Curaleaf Reports Record Fourth Quarter and Fiscal Year End 2019 Financial and Operational Results
- Generated Record Fiscal Year 2019 Managed Revenue of $250.6 Million and Record Adjusted EBITDA(1) of $25.9 Million;
- Delivered Record Quarterly Managed Revenue of $81.7 and Record Adjusted EBITDA(1) of $13.8 Million as Operations Continue to Ramp
- Reported Record Quarterly Pro Forma Revenue of $131.7(1)(2) Million;
- Closed on a $300 million Senior Secured Term Loan Facility Strengthening the Company’s Balance Sheet for Future Growth Initiatives; and
- Closed Select Acquisition on February 1, 2020 and Announced Expiration of Hart-Scott-Rodino Act (HSR) Waiting Period for Grassroots.
WAKEFIELD, Mass., March 24, 2020 /PRNewswire/ — Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) (“Curaleaf” or the “Company”), a leading vertically integrated cannabis operator in the U.S., today reported its financial and operating results for the fourth quarter and year ended December 31, 2019. All financial information is provided in U.S. dollars unless otherwise indicated.
Fourth Quarter Highlights
- Reported record total revenue of $75.5 million, which grew 22% sequentially and record Adjusted EBITDA of $13.8 million, which grew 32% sequentially
- Announced amended deal terms for Select acquisition aligning all stakeholders
- Opened Company’s first adult-use dispensary in Oxford, MA
Full Year Highlights
- Reported record total revenue of $221.0 million, which grew 187% over the prior year and record Adjusted EBITDA of $25.9 million compared to a loss of $10.4 million in 2018
- Successfully closed on and integrated 9 businesses which included 11 dispensaries, 5 cultivation sites and 14 processing sites as well as Select, which greatly expanded our presence in key states such as Arizona, California, Ohio, Oregon, Maryland and Nevada
Post Fourth Quarter Highlights
- Completed acquisition of Acres in Nevada
- Closed $300 million senior secured term loan facility
- Opened Company’s second adult-use dispensary and the first adult-use dispensary on Cape Cod in Provincetown, MA and the Company’s third adult-use dispensary in Ware, MA
- Completed Acquisition of Select and enhanced management team with key leadership appointments
- Announced expiration of HSR waiting period for pending acquisition of Grassroots
- Won retail and processing licenses in Utah and received Clinical Registrant Designation by the Pennsylvania
- Department of Heath permitting Curaleaf to open a cultivation and processing facility and up to six dispensaries under the Commonwealth’s medical marijuana research program
- Announced the pending acquisition of 3 Arrow Alternative Care dispensaries in the state of Connecticut with locations in Hartford, Milford and Stamford allowing Curaleaf to become vertically integrated in the state
At Curaleaf, we are a mission driven company with a long history serving medical patients and customers. That mission is at the core of our efforts as we navigate the evolving COVID-19 situation. Our top priorities are to ensure that we can continue to serve the needs of our patient and customers while minimizing any potential of exposure for them and our employees.
Boris Jordan, Executive Chairman of the Board of Curaleaf
“We have implemented a range of new procedures and policies at our dispensaries and have been working closely with regulators and government officials to secure an essential services designations in the vast majority of our markets. These actions allow for continued access to our products for patients and customers who depend on them for their health and wellness needs. Despite this unprecedented and challenging situation we are all facing, our fundamental business remains strong and we are seeing increased demand. I want to thank the Curaleaf team for their commitment to delivering on our mission of improving the lives of our patients and customers,” Boris Jordan added.
Joseph Lusardi, Chief Executive Officer of Curaleaf stated, “In fiscal 2019, the Curaleaf team delivered record results with our organic business growth and recent strategic acquisitions, solidifying our position as the leading cannabis operator in the United States.”
The fourth quarter represented our third consecutive quarter of positive Adjusted EBITDA, driven by additional production and retail locations coming online in key states as well as the positive impact of our increasing economies of scale.
Joseph Lusardi, Chief Executive Officer of Curaleaf
With the completion of the Select acquisition, we are now focusing on the integration and rollout of the Select brand across Curaleaf. Overall, we remain well positioned for improving growth and profitability in 2020.
Mike Carlotti, recently appointed Chief Financial Officer of Curaleaf, added, “We believe our recently completed $300 million senior secured term loan facility will provide us adequate liquidity to fund our planned strategic capital investments and announced acquisitions in our core markets such as Florida and Arizona.”
As we enter 2020, our balance sheet is strong and our focus remains on the prudent allocation of capital, continued operational improvements, as well as the successful integration of Select, which we believe will create shareholder value.
Mike Carlotti, appointed Chief Financial Officer of Curaleaf
Financial Results for the Fourth Quarter Ended December 31, 2019
Managed Revenue for the fourth quarter was a record $81.7 million, an increase of 134% over the prior year and 12% over the prior quarter.
Total Revenue for the fourth quarter of 2019 increased 136% year-over-year to a record $75.5 million, compared to $32.0 million in the fourth quarter of 2018. Total Revenue for the fourth quarter of 2019 increased 22% over the prior quarter.
