Curaleaf Reports First Quarter 2023 Results
First quarter 2023 revenue of $336.5 million, representing an increase of 14% year-over-year, and adjusted EBITDA(1) of $73.2 million
Operating cash flow from continuing operations of $30.6 million and cash on balance sheet of $115.8 million
NEW YORK, May 17, 2023 /PRNewswire/ — Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) (“Curaleaf” or the “Company”), a leading international provider of consumer products in cannabis, today reported its financial and operating results for the first quarter ended March 31, 2023. All financial information is reported in accordance with U.S. generally accepted accounting principles (GAAP) and is provided in U.S. dollars unless otherwise indicated.
Executive Chairman Boris Jordan said, “2023 is off to a strong start for Curaleaf, with first quarter year-over-year revenue growing 14% to $336.5 million, beating our guidance of low double-digit growth. Adjusted gross margin was 48% and adjusted EBITDA margin was 22%. We ended the quarter with $116 million of cash on our balance sheet and generated $31 million in operating cash flow from continuing operations. We continue to optimize our U.S. assets for responsible growth and are very excited about the investments we are making internationally, setting the stage for robust growth in ’24, ’25, and ’26 as cannabis adoption accelerates across Europe. We’ve entered 2023 from a position of strength with ample cash on hand, and will be investing in our business, setting us up for years of market share expansion.”
Since I moved into the CEO role one year ago we’ve moved decisively to maximize opportunities in high growth markets while scaling back from unprofitable markets. We are laser focused on operating efficiencies in every aspect of our business both in the U.S. and Europe, establishing a lean asset base from which we will drive margin improvements, operating leverage, and cash generation.
Matt Darin, Chief Executive Officer of Curaleaf
Our focus is on profitable, responsible growth as we continue to innovate new products, strengthen our brand portfolio and deliver a best in class retail experience.
First Quarter 2023 Financial Highlights
- Net Revenue of $336.5 million, a year-over-year increase of 14% compared to Q1 2022 revenue of $296 million, which excludes discontinued operations
- Gross profit of $160.8 million and gross margin of 48%
- Adjusted gross profit net of add-backs of $162 million, adjusted gross margin of 48%
- Net loss attributable to Curaleaf Holdings, Inc., including discontinued operations, of $54.4 million or net loss per share $0.07
- Adjusted net loss from continuing operations attributable to Curaleaf Holdings, Inc.(1) of $46 million or adjusted net loss per share1 of $0.05
- Adjusted EBITDA of $73.2 million or 22% of revenue
- Cash position at quarter end totaled $115.8 million
1. Adjusted EBITDA, adjusted gross profit, and adjusted net loss from continuing operations are non-GAAP financial measures, and adjusted EBITDA margin, adjusted gross margin, and adjusted net loss per share from continuing operations are non-GAAP financial ratios, in each case without a standardized definition under GAAP and which may not be comparable to similar measures used by other issuers. See “Non-GAAP Financial Performance Measures” below for definitions and more information regarding Curaleaf’s use of non-GAAP financial measures and non-GAAP financial ratios. See the section entitled “Reconciliation of Non-GAAP financial measures” below for a reconciliation of the non-GAAP financial measures used in this press release to the most directly comparable GAAP financial measures.
First Quarter 2023 Financial Highlights (Unaudited)
First Quarter 2023 Operational Highlights
- Exceeded expense reduction plan by $20 million to realize annual gross run rate savings of $60M.
- Opened three additional dispensaries in Florida, totaling 58 in the state.
- Proactive closures of operations in California, Colorado and Oregon which will result in anticipated costs savings and an improved inventory position.
- Launched JAMS, a flavor-forward cannabis edibles brand designed to meet the needs of new cannabis consumers, in Arizona and Florida.
- Expanded Grassroots and Find brands to New Jersey and B Noble brand to Florida.
- Began adult-use sales cannabis at Stamford and Hartford, Connecticut locations.
