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Cannabist Co Holdings Inc. (CBSTF)·Q1 2025 Earnings Summary

Executive Summary

  • Revenue declined sequentially amid footprint rationalization, but margins improved: Q1 2025 revenue was $87.4M (down 9% QoQ), Adjusted Gross Margin rose 45 bps QoQ to 36%, and Adjusted EBITDA margin expanded >200 bps to 9.5% .
  • GAAP net loss improved to $(32.2)M from $(55.2)M in Q4 2024, while GAAP EPS was $(0.07) vs $(0.12) in Q4; cash fell to $18.9M from $33.6M, and operating cash flow was $(15.2)M in Q1 .
  • Strategic actions continued: closed 3 Colorado stores, sold 1 California store, exited Washington, DC; post-quarter, sold remaining Florida MMTC license for $5M and received noteholder approval to extend senior notes to Dec 2028 (options to 2029), pending Canadian court approval .
  • Management remains focused on liquidity, cost reduction, and portfolio simplification, with catalysts in Ohio/Virginia store openings and preparation for Delaware adult-use transition .

What Went Well and What Went Wrong

What Went Well

  • Sequential margin improvement from simplification initiatives: Adjusted Gross Margin 36% (+45 bps QoQ) and Adjusted EBITDA margin +200+ bps QoQ to 9.5% .
  • Retail gross margin increased 180 bps QoQ, aided by SKU rationalization and pricing architecture; house brand “dreamt” showed strong traction (top sleep SKU in MD) .
  • Debt restructuring advanced: >75% noteholder approval to extend senior notes maturities to Dec 2028 with extension options to 2029, with court proceedings scheduled later in May; expected to provide runway for further optimization and liquidity focus .

What Went Wrong

  • Top-line pressure from footprint rationalization and closures: Q1 revenue $87.4M, down 9% QoQ, reflecting closure of 3 Colorado locations and sale of 1 California store; wholesale mix rose to ~18% of revenue .
  • Liquidity and cash generation headwinds: quarter-end cash declined to $18.9M (from $33.6M in Q4), and operating cash flow was $(15.2)M in Q1 .
  • Continued GAAP losses despite sequential improvement: net loss $(32.2)M, with negative shareholders’ equity $(62.0)M; SG&A remained elevated at $(37.4)M .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$122.6 $96.1 $87.4
Gross Profit ($USD Millions)$42.5 $33.9 $29.3
Adjusted Gross Profit ($USD Millions)$47.7 $33.9 $31.2
Adjusted Gross Margin (%)38.9% 35.3% 35.7%
Net Income (Loss) ($USD Millions)$(34.6) $(55.2) $(32.2)
GAAP Diluted EPS ($USD)$(0.08) $(0.12) $(0.07)
Adjusted EBITDA ($USD Millions)$15.3 $7.1 $8.3

Segment and Mix

Segment/Mix KPIQ1 2025Commentary
Wholesale Revenue ($USD Millions)$16.0 +3.5% QoQ; wholesale ~18% of total revenue (vs ~16% in Q4)
Retail Gross Margin+180 bps QoQ Benefited from SKU rationalization and pricing architecture
Top 5 Markets (Revenue)CO, MD, NJ, OH, VA Listed alphabetically
Top 5 Markets (Adj. EBITDA)CO, MD, NJ, OH, VA Listed alphabetically

KPIs and Balance Sheet

KPIQ1 2024Q4 2024Q1 2025
Cash ($USD Millions)$44.5 $33.6 $18.9
Operating Cash Flow ($USD Millions)$(6.2) $4.3 $(15.2)
Capex ($USD Millions)—$1.7 $2.0
Active Retail Count (Period-end)—59 55 (post-quarter 53 under MSAs)
Total Equity ($USD Millions)$42.9 $(30.1) $(62.0)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Capital Expenditures2025 (per quarter)$2–$3M per quarter $2–$3M per quarter Maintained
Store Openings2025Additional VA and OH locations (in development) 1 VA, 3 OH; one OH expected to open in Q3 Clarified timeline
Delaware Adult-Use2025Expected adult-use opportunity “Prepared for transition to adult use in Delaware” (timing not specified) Maintained qualitative stance
Debt Maturities2028/2029Announced intent to extend maturities Noteholders approved Arrangement to extend senior secured notes to Dec 2028, options to 2029; pending Canadian court approval Advanced (milestone achieved)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Balance sheet & debtFocus on leverage reduction and liquidity via divestitures Announced agreement to extend senior notes; 70% support at announcement Noteholders approved extension to Dec 2028 (options to 2029), pending court approval Progressing positively
Footprint optimizationDivested VA (Eastern) and AZ; rationalizing stores Florida divestiture of 14 dispensaries and 2 cultivation facilities; retail count fell to 59 Exited Washington, DC; sold 1 CA dispensary; closed 3 CO locations; active retail count 55 (post-quarter 53 under MSAs) Continued simplification
Margin improvementAdj. GM 34–38% range; Adj. EBITDA improved in NY wholesale Adj. EBITDA $7.0M; pricing pressure noted Adj. GM +45 bps QoQ; retail GM +180 bps QoQ; Adj. EBITDA margin +200+ bps QoQ Sequential improvement despite revenue pressure
House brands & productBrand portfolio expanding; NY wholesale recovery —Dreamt brand expansion to MA, NJ, VA; top sleep SKU in MD Positive adoption
New store openingsVA and OH developments in pipeline VA and OH pipeline reiterated 1 VA and 3 OH in development; one OH opening expected in Q3 Execution visibility improving
Regulatory catalystsAdult-use Ohio & Delaware highlighted Adult-use expectations reiterated Prepared for Delaware adult-use transition Awaiting timing

