Cannabist Company Holdings Inc

Revenue in Q2 was $87 million, down 1% sequentially. Adjusted gross margin was 33% versus 36% in Q1. Adjusted EBITDA was $8.5 million versus $8.3 million in Q1, and adjusted EBITDA margin improved 30 basis points to 9.8%. Wholesale revenue increased 16% sequentially to $18.4 million, while wholesale represented 21% of revenue versus 18% in Q1. Operating cash flow was positive $4 million, capex was $2 million, and free cash flow was negative $3.5 million. Cash ended the quarter at $15.5 million versus $18.9 million at the end of Q1. Management said the company expects capex to average less than $3 million per quarter. On the balance sheet, the debt restructuring closed on May 29 and extended all $271 million of senior debt obligations until at least December 2028. For Pennsylvania, management announced a signed transaction to sell 3 retail locations for roughly $10 million, with additional revenue streams expected through an incremental supply agreement and sublease. They also noted roughly $7 million in divestiture proceeds contracted in Q2, with about $5 million received and $2 million still outstanding.

David Hart said the company’s priorities remain liquidity, balance sheet management and cost reduction, with a continued effort to simplify operations and reduce its footprint. He highlighted completion of the debt restructuring, the ongoing exit from Florida, California and Illinois, and the new Pennsylvania transaction as part of the move to a smaller, more focused business. He also pointed to successful Delaware adult-use launches and expected new store openings in Ohio as near-term positives.

Derek Watson focused on the financial impact of simplification efforts and the company’s liquidity profile. He said gross margin was pressured by inventory obsolescence, especially in New York, and a wholesale inventory reduction initiative across 8 markets, while the overhead burden from underutilized facilities remained about a 4 percentage point drag on gross margin. He cited $23 million in annualized cost savings from 2024 restructuring plus about $2 million more in annualized labor savings from a smaller Q2 restructuring, and noted cash of $15.5 million, $4 million in operating cash flow, $2 million in capex, and $3.5 million of negative free cash flow after refinancing costs and divestiture timing.

There was no analyst Q&A segment in the transcript, so management’s main discussion centered on the earnings presentation and prepared remarks. The most notable topics were the margin hit from inventory cleanup, the plan to keep taking costs out through 2025, and the company’s continued reliance on divestitures to strengthen liquidity. Management also explained that the Pennsylvania sale is intended to support a wholesale model there while preserving future adult-use upside.