Columbia Care (OTC: CCHWF) is a player in the medical cannabis market with operations in both the US and Europe. It has been around for quite some time, having established its base in New York in 2012, and works on removing barriers in the cannabis space. It was the first company in the US to introduce credit cards for the purchase of cannabis products – no small feat considering financial institutions in the US are very wary about lending or associating with pot companies. Columbia Care stock shows plenty of promise – but is this cannabis stock a buy?
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Columbia Care Q4 Results
The company recently released its Q4 and full-year results for 2020 and also provided guidance for 2021. The results blew analysts’ expectations out of the water.
- Q4 revenue came in at $81.8 million, an increase of 51% from the previous quarter and 234% from Q4 2019. Full-year 2020 revenue came in at $197.9 million, up 151% from 2019.
- Q4 EBITDA (earnings before interest, taxes, depreciation, and amortization was $9.5 million, up $24 million from the same period in 2019.
- The company had $61 million in cash at the end of 2020 and it has raised $140 million in 2021, “bolstering its liquidity position in support of long-term growth initiatives”.
Perhaps, the most important announcement that Columbia Care made was the acquisition of Green Leaf Medical. CEO Nicholas Vita said that the acquisition will close in Q3 of 2021. Green Leaf Medical is a vertically integrated MSO (Multi-State Operator) in the mid-Atlantic region.
Once concluded, the deal will strengthen Columbia care’s presence in four markets where it already operates – Virginia, Maryland, Pennsylvania, and Ohio. According to Columbia out of these states, three will legalize the sale and consumption of adult-use cannabis which will help it accelerate top-line growth. The acquisition is valued at $240 million.
Green Leaf adds around 400,000 sq ft of cultivation and production capacity, four operating dispensaries, and six undeveloped, but permitted dispensaries, in key limited license markets.
What’s on Deck for Columbia Care in 2021?
Columbia Care acquired the Healing Center in San Diego that expanded its California presence. The amount spent on the acquisition was $15 million. The company already has a very strong footprint in San Diego and Los Angeles. This acquisition should push the pedal a little more. Columbia Care is clearly looking to build profitably in California.
The company expects its revenue for 2021 to come in between $500 million and $530 million, and combined adjusted EBITDA to range between $95 million and $105 million.
The company guidance for 2021 includes its acquisition of Green Leaf but doesn’t include any further acquisitions or changes in the regulatory environment in markets where Columbia Care currently operates, such as the pending adult-use program in New Jersey.
Vita said that 2021 is going to see a number of catalysts drive growth for Columbia Care. The company will launch its popular 777 Seed & Strain classics and Amber brands across additional markets throughout the year.
It will also roll out a new dispensary concept in Q2 2021 “that will provide a more approachable, more curated retail experience for medical and adult-use customers alike”. Columbia Care said it is on track to open the first co-located medical and adult-use dispensary in Boston in Q2 of 2021, and recently launched adult-use sales in Arizona.
Bottom Line: Is Columbia Care Cannabis Stock a Buy?
The current consensus rating of the stock is ‘buy’. Columbia Care shares are currently trading at $6.70 and have a price target of $10.74 which is an upside of 60% from current levels. After its recent financial results, it is very easy to determine that the company will see sequential margin improvements.
Overall, everything about Columbia Care seems to be clean. For investors, Columbia Care could be the best next cannabis stock to add to your portfolio.
Columbia Care: Is this Cannabis Stock a Buy?
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