc reaffirmed its 2021 revenue guidance of $500.0 million to $530.0 million and adjusted EBITDA guidance of $95.0 million to $105.0 million. In 2020, the company reported record revenue of $197.9 million and an adjusted EBITDA loss of nearly $1.0 million. (Source: “Columbia Care Reports Record Fourth Quarter and Full Year 2020 Results; Reaffirms 2021 Guidance,” Columbia Care Inc., March 16, 2021.)

During the quarter, the company raised $74.5 million of six percent convertible debt and ended the quarter with a cash balance of $149.2 million.

Analyst Take

Columbia Care Inc is an excellent, overlooked U.S. cannabis company with a strong balance sheet and one of the largest national footprints. It also reported another quarter of record financial results and reaffirmed its full-year guidance.

And the outlook remains bright for Columbia Care. The company has additional growth initiatives underway. With New York, New Jersey, and Virginia poised to transition to adult use, the opportunities for Columbia Care remain robust.

This has set the stage for a far-reaching second half of the year, with momentum building into 2022. With all things being equal, this should result in record-breaking 2021 and 2022 financial results.