Retail and wholesale revenue increased by 143% to a record $57.7 million during the quarter, compared to $23.7 million in the fourth quarter of 2018. The increase in retail and wholesale revenue was primarily due to organic growth in Florida resulting from the opening of eight dispensaries and the acquisition of three dispensaries in Arizona. Additionally, wholesale revenue increased in Massachusetts as a result of the number of adult-use dispensaries increasing.
Gross profit before impact of biological assets for the fourth quarter of 2019 was $39.8 million, compared to $20.0 million for the fourth quarter of 2018. The increase was due to continued improvement in the operating capacity of the Company’s cultivation and processing facilities.
Gross profit on cannabis sales was $22.0 million in the fourth quarter of 2019, resulting in a 38% margin, compared to $11.8 million in the fourth quarter of 2018. The decrease in margin was primarily due to cultivation and processing costs directly related to the increase in cannabis revenue, which were the result of opening new dispensaries and acquisitions made at the end of 2019.
Adjusted EBITDA was a record $13.8 million for the fourth quarter of 2019, compared to a loss of $1.4 million for the fourth quarter of 2018.
Net loss for the fourth quarter of 2019 was $27.2 million, compared to a net loss of $16.5 million in the fourth quarter of 2018. The increase was primarily driven by a $10.1 million increase in income tax expense, a $8.9 million increase in depreciation and amortization, a $4.6 million increase in share-based compensation, both of which are non-cash, a $4.1 million increase in one-time charges, primarily business development, acquisition and financing related, and a $2.4 million increase in interest expense offset by a $6.9 million change in the fair value of biological assets.
Financial Results for the Fiscal Year Ended December 31, 2019
Managed Revenue for 2019 nearly tripled to a record $250.6 million from $87.8 million in 2018.
Total Revenue 2019 increased 187% year-over-year to a record $221.0 million, compared to $77.1 million in 2018.
Retail and wholesale revenue more than tripled to a record $173.9 million during 2019, compared to $57.5 million in 2018. The increase in retail and wholesale revenue was primarily due to organic growth in Florida, the acquisitions of Glendale, Emerald, and Phyto in Arizona in 2019, the opening of three dispensaries in New York, the opening of three dispensaries and acquisition of one processing license in Maryland. Additionally, wholesale revenue increased in Massachusetts as a result of the number of adult-use dispensaries increasing.
Gross profit before impact of biological assets for 2019 was $118.6 million, compared to $45.9 million in 2018. The increase was due to continued improvement in the operating capacity of the Company’s cultivation and processing facilities.
Gross profit on cannabis sales was $71.5 million in 2019, resulting in a 41% margin, compared to $26.4 million in 2018. The increase, in gross profit, was due to the mix in retail revenue over wholesale revenue and continued improvement in the operating capacity of the Company’s cultivation and processing facilities.
Adjusted EBITDA was $25.9 million for 2019, compared to a loss of $10.4 million for 2018.
Net loss for 2019 was $69.8 million, compared to a net loss of $61.9 million in 2018. The decrease was primarily driven by a $18.4 million increase in income tax expense, a $28.6 million increase in depreciation and amortization, a $14.4 million increase in share-based compensation, both of which are non-cash, a $15.0 million increase in one-time charges, primarily business development, acquisition and financing related, and a $12.3 million increase in interest expense offset by a $22.6 million change in the fair value of biological assets.
Balance Sheet and Liquidity
As of December 31, 2019, we had $42.3 million of cash, $105.0 million of outstanding debt and approximately 468.4 million fully diluted shares outstanding. This does not reflect the benefit of the $300 million term loan facility which was completed in early 2020.
Conference Call and Webcast Information
Curaleaf will host a conference call and audio webcast today at 5:00 pm ET to answer questions about the Company’s operational and financial highlights. The dial-in numbers for the conference call are +1-888-317-6003 (U.S.), +1-866-284-3684 (Canada) or +1-412-317-6061 (Int’l) Passcode: 0185877. 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 December 3, 2019 at 11:59 pm ET and can be accessed by dialing +1-877-344-7529 (U.S.), +1-855-669-9658 (Canada) or +1-412-317-0088 (International) and entering replay pin number: 10139509. The online archive of the webcast will be available on https://ir.curaleaf.com/ir-calendar or 90 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 to business development, acquisition, financing and reorganization costs. 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 IFRS, 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 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 a leading vertically integrated multi-state cannabis operator with a dominant presence on both the East and West coasts of the United States, the largest cannabis market in the world. As a high-growth cannabis company known for quality, expertise and reliability, the company and its brands, Curaleaf and Select, provide industry-leading service, product selection and accessibility across the medical and adult-use markets. Strategically positioned in highly populated, limited-license states, the company currently operates in 17 states with 54 dispensaries, 15 cultivation sites and 24 processing sites. Curaleaf employs over 2,200 people across the United States. For more information please visit www.curaleaf.com.
Curaleaf Holdings, Inc.
Daniel Foley, VP, Corporate Finance & Investor Relations
Curaleaf Holdings, Inc.
Tracy Brady, VP of Corporate Communications
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