Cresco Labs (CL) Q4 2025 earnings summary

Executive summary

• Achieved $162 million in Q4 2025 revenue and $656 million for the full year, with sequential margin improvement and strong operating cash flow, while maintaining No. 1 market share in multiple billion-dollar markets and operating 73 retail stores as of year-end.

• Generated ~$73 million in operating cash flow for 2025, paid down ~$35 million in debt, and ended the year with ~$94 million in cash and equivalents.

• Strengthened the balance sheet by refinancing debt, extending maturities to 2030, and exiting California to focus on higher-return markets.

• Focused on organic growth in core markets, targeted expansion, and leveraging infrastructure for higher incremental returns.

• Maintained leadership in branded market share in Illinois, Pennsylvania, and Massachusetts, and introduced new retail initiatives like the Sunnyside house brand LOUDER.

Financial highlights

• Q4 2025 revenue was $162 million; full-year revenue reached $656 million.

• Q4 adjusted gross profit was $84.4 million (52.2% margin); adjusted EBITDA was $40.4 million (25.0% margin); operating cash flow was $27 million.

• Q4 net loss was ($88.9 million), primarily due to a $93.5 million impairment loss; FY 2025 net loss was $140 million, including $105 million in one-time, non-cash charges.

• Ended the year with $94 million in cash and no near-term maturities.

• Q4 free cash flow was $18 million; FY 2025 free cash flow was $38 million.

Outlook and guidance

• Expect a high single-digit sequential revenue decline in Q1, mainly due to Michigan excise tax changes, California exit, seasonality, and ongoing price compression.

• Gross margin expected to normalize from Q4's elevated levels due to seasonal mix shifts and competitive pricing.

• SG&A to remain consistent with recent run rates; no repeat of prior period benefits like bad debt reserve reductions.

• Operational improvements and disciplined capital allocation are expected to support performance growth and long-term expansion.

• Management expects to capitalize on industry consolidation and potential federal reform, focusing on organic expansion and selective acquisitions.