- Closed Amesbury facility in MA, repurposed the Bellmawr facility in NJ, and closed the Homestead outdoor grow in Florida, three older sites that have been replaced by newer, more efficient facilities.
Post First Quarter 2023 Operational Highlights
- Completed the acquisition of Deseret Wellness in Utah, giving Curaleaf three additional stores for a total of four in a market of 15.
- Continued to strategically expand retail footprint in Florida, opening two additional stores reaching 60. As of May 17, 2023, Curaleaf retail operations totaled 152 nationwide.
- Achieved record breaking sales on 4/20, led by New Jersey sales marking a 77% increase over 2022 and single highest day of sales in New Jersey ever.
- Launched new Curaleaf mobile app and loyalty program which has 1.9 million members to date.
- Expanded Grassroots brand to Florida.
Financial Results for the First Quarter Ended March 31, 2023
Total revenue was a record $336.5 million in the first quarter of 2023, a decrease of 2% from $344.9 million in the fourth quarter of 2022 and an increase of 14% from $296.1 million in the first quarter of 2022. The Company’s year-over-year revenue growth primarily reflects continued organic growth driven by new retail store openings and the significant focus on research and development, resulting in the introduction of 171 products in 2022, three new brand launches, and the contributions from Tryke and Four 20 Pharma.
Retail revenue was $273.0 million, compared with $276.5 million in the fourth quarter of 2022, and up 21% from $225.1 million in the first quarter of 2022. Retail revenue represented 81% of total revenue. Curaleaf’s year-over-year retail revenue growth was supported by 28 new stores added in 2022, and the further expansion of adult-use cannabis around the country.
Wholesale revenue was $62.1 million, a decrease of 8% from the fourth quarter of 2022 and represented 18% of total revenue. Wholesale revenue declined 11% year-over-year due to price compression, a proactive reduction of wholesale accounts in California, Colorado, and Oregon and an intentional reduction of low profit raw material sales.
Net Income Loss
Net loss attributable to Curaleaf Holdings, Inc. was $54.4 million, compared with a net loss of $260.3 million in the fourth quarter of 2022 and $36.5 million in the first quarter of 2022. The year-over-year degradation in net loss was mainly due to reduced gross margin rate stemming from price compression.
Balance Sheet and Cash Flow
As of March 31, 2023, the Company had $115.8 million of cash and $593.8 million of outstanding debt net of unamortized debt discounts.
During the first quarter of 2023, Curaleaf invested $26.0 million, net in capital expenditures, focused on cultivation, processing, and selective retail expansion in strategic markets.
For the first quarter of 2023 and 2022, the Company’s weighted average subordinate voting shares plus multiple voting shares outstanding amounted to 718,117,628 and 708,897,273 shares, respectively.
As of March 31, 2023, and December 31, 2022, the Company’s issued and outstanding subordinate voting shares plus multiple voting shares amounted to 718,611,821 and 717,490,830 shares, respectively.
Conference Call Information
The Company will host a conference call and audio webcast for investors and analysts on Wednesday, May 17, 2023 at 5:00 P.M. ET to discuss Q1 2023 earnings results. The call can be accessed by dialing 1-844-512-2926 in the U.S., internationally 1-412-317-6300, or from Canada 1-416-639-5883. The conference ID # is 5395830.
A replay of the conference call can be accessed at 1-877-344-7529, or internationally 1-412-317-0088, or from Canada 1-855-669-9658 using the replay ID # 2106379.
A webcast of the call can be accessed on the investor relations section of the Curaleaf website at ir.curaleaf.com. The teleconference will be available for replay starting at approximately 7:00 P.M. ET on May 17, 2023, and will end at 11:59 P.M. ET on May 24, 2023.
