Cresco stock is under pressure this morning after Cresco Labs Inc (CSE:CL) (OTCQX:CRLBF) announced that it has terminated its acquisition of VidaCann Ltd., originally announced in March.
Another Blow for the Industry
The cannabis industry has been through a lot of struggles over the course of the past months, and most of the companies in the sector have had their fair share of setbacks. Some companies have canceled important acquisitions due to a variety of reasons, and in new development, Cresco Labs has done the same. The company announced today that it has decided to cancel the $120 million acquisition of VidaCann Ltd that it had announced back in March this year. Cresco stated that the move is aimed at conserving cash so that the company’s bottom-line and top-line performance can be improved considerably.
However, the company made another important announcement with regards to its financial situation. Cresco Labs has successfully managed to secure sell and buyback agreements on two of its properties at Michigan and Ohio. The company is going to raise $38 million in total through these agreements.
Cresco stock is trading lower by 2% at $7.46 CAD.
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The CEO of Cresco, Charlie Batchell, said, “The team and operations at VidaCann are phenomenal, but with a focus on managing our cost of capital, and insuring the most efficient and highest return on invested capital, the ability to deploy resources to other, existing, Cresco markets.”
These announcements have come at a very interesting time for the company considering the fact that it is going to announce its financial results for the third quarter later on today.
The company is one of the better-known vertically integrated cannabis firms and operates as many as 23 production facilities. In addition to that, the US-based firm has 56 retail licenses and operates 22 dispensaries as well across 11 states.
All Eyes on Q3 Earnings
In Q3 2019, analysts expect the company to report revenue of $38.45 million, which reflects a rise of 28.6% from the previous quarter. On the other hand, the losses are expected to rise by as much as 115.4% from the second quarter and hit $4.36 million.
Cresco stock has fallen over 20% so far this year.
Featured image: DepositPhotos © nmcandre
