Curaleaf cuts quarterly loss and surpasses $1 billion in annual sales for the first time

Curaleaf Holdings Inc. reported a smaller fourth-quarter loss that was larger than Wall Street estimates, but the cannabis company surpassed $1 billion in annual sales for the first time.

Curleaf CURLF,

late Thursday announced that it lost $27.54 million, or 4 cents a share, in the most recent quarter, after an adjusted loss of $37.07 million, or 6 cents a share, in the year-ago quarter.

Revenue was $320.0 million, up 39% from $230.3 million in the same quarter last year and 1% above the third quarter total of $317.1 million.

According to a FactSet poll, analysts were expecting a loss of 2 cents per share and revenue of $323.4 million.

US-listed Curaleaf shares closed at $6.11 on Thursday, up about 1%. That sparked a record nine-session losing streak, during which shares fell 32% to close at a 20-month low on Wednesday.

The stock is down 33.8% over the past three months, compared to a 25.2% loss for the AdvisorShares Pure US Cannabis ETF MSOS.
and the SPX of the S&P 500 Index,
3.9% decrease.

Curaleaf CEO Joe Bayern told MarketWatch that the company’s 2021 revenue will set a record $1.21 billion and is within the company’s target of $1.2 billion to $1.3 billion. In 2020, Curaleaf had revenue of $626.6 million.

“We’ve made further progress building key metrics, with improved margins and revenue, and we’ve expanded our footprint,” Bayern said. “We thought it was quite a spectacular year.”

In the fourth quarter, Curaleaf reduced its net loss with an increase in operating income of approximately $20 million and a $2 million decrease in income tax expense, partially offset by a $15 million increase in other expenses.

For 2022, Curaleaf expects sales of $1.4 billion to $1.5 billion, compared to the Feb. 28 FactSet consensus of $1.57 billion.

Alliance Global Partners analyst Aaron Gray reiterated his buy rating and lowered his price target on the Canada-listed stock to $15 from $21. The lowered target still implies a 92% upmove from Thursday’s close of $7.80.

“Despite the 2022 sales guide being down the street, we believe CURA’s midpoint is achievable and beatable in the absence of a significant change in the consumer wallet or state regulators as the company is well positioned in the years to come and new states online.” go (NJ, NY, CT),” he wrote in a note to clients on Friday.

In 2022, Curaleaf expects to continue growing its gross margins on cannabis sales as well as its operating margin. In the fourth quarter, the company increased gross margin from cannabis sales to 49.7% from 47.8% in the year-ago quarter.

Curaleaf plans to consider acquisitions in 2022, including in key markets such as Bloom Dispensaries in Arizona; is also working on expanding its cultivation and other capacities, such as B. the $67 million purchase of Las Sueños in Colorado; or potentially additional acquisitions in newer markets like Europe, Bavaria said.

CEO Bayern said the surge in the Omicron variant of the coronavirus that causes COVID-19 impacted the company and the broader industry in late 2021 and early 2022, but he’s optimistic for the year’s record. The company plans to grow in the Northeast and other regions.

“We saw a little slowdown in the back half of 2021 and early 2022,” he said. “We think it’s temporary and I think 2022 will be a good year for Curaleaf and the rest of the industry.”

During the fourth quarter, Curaleaf increased its retail footprint by eight locations and agreed to purchase Tryke Companies, a multi-state operator in Nevada, Arizona and Utah.

It also completed a $475 million debt offering of 8% senior secured notes due 2026 and retired its older debt.

As of December 31, the Company had 117 dispensaries and expanded its cultivation and manufacturing capacity to 4.4 million square feet, up 2.5 million square feet from the prior year. With the acquisition of the EMMAC Life Sciences Group, the company also entered the European market. Curaleaf cuts quarterly loss and surpasses $1 billion in annual sales for the first time

Brian Lowry

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