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Curaleaf Blows Past Expectations in Q1 With Even Bigger Opportunities Ahead

By Keith Speights - May 11, 2021 at 6:02AM

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This U.S. cannabis company is firing on all cylinders.

I picked Curaleaf Holdings (CURLF 1.24%) as one of four pot stocks to buy on 420 Day (April 20) that could soar 20% or more this year. Since then, Curaleaf's share price has risen 12%. 

That gain (and my prediction) were on the line as the company announced its first-quarter results after the market closed on Monday. Based on Curaleaf's Q1 update, though, I remain confident about the coming months. Here are the highlights from the multistate cannabis operator's results.

Cannabis leaf on top of $100 bills

Image source: Getty Images.

By the numbers

Curaleaf reported revenue in the first quarter of $260.4 million. This reflected a 170% year-over-year increase from revenue of $96.5 million in the prior-year period. It also was up 13% from revenue of $230.3 million generated in the fourth quarter of 2020.

The company announced a Q1 net loss of $17.2 million, or $0.03 per share. The bottom-line result was a little worse than Curaleaf's net loss of $15.1 million, or $0.03 per share, in the first quarter of 2020. However, it was better than the net loss of $35.3 million, or $0.05 per share, in the previous sequential quarter.

Cannabis investors focus even more heavily on adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). On that front, Curaleaf performed really well. It recorded Q1 adjusted EBITDA of $62.6 million, more than tripling year over year and up 16% quarter over quarter.

Curaleaf also ended the first quarter with cash of $314.6 million. This was an increase from the $73.5 million on hand as of Dec. 31, 2020.

Behind the numbers

The company's retail cannabis revenue in the first quarter soared 231% year over year and 14% quarter over quarter to $188 million. This impressive growth was driven in large part by the opening of new stores in Florida, Maine, and Pennsylvania and the launch of Arizona's adult-use marijuana market, which opened in Q1.

Curaleaf's wholesale revenue increased 254% year over year and 12% sequentially to $72 million. The solid growth was due in part to the company's expansion of its Select brand in states including Illinois, Massachusetts, Maryland, New Jersey, New York, and Pennsylvania. Other growth drivers included the launches of new products as well as a strong performance in Arizona, California, and Oregon.

As a result of this across-the-board growth, Curaleaf's Q1 revenue surpassed the company's guidance. Both revenue and adjusted EBITDA figures in Q1 set record highs.

Of particular note was Curaleaf's launch of its Select Squeeze THC-infused beverage enhancer. CEO Joe Bayern said that this was the company's "most successful product launch ever and represented one of the cannabis industry's widest national product launches to date."

Looking ahead

Curaleaf expects that revenue will be between $305 million and $315 million in the second quarter of this year. The company also thinks that it will achieve positive net income and positive operating cash flows in the second half of 2021.

The acquisition of EMMAC, which was previously the largest vertically integrated independent cannabis company in Europe, gives Curaleaf a solid launching pad in international markets. The company has opened four new stores since the end of the quarter that should boost sales in Q2.

Executive Chairman Boris Jordan pointed out two other huge opportunities. He stated, "The recent approvals of adult-use cannabis in New Jersey and New York, which are states where Curaleaf has a leading market share, will unlock vast new markets, worth an estimated $2.1 billion and $5 billion in sales respectively."

Can Curaleaf deliver that 20% or greater gain that I projected on 420 Day? I think the company's Q1 results show that the answer is a resounding "yes."

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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