Curaleaf Reports First Quarter 2019 Financial and Operational Results
- Reported Pro Forma Revenue(¹)(²) of $75.1 million in First Quarter 2019
- Delivered Managed Revenue(¹) of $40.7 Million in First Quarter 2019 through Continued Expansion of Market-Leading Operational Footprint
- Announced Acquisition of Select, the Leading Cannabis Wholesale Brand in the U.S.
WAKEFIELD, Mass., May 30, 2019 /PRNewswire/ — Curaleaf Holdings, Inc. (CSE: CURA) (OTC: CURLF), a leading vertically integrated cannabis operator in the U.S., today reported its financial and operating results for the first quarter ended March 31, 2019. All financial information is provided in U.S. dollars unless otherwise indicated.
First Quarter Highlights
- Reported Pro Forma Revenue of $75.1 million(¹)(²)
- Opened seven new dispensaries at a rapid pace in key markets such as Florida, Maryland and New York, building on existing licenses and prior acquisitions
- Qualified to list on OTC Markets Group’s OTCQX® Best Market under the symbol “CURLF”
Post First Quarter Highlights
- Announced the acquisition of Select, the leading cannabis wholesale brand in the U.S.; Select transaction would combine Curaleaf’s retail locations, vertical integration, wellness brand and strong East Coast market presence with Select’s wholesale model, lifestyle brand and leading West Coast market presence.
- Acquired option to purchase Ohio Grown Therapies LLC’s medical cannabis cultivation and processing licenses and facility in Ohio
- Completed acquisition of exclusive rights to operate Absolute Healthcare, Inc.’s Emerald dispensary in Gilbert, Arizona one of the highest grossing dispensaries in the state
- Completed acquisition of Eureka in California
In the months since our last earnings release we have continued to execute on our strategy to become the leading vertically integrated multi-state cannabis operator in the United States. We reported strong organic growth, anchored by our core East Coast markets, and announced several landmark transactions, including the acquisition of Select, that will position Curaleaf to lead the industry forward.
Joseph Lusardi, Chief Executive Officer of Curaleaf
The combination of Curaleaf and Select will bring together the largest retailer and largest wholesaler, with the leading wellness and lifestyle brands in the United States, providing substantial opportunities to accelerate revenue growth, achieve significant cost savings and expand overall margins. I am excited for the future as we continue to pursue ways to expand our footprint and integrate across states to create value for shareholders.
Neil Davidson, Chief Financial Officer of Curaleaf, added, “In addition to Select, we prudently deployed capital focusing on tuck-in acquisitions that will expand our footprint and capabilities in key markets. We remain focused on positioning ourselves as the industry leader through prudent capital allocation to deliver strong organic growth. We are confident in our strategy and plans for accelerated growth in the back half of the year, as we build out a national platform and brands with the goal of producing profitable and positive cash flow over the long-term.”
¹See “Non-IFRS Financial and Performance Measures” below for more information regarding Curaleaf’s use of Non-IFRS financial measures and other reconciliations.
²Pro Forma Revenue includes the revenue of pending and closed acquisitions of Eureka, Acres, Select, and Absolute Healthcare, Inc.’s Emerald Dispensary operations as if they occurred on January 1, 2019.
Financial Results for the First Quarter Ended March 31, 2019
Managed Revenue for the first quarter was $40.7 million an increase of 260% over the prior year and 17% over the prior quarter. Pro Forma Revenue(¹)(²) was $75.1 million.
Total Revenue for the first quarter of 2019 increased 288% year-over-year to $35.3 million, compared to $9.1 million in the first quarter of 2018. Revenue for the first quarter of 2019 increased 10% over the prior quarter.
Retail and wholesale revenue saw a nearly five-fold increase to $27.8 million during the quarter, compared to $5.7 million in the first quarter of 2018. The increase in cannabis revenue was primarily due to the contribution from acquisitions made throughout 2018 as well as from new dispensaries that opened during the quarter in Florida and New York.
Gross profit before impact of biological assets for the first quarter of 2019 was $18.1 million, resulting in gross margin of 51%, compared to $4.2 million for the first quarter of 2018. The increase over the prior year was due to improved operating capacity of the Company’s cannabis business.
Gross profit on cannabis sales(¹) was $10.6 million in the first quarter of 2019, resulting in a 38% margin, compared to $0.9 million in the first quarter of 2018.
Adjusted EBITDA(¹) loss was $3.7 million for the first quarter of 2019, compared to a loss of $2.0 million for the first quarter of 2018.
Net loss for the first quarter of 2019 was $10.9 million, compared to a net loss of $3.4 million in the first quarter of 2018 due to an increase of $5.0 million in non-cash depreciation and amortization and share-based compensation and an increase in net interest expense of $4.3 million. Net loss per share for the first quarter of 2019 was $0.02, compared to a loss of $0.01 in the first quarter of 2018.
Balance Sheet and Liquidity
As of March 31, 2019, we had $172.6 million of cash, $85.9 million of outstanding debt and fully diluted shares outstanding of 453.6 million.
Conference Call and Webcast Information
Curaleaf will host a conference call and audio webcast today at 6:00 pm ET to answer questions about the Company’s operational and financial highlights. The dial-in numbers for the conference call are +1-877-407-9039 (U.S. Toll-Free) or +1-201-689-8470 (International). Please dial-in 10 to 15 minutes prior to the start time of the conference call and an operator will register your name and organization.
The conference call will also be available via webcast, which can be accessed through the Investor Relations section of Curaleaf’s website, https://ir.curaleaf.com/ir-calendar.
For interested individuals unable to join the conference call, a dial-in replay of the call will be available until June 13, 2019 at 11:59 pm ET and can be accessed by dialing +1-844-512-2921 (U.S. Toll Free) or +1-412-317-6671 (International) and entering replay pin number: 13691231. The online archive of the webcast will be available on https://ir.curaleaf.com/ir-calendar for 30 days following the call.
Non-IFRS Financial and Performance Measures
In this press release Curaleaf refers to certain non-IFRS financial measures such as Pro Forma Revenue, Managed Revenue, Gross Profit on Cannabis Sales and Adjusted EBITDA. These measures do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers. Curaleaf defines Managed Revenue as total revenue plus revenue from entities for which the Company has a management contract but does not consolidate the financial results based on IFRS 10 – Consolidated Financial Statements. Curaleaf defines Pro Forma Revenue as Managed Revenue plus revenue from operations of pending and closed acquisitions as if such acquisitions occurred on January 1, 2019. The Company defines Gross Profit on Cannabis Sales as retail and wholesale revenues less cost of goods sold. Adjusted EBITDA is defined by Curaleaf as earnings before interest, taxes, depreciation and amortization less share-based compensation expense and one-time charges related acquisition and financing related costs. Curaleaf considers these measures to be an important indicator of the financial strength and performance of our business. The following tables provide a reconciliation of each of the non-IFRS measures to its closest IFRS measure.
About Curaleaf Holdings
Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) (“Curaleaf”) is the leading vertically integrated multi-state cannabis operator in the United States. It is a high-growth cannabis company with a national brand known for quality, trust and reliability. The company is positioned in highly populated, limited license states, and currently operates in 12 states with 45 dispensaries, 12 cultivation sites and 11 processing sites. Curaleaf has the executive expertise and research and development capabilities to provide leading service, selection and accessibility across the medical and adult-use markets, as well as the CBD category through its Curaleaf Hemp brand.