Cannabist Q3 Was Flat Sequentially

The Cannabist Company Reports Third Quarter 2023 Results

NEW YORK–(BUSINESS WIRE)–The Cannabist Company Holdings Inc. (NEO: CBST) (OTCQX: CBSTF) (FSE: 3LP) (“The Cannabist Company” or the “Company”), one of the largest and most experienced cultivators, manufacturers and retailers of cannabis products in the U.S., today reported its financial and operating results for the third quarter ended September 30, 2023. All financial information presented in this release is in U.S. GAAP and in thousands of U.S. dollars, unless otherwise noted.

Third Quarter 2023 U.S. GAAP Financial Highlights (in $ thousands, excl. margin items):

“The third quarter results demonstrate consistent execution, with stable revenue of more than $129 million and Adjusted EBITDA of more than $20 million, in a complicated quarter rife with corporate actions and changes to the business, in only 8 weeks of operating as an independent company,” said Nicholas Vita, CEO of The Cannabist Company. “In July, we announced the mutual agreement to terminate the pending merger agreement after 16 months, and immediately announced corporate restructuring and operational changes to launch the Company into our next chapter, focused on resetting manufacturing priorities, managing the balance sheet, and beginning the process of restructuring elements of COGS to drive gross margin improvement in 2024. Less than two months later, we announced the transition from Columbia Care to The Cannabist Company, which is a reflection of where our organization and the market are heading, as we continue to innovate and differentiate in an ever-evolving industry”.

As we continue to optimize our footprint and prioritize markets that are driving profitability and growth, we are preparing to capitalize on the embedded growth in our portfolio, with additional retail locations expected to open in Maryland, New Jersey, New York, Ohio, and Virginia beginning in 2024. We are also growing the wholesale program and are targeting enhanced margin through increased facility utilization and greater branded product sales.

Nicholas Vita, CEO of The Cannabist Company

We will continue to make progress, as we did in the third quarter, toward proactively managing our balance sheet and improving liquidity. We are excited for the road ahead as The Cannabist Company and look forward to providing updates on our progress.

Top 5 Markets by Revenue in Q3³: Colorado, Maryland, New Jersey, Ohio, Virginia

Top 5 Markets by Adjusted EBITDA in Q3³: Maryland, New Jersey, Ohio, Pennsylvania, Virginia

_{³Markets are listed alphabetically}

Operational Highlights

Enhancing scale and optimizing strategic retail network:

• Wholesale revenue increased 3.3% sequentially to $15.7 million, as new wholesale program was established late in the quarter
• Retail revenue was flat sequentially, with outsize growth in Maryland and an increase in overall transactions offset by a decline in average basket size across the portfolio
• Maryland revenue increased 55% sequentially, with the start of adult use sales on July 1, 2023; one additional Maryland retail location is in development, one existing retail location will be relocated and expanded in 1H2024
• New Jersey’s two active retail locations remain among the top dispensaries in the Company’s portfolio; a third New Jersey retail location is in development for 1H2024
• In Q3 2023, the Company opened one Cannabist location in Suffolk, Virginia, bringing the total active store count to 86; Virginia remains a top market by revenue and adjusted EBITDA, with 10 retail locations in operation and 2 more in development for 1H2024

Driving cultivation expertise and continued improvements:

• The Company sees continued gains in operational efficiency and productivity, with the overall cultivated cost per gram continuing to show improvement, with a 9% reduction YoY; multiple markets also saw improved potency through strict adherence to standard operating procedures
• The Company now counts more than 70 high potency strains (25% THC or higher) throughout the portfolio, which affords our flower a premium price in the market as we continue to see a higher percentage of the portfolio in the high potency, branded category that commands premium pricing; has enabled the launch of higher potency brands like Triple Seven in new markets
• Cultivation improvements and standardization represent significant opportunity to improve gross margin further through continued reduction in cost per cultivated gram; the Company continues to optimize production planning, genetics selection, environmental controls and plant management across the cultivation portfolio to support market demand
• Improvement in cultivation efficiency and standardization supports introduction of upgraded brands, such as Triple Seven, Classix, Amber, Press, Hedy and Seed & Strain, to drive future pricing improvements and wholesale demand

