Curaleaf Achieves Record Financial and Operational Results in Second Quarter Report 2020 and Anticipate Continued Growth.
Curaleaf Holdings, Inc. (CSE: CURA), a leading vertically integrated cannabis operator in the U.S., today reported its financial and operating results for the second quarter ended June 30, 2020. All financial information is provided in U.S. dollars unless otherwise indicated.
Second Quarter Highlights
- Record managed revenue of $121.4 million, which grew 120% year-over-year and 16% sequentially, despite estimated $25.6 million revenue related impact from COVID-19 largely in Nevada and Massachusetts
- Record total revenue of $117.5 million, which grew 142% year-over-year and 22% sequentially
- Record Adjusted EBITDA of $28.0 million, which grew more than five times 2019 levels and 40% sequentially
- Generated cash flow from operations of $23.4 million
- Select launched into 2 new states
- Completed acquisition of Arrow in Connecticut
- Completed acquisition of Maine Remedy assets that were previously managed
Post Second Quarter Highlights
- Completed acquisition of Grassroots creating the world's largest cannabis Company
- Completed acquisition of Curaleaf NJ, Inc. and Maine Organic Therapy assets that were previously managed
- Closed acquisition of Blue Kudu enabling further roll-out of Select products in Colorado
- Select launched into 4 new states; now available in 12 states
- Completed a private placement of approximately $24.5 million in net proceeds
- Raised approximately $42.0 million in net proceeds related to sale/leaseback transactions
The outstanding results come despite headwinds related to temporary COVID-19 related closures and restrictionsJoseph Lusardi, Chief Executive Officer of Curaleaf
Lusardi continued, "Curaleaf, once again, delivered record quarterly results highlighted by managed revenues exceeding our outlook, as well as, a 40% sequential improvement in Adjusted EBITDA. After quarter end, we successfully completed the transformative acquisition of Grassroots, expanding our presence into 6 new states, including the high-growth Illinois and Pennsylvania markets. The closing of Grassroots affirms our position as the world's largest cannabis company when measured by both revenue and operating presence. Overall, Curaleaf remains well positioned for continued growth in the second half of 2020. This growth will be driven by organic initiatives, the integrations of the Select and Grassroots businesses, as well as, the closing of multiple strategic tuck-in acquisitions across a number of key states."
Mike Carlotti, Chief Financial Officer of Curaleaf, added "Our top-line growth drove record adjusted EBITDA and an improved adjusted EBITDA margin. The strength of our balance sheet has allowed us to invest in our base business and opportunistically pursue additional strategic acquisitions. Looking forward, we anticipate a continued rise in managed revenue and adjusted EBITDA leading to strong sequential growth in the third quarter and second half of 2020 driven by organic growth, continued investment in key states, as well as, the integration of Select, Grassroots, Arrow and BlueKudu into our portfolio. Finally, we continue to make progress in converting and consolidating our managed entities in Maine, New Jersey and Massachusetts. As of today, we have consolidated all of our managed entities except for ATG which we expect to consolidate in the third quarter."
Financial Results for the Second Quarter Ended June 30, 2020
Managed Revenue for the second quarter of 2020 was a record $121.4 million, an increase of 120% compared to $55.1 million in the second quarter of 2019. Managed Revenue for the second quarter increased 16% sequentially.
Total Revenue for the second quarter of 2020 was a record $117.5 million, an increase of 142% compared to $48.5 million in the second quarter of 2019. Total Revenue for the second quarter of 2020 increased 22% sequentially.
Retail revenue increased by 112% to $66.3 million during second the quarter of 2020, compared to $31.3 million in the second quarter of 2019. Growth in retail revenue was primarily due to organic growth and new store openings in Florida, Massachusetts and New York, impact of the Select acquisition, as well as, the acquisitions of three dispensaries in Arizona, two dispensaries in Nevada and from Maryland due to the addition of the HMS/MI businesses and Elevate Takoma, offset partially by the unforeseen negative impact of COVID-19 in Massachusetts and Nevada.
Wholesale revenue increased by 422% to $33.3 million during the second quarter of 2020, compared to $6.4 million in the second quarter of 2019. Growth in wholesale revenue was due primarily to the addition of Select.
Management fee income increased by 66% to $17.9 million during the second quarter of 2020, compared to $10.8 million in the second quarter of 2019. Growth in management fee income was due primarily to growth in New Jersey and management fees generated from Alternative Therapies Group in Massachusetts.
Gross profit before impact of biological assets for the second quarter of 2020 was $60.6 million, compared to $26.0 million for the second quarter of 2019. The increase was primarily due to the continued improvement in the operating capacity and efficiency of the Company's cultivation and processing facilities.
Gross profit on cannabis sales was $42.7 million for the second quarter of 2020, resulting in a 43% margin, compared to $15.3 million in the second quarter of 2019. The increase was primarily due to the continued improvement in the operating capacity and efficiency of the Company's cultivation and processing facilities.
Adjusted EBITDA was a record $28.0 million for the second quarter of 2020, compared to $4.4 million for the second quarter of 2019.
Net loss for the second quarter of 2020 was $2.0 million, compared to a net loss of $24.5 million in the second quarter of 2019. The increase was primarily driven by a $19.2 million increase in the fair value of biological assets and a $1.1 million decrease in one-time charges. These benefits were partially offset by a $9.5 million increase in depreciation and amortization and a $0.3 million increase in share-based compensation, both of which are non-cash, a $5.3 million increase in income tax expense, and a $7.0 million increase in net interest expense.
Balance Sheet and Liquidity
As of June 30, 2020, we had $122.8 million of cash, $283.3 million of outstanding debt net of unamortized debt discounts and 533.2 million fully diluted shares outstanding.
To find out more about Curaleaf, visit their company HQ here.
Disclaimer: Past performance is not an indicator of future performance.
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