Non-GAAP Financial and Performance Measures
Curaleaf reports its financial results in accordance with GAAP and uses a number of financial measures and ratios when assessing its results and measuring overall performance. Some of these financial measures and ratios are not calculated in accordance with GAAP. Curaleaf refers to certain non-GAAP financial measures and ratios such as “adjusted gross profit”, “adjusted gross margin”, “adjusted net loss”, “adjusted net loss per share”, “adjusted EBITDA”, and “adjusted EBITDA margin”. These measures do not have any standardized meaning prescribed by GAAP and may not be comparable to similar measures presented by other issuers. The Company defines “adjusted gross profit” as gross profit net of cost of goods sold and related other add-backs. “Adjusted gross margin” is defined by Curaleaf as gross profit net of add-backs divided by total revenues. “Adjusted net loss” is defined by Curaleaf as Net Loss less other add-backs. “Adjusted net loss per share” is defined by Curaleaf as Adjusted Net Loss divided by the weighted average shares outstanding. “Adjusted EBITDA” is defined by Curaleaf as earnings before interest, taxes, depreciation and amortization less share-based compensation expense and other add-backs related to business development, acquisition, financing and reorganization costs. “Adjusted EBITDA margin” is defined by Curaleaf as adjusted EBITDA divided by total revenue. Curaleaf considers these measures to be an important indicator of the financial strength and performance of our business. We believe the adjusted results presented provide relevant and useful information for investors because they clarify our actual operating performance, make it easier to compare our results with those of other companies and allow investors to review performance in the same way as our management. Since these measures are not calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, our reported results as indicators of our performance, and they may not be comparable to similarly named measures from other companies. The tables below provide reconciliations of Non-GAAP measures to the most directly comparable GAAP measures.
Reconciliation of Non-GAAP financial measures
Adjusted Gross Profit from Continuing Operations (Unaudited)
Gross profit from continuing operations was $160.8 million in the first quarter of 2023, compared with $116.4 million in the fourth quarter of 2022. Adjusted gross profit from continuing operations net of add-backs for the first quarter was $162.2 million compared with $168.9 million in the fourth quarter of 2022. Adjusted gross margin for the first quarter of 2023 was 48.2%, a decrease of 80 basis points compared with the fourth quarter of 2022. The decrease in gross margin was largely due to price compression in certain markets.
Adjusted Net Loss from Continuing Operations (Unaudited)
Adjusted EBITDA (Unaudited)
Adjusted EBITDA was $73.2 million for the first quarter of 2023, a decrease of 5% from $76.9 million in the fourth quarter of 2022 and an decrease of 4% from $76.1 million in the first quarter of 2022. Adjusted EBITDA margin was 21.7%, a decrease of 60 basis points from 22.3% in the prior quarter and an decrease of 400 basis points from 25.7% in the first quarter of 2022. The sequential decrease in Adjusted EBITDA primarily reflects lower gross profit margin driven primarily by pricing pressure in certain markets.
Condensed Interim Consolidated Balance Sheets
Condensed Interim Consolidated Statements of Operations (Unaudited)
($ thousands, except for share and per share amounts)
Condensed Interim Consolidated Statements of Cash Flows (Unaudited)
($ thousands, except for share and per share amounts)
About Curaleaf Holdings
Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) (“Curaleaf”) is a leading international provider of consumer products in cannabis with a mission to improve lives by providing clarity around cannabis and confidence around consumption. As a high-growth cannabis company known for quality, expertise and reliability, the Company and its brands, including Curaleaf, Select, and Grassroots provide industry-leading service, product selection and accessibility across the medical and adult-use markets. In the United States, Curaleaf currently operates in 19 states with 152 dispensaries, and employs nearly 5,500 team members. Curaleaf International is the largest vertically integrated cannabis company in Europe with a unique supply and distribution network throughout the European market, bringing together pioneering science and research with cutting-edge cultivation, extraction and production. Curaleaf is listed on the Canadian Securities Exchange under the symbol CURA and trades on the OTCQX market under the symbol CURLF. For more information, please visit https://ir.curaleaf.com.