Sustained momentum on branding initiatives at retail and product levels:

• On September 19, the Company unveiled a new name and brand identity, evolving from Columbia Care Inc. to The Cannabist Company Holdings Inc.
• In Q3 2023, launched various new form factors of award-winning brands across our national portfolio, including Amber, Press 2.0, and Triple Seven
• In-house brands accounted for over 60% of all flower sold at The Cannabist Company owned dispensaries in Q3 2023; owned brands made up 50% of sales in Q3 2023
• There are 36 Cannabist locations in the U.S., with additional openings planned in 2024

Capital Markets & Liquidity Highlights

• The Company ended the quarter with $60.3 million in cash, compared to $37.0 million in Q2 2023, an increase of over 60%
• In Q3 2023, operating cash flow was $1.8 million as the Company continues to focus on cash flow generation – enabling us to reach our 2024 financial target of positive operating cash flow one quarter early
• Capital expenditure of $2.5 million in the quarter for new store opening and manufacturing upgrades ahead of anticipated growth of wholesale program
• On August 1, the Company announced voluntary delisting of shares from the Canadian Securities Exchange “CSE”, which was effective as of August 2; the Cboe Canada remains the Company’s primary exchange
• With the Company’s name change to The Cannabist Company, shares began trading under new ticker symbols of CBST on the Cboe Canada and CBSTF on OTC Markets in September
• On September 21, the Company closed on a US $25 million unit offering at a price of C$1.52 per share, the proceeds from which were used on October 23 to effect a partial redemption of $25 million of the $38.2 million outstanding 13% notes due May 2024; the reduction in principal represents an annualized reduction in interest expense of $3.25 million
• Including the impact of the organizational changes announced on July 31, 2023 and the integration of Green Leaf Medical, LLC, since December 2022, the Company has eliminated over $38 million, net, in annual operating expenses, while also improving organizational design to accelerate decision-making and leverage scale in markets more effectively
• The Company has signed definitive agreements, subject to closing conditions, to divest its Utah license and retail location for $6.6 million
• As announced contemporaneously today, the Company’s Board of Directors authorized a normal course issuer bid (the “NCIB”) to repurchase up to 15 million of its issued and outstanding Common Shares, but in no event to exceed $5 million in total over the course of the NCIB. The NCIB is subject to the approval of the Cboe Canada Exchange (the “CBOE”) and will be in effect for up to the next 12 months
• The Company intends to pursue additional alternatives to reduce debt, reduce interest expense and extend maturities on the remaining instruments due 2024, 2025, and 2026

Conference Call and Webcast Details

The Company will host a conference call on Tuesday, November 14, 2023 at 8:00 a.m. ET to discuss financial and operating results for the third quarter of 2023.

To access the live conference call via telephone, participants must pre-register at https://register.vevent.com/register/BI0f19b43d1bda451cb50bdff776665b09. After registering, instructions will be shared on how to join the call for those who wish to dial in. A live audio webcast of the call will also be available in the Investor Relations section of the Company’s website at https://investors.cannabistcompany.com/ or at https://edge.media-server.com/mmc/p/7ub538yd.

A replay of the audio webcast will be available in the Investor Relations section of the Company’s website approximately 2 hours after completion of the call and will be archived for 30 days.

About The Cannabist Company (f/k/a Columbia Care)

The Cannabist Company, formerly known as Columbia Care, is one of the largest and most experienced cultivators, manufacturers and providers of cannabis products and related services, with licenses in 16 U.S. jurisdictions. The Company operates 125 facilities including 94 dispensaries and 31 cultivation and manufacturing facilities, including those under development. Columbia Care, now The Cannabist Company, is one of the original multi-state providers of cannabis in the U.S. and now delivers industry-leading products and services to both the medical and adult-use markets. In 2021, the Company launched Cannabist, its retail brand, creating a national dispensary network that leverages proprietary technology platforms. The company offers products spanning flower, edibles, oils and tablets, and manufactures popular brands including Seed & Strain, Triple Seven, Hedy, gLeaf, Classix, Press, and Amber. For more information, please visit www.cannabistcompany.com.

Original press release

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