Cresco Labs Inc. on Monday reported a net loss for the fourth quarter that widened from last year as higher costs and expenses offset strong revenue growth.
The multi-state cannabis operator also said it has reached a mutual agreement to terminate the acquisition of Tryke Companies LLC. In September 2019, Cresco Labs had announced a deal to acquire Las Vegas-based seed-to-sale cannabis company Tryke Companies for $282.5 million.
Cresco Labs' fourth-quarter net loss widened to $45.22 million from $4.41 million in the prior-year period.
The latest quarter's results included acquisition and other non-core costs of $7.2 million, $4.1 million related to share-based incentive compensation, $3.4 million in expansion, relaunch and rebranding costs, and $1.3 million fair value mark-up on acquired inventory.
However, revenue for the quarter more than doubled to $41.38 million from $16.96 million in the year-ago period, driven by Cresco Labs' expansion into new markets and continued growth in the states where the company operates.
Cresco Labs said it has terminated the agreement to purchase all outstanding equity of Tryke Companies, noting that its capital allocation strategy has adapted due to several recent changing dynamics.
According to the company, its acquisition of Tryke was impacted by regulatory delays, a decline in capital markets, and COVID-19, which brought additional risk to this transaction.
However, Cresco Labs noted that terminating the acquisition puts it in a position to better manage any potential future implications from COVID-19 and also take advantage of the current macro environment.
Cresco Labs said it has agreed to pay equity valued at $1.25 million as total consideration for the termination of the agreement. With the termination of the deal, the company noted that it has no outstanding acquisitions or major capex obligations, leaving its balance sheet unencumbered.
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