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NEW YORK, Aug. 9, 2023 – PRESS RELEASE – Curaleaf Holdings Inc., a leading international provider of consumer products in cannabis, reported its financial and operating results for the second quarter ended June 30, 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.
Boris Jordan, executive chairman of Curaleaf, stated, "Our second quarter revenue grew 4% year over year to $339 million, adjusted gross margin was 44% and adjusted EBITDA was 21%. We ended the second quarter with $85 million in cash on the balance sheet and generated $37 million in year-to-date cash flow from continuing operations. As the U.S. industry regains its supply-demand equilibrium and we eagerly anticipate the game changing catalysts on the horizon, we continue to control costs and remain focused on long-term growth opportunities, particularly in Europe and our advantage in Germany specifically. We remain committed to the long game and will continue to position the company globally for years of robust growth and margin improvement in '24, '25, '26 and beyond."
Curaleaf CEO Matt Darin said, "In Q2 we continued to prioritize the highest return growth opportunities balanced by a relentless focus on driving efficiencies across the business. We made solid progress towards these objectives by shrinking our expense base by 7%, increasing our retail vertical mix to 65% and reducing our inventory by $17 million from the first quarter. As we further optimize our best-in-class CPG portfolio with a continuously innovative and growing brand and product assortment, our focus remains on profitable, responsible growth in every aspect of our business, both in the U.S. and Europe. The fact is that no company is better positioned than Curaleaf to capitalize on the global cannabis market opportunities when the sector eventually and fully unlocks."
Second Quarter 2023 Financial Highlights
- Net Revenue of $338.6 million, a year-over-year increase of 4% compared to Q2 2022 revenue of $327 million, which excludes discontinued operations. Sequentially, net revenue grew 1%
- Gross profit of $146.5 million and gross margin of 43%
- Adjusted gross profit of $149.9 million, resulting in adjusted gross margin of 44%, which includes an 80 basis point impact from an additional expense reclassification into cost of goods sold
- Net loss attributable to Curaleaf Holdings Inc., including discontinued operations, of $71.2 million or net loss per share $0.10
- Adjusted net loss from continuing operations attributable to Curaleaf Holdings Inc. of $68.9 million or adjusted net loss per share of $0.09
- Adjusted EBITDA of $70 million or 21% of revenue
- Cash position at quarter end totaled $85 million
- Free cash flow from continuing operations of $8 million
Six Months Ended June 30, 2023 Financial Highlights
- Net revenue of $675.1 million, a 8% increase year-over-year
- Gross profit of $307.3 million and gross margin of 46%
- Adjusted gross profit(1) of $312.1 million, a 9% decrease year-over-year
- Adjusted gross margin(1) of 46%
- Operating cash flow of $27.6 million
- Net loss attributable to Curaleaf Holdings, Inc. of $125.6 million or net loss per share of $0.17
- Adjusted net loss(1) attributable to Curaleaf Holdings, Inc. of $115 million or net loss per share(1) of $0.15
- Adjusted EBITDA(1) of $143.2 million or 21% of revenue
Second Quarter 2023 Operational Highlights
- Completed the acquisition of Deseret Wellness in Utah.
- Continued to strategically expand our retail footprint in Florida by adding two additional stores reaching 60 in the state, and 152 stores nationwide.
- Launched new Curaleaf mobile app.
- Introduced Grassroots brand to Florida.
- Expanded Find, our value flower line, to six additional states including Florida, Nevada, New York, Ohio, Pennsylvania, and Utah; Find is now in 12 markets.
- Introduced Jams, our new edibles line, in Arizona, Florida, and New Jersey.
- Launched Grassroots diamond infused pre-rolls in Arizona, Illinois, Maryland, and Nevada.
- Completed sale of Colorado cultivation assets.
Post Second Quarter 2023 Operational Highlights
- In Connecticut, we opened our third store for adult-use sales, and our fourth location got approved for adult use in August.
- Launched Briq, our revolutionary 2-gram vape, into six key markets including Arizona, Florida, Maryland, Maine, Michigan and New York, which set record breaking sales of $2 million in the first month. Briq is expanding to four more states in August.
- Successfully launched adult-use sales in Maryland across our four stores and wholesale.
- Completed the acquisition of EU GMP processing assets from Clever Leaves in Portugal to further vertically integrate our European supply chain.
- Unveiled the rebrand of our Select cannabis lifestyle brand.
- Entered into an agreement to sell our Oregon assets.
Total revenue was a record $338.6 million in the second quarter of 2023, an increase of 1% from $336.5 million in the first quarter of 2023 and an increase of 4% from $327 million in the second quarter of 2022. The company's year-over-year revenue growth primarily reflects continued organic growth driven by strength in Nevada, Arizona, Connecticut, New Jersey, Arizona, and Massachusetts, and our international segment.
Retail revenue was $277.4 million, compared with $273 million in the first quarter of 2023, and up 10% from $251.1 million in the second quarter of 2022. Retail revenue represented 82% of total revenue. Curaleaf's year-over-year retail revenue growth was supported by product expansion, new store openings, and the further expansion of adult-use cannabis around the country.
Wholesale revenue was $59.7 million, a decrease of 4% from the first quarter of 2023 and represented 18% of total revenue. Wholesale revenue declined 20% year-over-year due to price compression, a proactive reduction of wholesale accounts, and an intentional reduction of low profit raw material sales.
Net loss attributable to Curaleaf Holdings Inc. was $71.2 million, compared with a net loss of $54.4 million in the first quarter of 2023 and $21.9 million in the second quarter of 2022. The year-over-year degradation in net loss was mainly due to reduced gross margin rate stemming from price compression in Florida and New York, intentional actions to reduce inventory, and an 80 basis point reclassified expense into cost of goods sold.
Total revenue for the six months ended 2023 was a record $675 million, an increase of 8% from $623 million for the six months ended 2022.
Retail revenue was $550 million for the six months ended 2023, an increase of 16% from $476 million for the six months ended 2022. The increase in retail revenue was primarily driven by the expansion of product lines into new markets and new store openings.
Wholesale revenue was $122 million, a decrease of 16% from $144 million for the six months ended 2022. The decline in wholesale revenue was primarily due to price compression, a reduction of wholesale accounts, and an intentional reduction of sales to accounts with increased credit risk.
Net loss, attributable to Curaleaf Holdings Inc., for the six months end 2023 was $126 million, compared with a net loss of $58 million for the six months ended Q2 2022. The $67 million degradation in net loss year-over-year was primarily due to the degradation in gross margin and increase in total other expenses.
Balance Sheet and Cash Flow
As of June 30, 2023, the company had $85 million of cash and $574.1 million of outstanding debt net of unamortized debt discounts.
As of the end of the second quarter, Curaleaf has invested $34.9 million, net in capital expenditures, focused on cultivation, processing, and selective retail expansion in strategic markets.
Shares Outstanding
For the second quarter of 2023 and 2022, the company's weighted average subordinate voting shares plus multiple voting shares outstanding amounted to 719,269,057 and 709,965,526 shares, respectively.
View the full press release with line-item financial results here.
