Curaleaf’s fourth quarter growth has been impressive, but 2021 is expected to be even better

Curaleaf Holdings (OTC: CURLF) is on a roll. Shares have risen 37% so far in 2021 after making a 90% gain last year.

The multi-state cannabis operator gave investors even more taste on Tuesday. Curaleaf announced its fourth quarter results after the market closed and provided details on a major new acquisition. Here are highlights from the company’s Q4 update – and why Curaleaf’s future looks even brighter than its past.

Image source: Getty Images.

By the numbers

Curaleaf reported total fourth quarter revenue of $ 230.3 million, a record for the company. This reflects a 205% jump from the $ 75.5 million reported in the same quarter of 2019 and a 26% increase from the third quarter of 2020. Managed revenue, which includes revenue from entities for which Curaleaf has a management contract, climbed 186% in one year. year and 21% quarter over quarter to $ 233.3 million.

The company generated adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the fourth quarter of $ 53.8 million. This result is 289% higher than the adjusted EBITDA for the period of the previous year and 27% higher than the result of the previous quarter.

Curaleaf reported a net loss of $ 35.3 million in the fourth quarter, or $ 0.05 per share. In the prior year period, the company’s net loss was $ 26.6 million, or $ 0.06 per share. The average analyst estimate was for a net loss of $ 0.02 per share.

Behind the numbers

The acquisition of Grassroots played a major role in Curaleaf’s strong fourth quarter results. This agreement allowed the company to expand into six additional states, including the high-growth markets of Illinois and Pennsylvania.

Curaleaf’s retail revenues climbed 242% year-over-year to $ 164.9 million, in part due to acquisitions. The company also benefited from robust organic growth as well as new store launches in Arizona, Florida, Illinois, Massachusetts and New York.

Wholesalers’ revenues climbed nearly 579% to $ 64.4 million in the fourth quarter. The acquisitions of Grassroots, ATG, Blue Kudu, Curaleaf NJ and Select were the main drivers of this growth. Curaleaf also generated higher wholesale sales in Maryland and New York through increased cultivation and harvest.

The company’s management fee income fell to $ 1 million in the fourth quarter, from $ 17.8 million in the prior year period. This decrease results mainly from the acquisitions of Curaleaf NJ and ATG.

With the huge revenue growth, why has Curaleaf’s bottom line deteriorated? The main culprits were a $ 25.8 million increase in income tax expense, a $ 20.3 million increase in net interest expense, and a $ 16.3 million increase in depreciation and amortization. amortization. In addition, the Company’s stock-based compensation expense increased by $ 10.5 million compared to the prior year period.

Look ahead

Legalization of recreational marijuana in New Jersey should open a major new opportunity for Curaleaf. CEO Joe Bayern said the company “believed[s] New Jersey will accelerate the potential for future adult use in key states such as New York, Pennsylvania, and Connecticut. “He continued:” Each of these markets presents[s] a huge growth opportunity for us, as Curaleaf is the only MSO [multi-state operator] with a prominent presence in each of these states. “

Another key growth driver for Curaleaf will be its planned acquisition of EMMAC Life Sciences Limited. This transaction will allow Curaleaf to expand into the main European medical cannabis markets such as Germany, Italy, Portugal, Spain and the United Kingdom.

Curaleaf CFO Mike Carlotti has predicted that 2021 “will be yet another banner year for Curaleaf.” With the opening of new markets in the United States and Europe, this prediction seems to be a safe bet.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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