Curaleaf Holdings (CURLF 2.70%) is on a roll. Shares are up 37% so far in 2021 after delivering a gain last year of 90%.
The multistate cannabis operator gave investors even more to like on Tuesday. Curaleaf announced its Q4 results after the market close and provided details about a major new acquisition. Here are the highlights from the company's Q4 update -- and why Curaleaf's future looks even brighter than its past.
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By the numbers
Curaleaf reported total revenue in the fourth quarter of $230.3 million, a record high for the company. This reflected 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 for entities for which Curaleaf has a management contract, soared 186% year over year and 21% quarter over quarter to $233.3 million.
The company generated adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) in Q4 of $53,8 million. This result was 289% higher than adjusted EBITDA in the prior-year period and 27% above the result in the previous quarter.
Curaleaf posted a Q4 net loss of $35.3 million, or $0.05 per share. In the prior-year period, the company's net loss totaled $26.6 million, or $0.06 per share. The average analyst estimate projected a net loss of $0.02 per share.
Behind the numbers
The acquisition of Grassroots played a major role in Curaleaf's strong Q4 results. This deal enabled the company to expand into six additional states, notably including fast-growing markets in Illinois and Pennsylvania.
Curaleaf's retail revenue soared 242% year over year to $164.9 million, driven in part by acquisitions. The company also benefited from robust organic growth as well as its launches of new stores in Arizona, Florida, Illinois, Massachusetts, and New York.
Wholesale revenue skyrocketed nearly 579% to $64.4 million in Q4. The acquisitions of Grassroots, ATG, Blue Kudu, Curaleaf NJ, and Select were key drivers of this growth. Curaleaf also delivered higher wholesale sales in Maryland and New York thanks to increased cultivation and harvest.
The company's management fee income dropped to $1 million in Q4 from $17.8 million in the prior-year period. This decline stemmed mainly from the acquisitions of Curaleaf NJ and ATG.
With the tremendous revenue growth, why did Curaleaf's bottom line deteriorate? The primary culprits were a $25.8 million jump in income tax expense, a $20.3 million increase in net interest expense, and a $16.3 million increase in depreciation and amortization. In addition, the company's share compensation expense rose by $10.5 million from the prior-year period.
Looking ahead
New Jersey's legalization of recreational marijuana should open up a major new opportunity for Curaleaf. CEO Joe Bayern said that the company "believe[s] New Jersey will accelerate the potential of future adult-use in key states such as New York, Pennsylvania, and Connecticut." He continued: "Each of these markets present[s] an enormous growth opportunity for us, as Curaleaf is the only MSO [multi-state operator] with a leading presence in every one of these states."
Another key growth driver for Curaleaf will be its planned acquisition of EMMAC Life Sciences Limited. This transaction will enable Curaleaf to expand into key European medical cannabis markets such as Germany, Italy, Portugal, Spain, and the United Kingdom.
Curaleaf CFO Mike Carlotti predicted that 2021 "will be yet another record year for Curaleaf." With new markets opening up both in the U.S. and in Europe, that prediction looks like a pretty safe bet.
