Cresco Labs (CSE: CL) reported its third quarter financial results this morning, reporting marginal revenue growth to $215.5 million for the quarter. Most significantly, the company reported a substantial impairment loss, resulting in the firm reporting a net loss of $263.5 million.
Revenues for the third quarter improved slightly over the second quarter, climbing a modest 2.6% from $210.0 million to $215.5 million over the three month period. Gross profits however improved more significantly, climbing from $101.0 million to $108.3 million, representing a gross profit of 50.3%.
Operating expenses however eliminated any gains seen from a growing gross profit percentage, with total operating expenses amounting to $372.3 million, compared to $86.1 million in the prior quarter. The significant expense increase is the result of a $290.9 million impairment recorded by the company, related to the writedown of intangible assets due to a “strategic shift in California operations.”
The company as a result saw a loss from operations of $264.0 million. Losses were pushed further after an interest expense of $13.6 million, which was then offset by an income tax recovery of $12.4 million. The company overall posted a net loss of $263.5 million, while adjusted EBITDA came in at $56.4 million.
Cash and cash equivalents as of the quarter ended totaled out at $252.8 million, with the firm reporting other current assets of $196.2 million and total current liabilities of $209.2 million.
In terms of outlook, gross profit margins are expected to be in excess of 50.0% for the remainder of the year, while adjusted EBITDA is set to hit 30.0% by the end of the year. Fourth quarter revenue has also been guided to be between $235 million and $245 million.
Cresco Labs last traded at $10.95 on the CSE.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.