The Highlights
It was a good week for global equities, with the MSCI World Index up 1.36% and the S&P 500 up 1.68%. Small caps followed suit, with the Russell 2000 up 1.92% and the NASDAQ up 2.95%. Most of the gains came on Thursday when investors became more optimistic about a debt ceiling solution. Cannabis stocks participated, with the MSOS ETF gaining 1.50% this week. There was considerable dispersion, with Curaleaf (CSE: CURA, OTCQX: CURLF), AYR Wellness (CSE: AYR, OTCQX: AYRWF), and Columbia Care (NEO: CCHW, OTCQX: CCHWF) all up more than 10%. MariMed (CSE: MRMD, OTCQX: MRMD) dropped 6.52% after gaining 24.67% over the prior two weeks. Trulieve (CSE: TRUL, OTCQX: TCCNF) dropped 6.16% and is now down 20.75% since reporting earnings on May 10. Columbia Care Shows Progress; Stock Rallies Columbia Care (NEO: CCHW, OTCQX: CCHWF) reported 1Q revenue of $124.5 million, down 1.3% Q/Q and up 1.2% Y/Y. This beat consensus of $123.0 million. The revenue increase was driven by three new stores and strength in its New Jersey, Virginia, and West Virginia operations. 1Q adjusted EBITDA declined to $16.4 million from $17.4 million in 4Q. This was below consensus of $17.4 million. Adjusted EBITDA margins declined slightly to 13.2% in 1Q versus 13.8% in 4Q. Management expects an increase in adjusted EBITDA margins due to cost-cutting and footprint optimization. Operational expenses as a percentage of revenue dropped to 44.5% from 49.3% in 4Q, evidence that cost-cutting measures are starting to pay off. Columbia Care finished 1Q with $40.2 million in cash, down from $48.1 million in 4Q. The drop was due to negative OCF and $5.7 million in capex was primarily for new store openings. Capex should decline in the coming quarters.
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