Cresco Labs Inc. reported a Q4 adjusted loss of $0.02 per share for the quarter ended December 2025, matching the Zacks Consensus Estimate. A year earlier, it posted an adjusted loss of $0.01 per share.
The report showed an earnings surprise of +14.16%. In the prior quarter, the expected loss was $0.03 per share, but the company reported a loss of $0.05, a surprise of -66.67%.
Quarterly revenue was $161.55 million, beating the consensus estimate by 0.26%. This compared with $175.91 million a year ago, and the company has beaten revenue estimates three times in the past four quarters.
Shares are down about 20.7% year to date, versus a 0.4% gain for the S&P 500. The stock holds a Zacks Rank #4 (Sell), and the Medical – Products industry is in the bottom 45% of 250+ Zacks industries.
The current consensus calls for EPS of -$0.03 on $162 million in revenue next quarter, and EPS of -$0.09 on $670.41 million for the fiscal year. Myomo, Inc. is due to report on March 9, with forecasts of a $0.09 loss per share (year-over-year change of -800%) and revenue of $10.15 million, down 15.9%.
Given the Q4 2025 results, we see a company that managed to beat revenue expectations but is still struggling with profitability and year-over-year growth. The stock’s 20.7% drop since the start of the year shows a strong bearish sentiment from the market. This performance is consistent with the broader cannabis sector, as the AdvisorShares Pure US Cannabis ETF (MSOS) also saw a decline of roughly 18% in 2025 due to persistent price compression in key states and delays in federal reform.
The bearish trend and the stock’s official “Sell” rating suggest that buying puts or establishing bear call spreads could be a primary strategy. This allows traders to profit from further downside or a sideways drift. Looking back at 2025, we recall similar earnings reports for cannabis operators often led to a post-announcement stock decline, even when top-line numbers were met, as investors focused on the lack of profitability.
However, implied volatility is a key factor to watch in the coming days. With the earnings uncertainty now passed, we expect implied volatility to decrease, making it more expensive to hold long options. Traders could consider selling premium, such as cash-secured puts at a lower strike price, to bet that the worst of the sell-off is over without needing a significant rally.
The major wild card remains federal regulatory news, specifically the DEA’s rescheduling process which saw numerous delays throughout 2025. Any unexpected positive announcement on this front could cause a sharp rally, punishing outright bearish positions. Therefore, using defined-risk spreads is a more cautious approach than buying naked puts or shorting the stock.
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