Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) posted positive results on Monday — driven by new retail store openings in key emerging states and the green light for adult use in New Jersey. The company reported its financial results for the second quarter ending June 30, 2022.
For the key metric of total revenue, Curaleaf beat expectations as it delivered approximately $338 million during the period — beating the Yahoo Finance Average analyst estimate for revenues of $334.15 million.
Revenue from retail sales rose 13% totaling $252 million — 75% of total revenue — an 8% uptick versus $226 million in the same quarter last year. The company said that growth in retail revenue was primarily due to the opening of 28 stores over the year — seven dispensaries since the last quarter alone — in emerging states such as Arizona (including the acquisition of Bloom Dispensaries), Florida, Maine, and Pennsylvania and the commencement of adult-use in New Jersey.
However, the company also saw wholesale revenue fall 6% to $84 million versus $89 million during the same time last year. The decline in wholesale revenue during the quarter was largely due to the company’s continued assessment of the wholesale marketplace in California and Colorado, it said.
Curaleaf also reported a second-quarter net loss of $28 million compared to a net loss of $7 million in the same period last year. The company said that the net result was primarily impacted by an “unfavorable net change in fair value of biological assets coupled with the increase in operating expenses, which were partially offset by higher revenues.”
Gross profit on cannabis sales was $175 million for the quarter, versus $155 million the year before. Gross profit margin reached 51.9%, versus 49.6% last year — largely resulting from the increase in vertically integrated products sold in its dispensaries and the mix of revenue from higher margin states, the company said.
The earnings were for a loss of four cents per share, which met analysts’ estimates.
Adjusted EBITDA rose to $86 million in the second quarter, versus earnings of $84 million in the same period last year. The year-over-year gain was “primarily driven by solid revenue growth combined with operating leverage,” the company said, adding that “The year-over-year decrease in Adjusted EBITDA margin reflects greater SG&A expenditures due to increased headcount in support of new store openings, higher levels of expenses related to research and development activities, as well as higher sales and marketing spend and an increase in professional fees.”
This quarter, Curaleaf had $187 million of cash and $587 million of outstanding debt net of unamortized debt discounts, which had a weighted average interest rate of 7.3% per annum.
During the first half of 2022, Curaleaf invested $60 million net in capital expenditures during the first half of the year — mostly for cultivation, processing, and retail site development activities. The company said it expects to invest approximately $125 million in capital expenditures in total this year.
“Our record-breaking second quarter got off to a great start with the launch of adult use in New Jersey and a historic 4/20,” said Boris Johnson, Curaleaf’s executive chairman. “We bounced back from earlier headwinds to grow revenue 8%, and AEBITDA 18% sequentially while continuing to execute on our growth strategy for Europe, a key differentiator for Curaleaf and a significant advantage over our competitors. I am also very pleased to report that thanks to our vertical penetration and operating efficiencies, Adjusted EBITDA margins expanded to 26%. The fundamentals of our business are strong, and our leadership team is moving with speed and discipline, continuing to set-up 2022 as another milestone year.”
In newly-minted CEO Matt Darin’s bid to reorganize the company at the top, Curaleaf today said that it has tapped Ed Kremer and Camilo Lyon as new CFO and CIO, respectively. Mitch Hara was named new CSO and started last week.
Ed Kremer has served as a public CFO and held leadership positions at Oakley, Beats by Dre, and Oliver Peoples. Neil Davidson, Curaleaf’s Interim CFO, will work closely with Mr. Kremer during the transition period, the company said.
Lyon most worked as a managing director at BTIG covering the consumer and cannabis sectors.
“Ed, Camilo, and Mitch all bring robust industry experience; track records of business discipline, growth, and success; and smart strategic insights that will drive Curaleaf towards fulfilling our long-term goals,” Darin said at the time. “I’m thrilled to welcome them to the leadership team, and I’d like to thank Neil Davidson for his continued commitment and contributions to Curaleaf.”
Tyneeha Rivers — who joined as the company’s first Chief People Officer in June — has made an immediate impact on organizational dynamics and leadership culture, the release said.