Management Commentary

  • “We have continued to make progress on our plans to simplify and optimize the business, which drove a sequential improvement in margins… we saw an improvement in retail gross margin and success from house brands, such as dreamt.” — David Hart, CEO .
  • “We remain focused on completing remaining divestitures in Florida, California and Illinois, which will help to further simplify the business and provide liquidity… holders of our Senior Notes voted to approve the proposed Arrangement Resolution… principal remaining step… court approval in Canada.” — David Hart, CEO .
  • “Our priorities throughout 2025 will continue to be liquidity and balance sheet management alongside operational improvements… We look forward to opening additional retail locations in Ohio and Virginia this year and are prepared for the transition to adult use in Delaware.” — David Hart, CEO .

Q&A Highlights

  • Management reiterated focus on liquidity and cost reduction while expecting operational improvements to translate into better cash generation through 2025; call featured CEO David Hart, President Jesse Channon, and CFO Derek Watson .
  • Discussion of wholesale strategy and SKU simplification, with continued traction for third-party brands alongside proprietary labels; preparation for Delaware adult-use opportunity noted without specific timing .
  • Management addressed divestiture “noise” in reported figures, emphasizing underlying margin improvements in remaining markets; the debt restructuring was framed as crucial to provide runway for optimization .

Estimates Context

  • S&P Global consensus for Q1 2025 revenue: $88.78M vs actual $87.44M → bold miss of $1.34M*; Q1 2025 Primary EPS consensus: $(0.046) vs SPGI “actual” $(0.0296) → bold beat by $0.0164*.
  • Note: Company-reported GAAP EPS for Q1 2025 was $(0.07), which may differ from SPGI “Primary EPS” normalization; we anchor estimate comparisons to SPGI for consistency .
    Values retrieved from S&P Global.*
MetricQ1 2025 ConsensusQ1 2025 Actual (SPGI)Delta
Revenue ($USD)$88.78M*$87.44M*Miss: $(1.34)M*
Primary EPS ($USD)$(0.046)*$(0.0296)*Beat: $0.0164*
# of Estimates (Revenue / EPS)2 / 3*——

Key Takeaways for Investors

  • Sequential margin improvement amid footprint rationalization suggests operational progress; watch sustainability of retail margin gains and wholesale mix rising to ~18% of revenue .
  • Liquidity remains tight (cash $18.9M; OCF $(15.2)M)); the senior notes extension approval (pending court) is a material catalyst for runway and reduces near-term refinancing risk .
  • Near-term revenue headwinds from store closures and divestitures should persist; focus shifts to executing new store openings in OH/VA and leveraging brand momentum (“dreamt”) .
  • Capex discipline maintained ($2–$3M per quarter), aligning with selective growth and optimization strategy .
  • Expect estimate revisions to reflect lower revenue base but improving margins; SPGI shows a small Q1 revenue miss and EPS beat on normalized basis*, which could temper negative sentiment if margin gains continue. Values retrieved from S&P Global.*
  • Medium-term thesis hinges on debt extension completion, completion of remaining divestitures (FL cultivation, CA, IL), and regulatory catalysts (Delaware adult-use), which can re-rate cash flow trajectory .
  • Trading setup: stock is sensitive to restructuring milestones and cash metrics; court approval on notes and execution on OH/VA openings are likely near-term swing catalysts .

Additional Documents Reviewed

  • Q4 & FY 2024 results press release with corrected figures (context and trend analysis) .
  • Q1 2025 press release on investor site (duplicate of Exhibit 99.1) .
  • Scheduling press release for Q1 2025 call (context) .