Curaleaf Holdings, Inc. (OTCQX: CURLF) reported increased revenue for the first quarter ended March 31, 2020. Total revenue for Curaleaf in the first quarter of 2020 increased by 174% to $96.5 million versus $35.3 million in the first quarter of 2019. Total revenue for the first quarter of 2020 increased 28% sequentially.
The net loss for the first quarter was $15.5 million, compared to a net loss of $10.8 million in the first quarter of 2019. The net losses declined from the fourth quarter which was $26 million. The company said that the increase was primarily driven by a $14.7 million increase in income tax expense largely resulting from deferred taxes associated with biological assets, a $9.1 million increase in depreciation and amortization, a $2.7 million increase in share-based compensation, both of which are non-cash, a $9.7 million increase in one-time charges, primarily business development, acquisition and financing related, and a $7.2 million increase in interest expense offset by a $13.3 million change in the fair value of biological assets.
“Curaleaf delivered record first-quarter results, highlighted by managed revenues exceeding our outlook as well as a 45% sequential improvement in Adjusted EBITDA,” said Joseph Lusardi, Chief Executive Officer of Curaleaf. “Overall, Curaleaf remains well-positioned for improving top and bottom-line performance in 2020 driven by our organic growth initiatives as well as strategic acquisitions. We expect the pending completion of our purchase of Grassroots, the largest private vertically integrated multi-state cannabis operator, to affirm our position as the world’s largest cannabis company by both revenue and operating presence.”
Retail revenue increased by 197% to $56.6 million during the quarter, compared to $19.0 million in the first quarter of 2019. Growth in retail revenue was primarily due to organic growth and new store openings in Florida, Massachusetts, and New York, along with 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.
Wholesale revenue increased by 134% to $20.4 million during the quarter, compared to $8.7 million in the first quarter of 2019. Growth in wholesale revenue was due primarily to the addition of Select and as a result of the increased number of adult-use dispensaries in Massachusetts.
“The strength of our financial performance in the first quarter also drove improved operating cash flow,” said Mike Carlotti, Chief Financial Officer of Curaleaf. “Combined with the strength of our balance sheet, which was improved by the $300 million senior secured credit facility that closed in January 2020, this has allowed us to remain opportunistic in terms of investing in the business, as well as, pursuing strategic acquisitions. Most notably, in early February, we successfully completed the acquisition of Select. In early April, we completed the acquisition of Arrow, achieving a key objective of vertically integrating our operations in Connecticut and providing us new dispensaries in three of Connecticut’s largest metro-areas.” The company had $176.4 million of cash, $281.5 million of outstanding debt net of unamortized debt discounts and 507.7 million fully diluted shares outstanding.
In March, Curaleaf acquired three Arrow Alternative Care (AAC) dispensaries in the state of Connecticut. AAC operates three out of 18 total stores currently operational in the state. The company also said in March that it would acquire Colorado-based edibles company BlueKudu for an undisclosed amount.
Founded in 2011, BlueKudu is one of Colorado’s oldest and most experienced edible manufacturers. Known for utilizing high-quality ingredients sourced from Rainforest Alliance Fair Trade Certified Farms, BlueKudu employs culinary experts and an extraction process that provides a cleaner and more natural oil to create artisanal cannabis products with vegan and gluten-free options. The company says it is available in 200 locations.
Carlotti added, “Looking forward, we currently anticipate the continued rise in managed and pro forma revenue, with sequential growth in the second quarter of 2020 despite temporary COVID-19 related restrictions that occurred in Massachusetts and Nevada.”