WAKEFIELD, Mass., Nov. 17, 2020 (Canada NewsWire via COMTEX) -- Record Third Quarter Pro Forma Revenue((1)(2))of $215.3 Million
Record Third Quarter Managed Revenue((1))of $193.2 Million, up 164% and in Line with Company Guidance
Record Year-to-Date Managed Revenue((1)) of $419.6 Million
Record Third Quarter Adjusted EBITDA((1)) of $42.3 Million as Operations Across 23 States Continue to Scale
WAKEFIELD, Mass., Nov. 17, 2020 /CNW/ -- Curaleaf Holdings, Inc. /zigman2/quotes/203485866/delayed CA:CURA -2.51% (otcqx:CURLF) ("Curaleaf" or the "Company"), a leading U.S. provider of consumer products in cannabis, today reported its financial and operating results for the third quarter ended September 30, 2020. All financial information is provided in U.S. dollars unless otherwise indicated.
Q3 2020 Financial Highlights (Unaudited) ($ thousands, except per share amounts) Q3 2020 Q2 2020 % qoq Q3 2019 % yoy Change Change --- Managed Revenue(1) $193,220 $121,402 59% $73,192 164% Total Revenue $182,408 $117,480 55% $61,820 195% Gross profit before impact of biological assets $91,775 $60,636 51% $34,741 164% Gross profit on cannabis sales(1) $89,669 $42,735 110% $23,602 280% Gross margin on cannabis sales(1) 50% 43% 47% Adjusted EBITDA(1) $42,295 $27,994 51% $10,439 305% Net income (loss) attributable to Curaleaf Holdings Inc. ($9,343) ($2,029) ($6,835) Net income (loss) per share - basic and diluted ($0.01) ($0.00) (0.01)
(1) See "Non-IFRS Financial and Performance Measures" below for more information regarding Curaleaf's use of Non-IFRS financial measures and other reconciliations. (2) Pro Forma Revenue includes the revenue from GR Companies, Inc. ("Grassroots") as if it occurred on July 1, 2020.
Third Quarter Highlights
-- Record managed revenue of $193.2 million, which grew 164% year-over-year and 59% sequentially -- Record total revenue of $182.4 million, which grew 195% year-over-year and 55% sequentially -- Record Adjusted EBITDA of $42.3 million, which grew more than four times 2019 levels and 51% sequentially -- Closed acquisition of Grassroots creating the world's largest cannabis Company, as measured by revenue -- Completed acquisition of Curaleaf NJ, Inc. and Maine Organic Therapy assets that were previously managed -- Closed private placement of approximately $24.5 million in net proceeds -- Raised approximately $41.0 million in net proceeds related to sale-leaseback transactions
Post Third Quarter Highlights
-- Select launched into 3 new states, including Ohio, Illinois, Pennsylvania, now available in 16 states -- Opened 2 new dispensaries in Florida with 33 now open in state -- Completed Acquisition of Alternative Therapies Group in Massachusetts the last managed entity to be consolidated -- Voters in two key Curaleaf states approved cannabis for adult-use: New Jersey and Arizona -- Announced the divestiture of $31.5 million of assets in Maryland, supporting the optimization of Curaleaf's vertically integrated presence in the state
Joseph Lusardi, Chief Executive Officer of Curaleaf stated, "Curaleaf's record third quarter results were complemented by the successful completion of our acquisition of Grassroots, which expanded our presence into 6 new states, including high-growth markets such as Illinois and Pennsylvania. As we head into 2021, Curaleaf remains incredibly well-positioned following the transformative legalization of adult-use cannabis in Arizona and New Jersey, and consequently the potential of future adult-use in New York, Pennsylvania and Connecticut. Each of these markets present an enormous opportunity for us, as the only MSO with a leading presence in every one of these states. Looking forward, we expect our growth will be driven by organic initiatives, increased capacity and dispensaries in key states and the roll out of adult use in Arizona and New Jersey."
Mike Carlotti, Chief Financial Officer of Curaleaf, added, "Curaleaf, once again, delivered record quarterly results highlighted by record managed revenues, total revenues, and a 51% sequential improvement in Adjusted EBITDA. We anticipate a continued rise in managed revenue and adjusted EBITDA leading to strong sequential growth in the fourth quarter and into 2021. Finally, as of October 8th, we consolidated our final managed entity, Alternative Therapies Group in Massachusetts, and accordingly will report only IFRS total revenue beginning in the first quarter of 2021, thus greatly simplifying our future financial reporting."
Financial Results for the Third Quarter Ended September 30, 2020
Managed Revenue for the third quarter of 2020 was a record $193.2 million, an increase of 164.0% compared to $73.2 million in the third quarter of 2019. Managed Revenue for the third quarter increased 59.2% sequentially.
Total Revenue for the third quarter of 2020 was a record $182.4 million, an increase of 195.1% compared to $61.8 million in the third quarter of 2019. Total Revenue for the third quarter of 2020 increased 55.3% sequentially.
Retail revenue increased by 206.5% to $135.3 million during third the quarter of 2020, compared to $44.2 million in the third quarter of 2019. The increase in retail revenue was primarily due to organic growth and new store openings in in Florida, Massachusetts, Arizona and New York, coupled with the impact of Grassroots, Curaleaf NJ, Arrow, and Maine Organic Therapy acquisitions in 2020, the 2019 acquisitions of two dispensaries in Arizona in the third quarter of 2019 and acquisition of Acres in Nevada in late 2019.
Wholesale revenue increased nearly seven-fold to $45.0 million during the third quarter of 2020, compared to $6.5 million in the third quarter of 2019. Growth in wholesale revenue was due primarily to the addition of Select, Grassroots, New Jersey, Blue Kudu and an increase in California, Maryland and New York as a result of increased cultivation and harvest.
Management fee income decreased by 81.1% to $2.1 million during the third quarter of 2020, compared to $11.1 million in the third quarter of 2019. The decrease in the management fee income was primarily due to the acquisition of Curaleaf NJ, the managed not-for-profit in New Jersey in July 2020, offset by the management fees generated from ATG.
Gross profit before impact of biological assets for the third quarter of 2020 was $91.8 million, compared to $34.7 million for the third 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 $89.7 million for the third quarter of 2020, resulting in a 50% margin, compared to $23.6 million in the third 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 $42.3 million for the third quarter of 2020, compared to $10.4 million for the third quarter of 2019.
Net loss, attributable to Curaleaf Holdings, Inc., for the third quarter of 2020 was $9.3 million, compared to a net loss of $6.8 million in the third quarter of 2019. The decrease was primarily driven by a $16.3 million increase in depreciation and amortization and a $0.8 million increase in share-based compensation, both of which are non-cash, a $13.5 million increase in income tax expense, a $13.3 million increase in net interest expense and $10.1 million increase in one-time expenses. These were partially offset by a $10.2 million increase in the fair value of biological assets and a $10.3 million increase in other income.
Balance Sheet and Liquidity