Curaleaf Reports Q3 Revenue Decline Amid Market Challenges

Curaleaf Reports Q3 2024 Financial Results, Focusing on Sustainable Growth and International Expansion

Stamford, Conn., Nov. 6, 2024 – Curaleaf Holdings, Inc. (TSX: CURA) (OTCQX: CURLF), a major player in the cannabis industry, released its third-quarter 2024 financial results, showing a mixed performance with slight revenue declines balanced by strong international growth and solid cash flow from operations. As the company navigates an increasingly competitive cannabis landscape, it is emphasizing disciplined, sustainable growth and diversifying revenue through its expanding international footprint.

Third Quarter Financial Performance Highlights

Curaleaf reported third-quarter revenue of $330.5 million, representing a modest 1% decline from the previous year’s third quarter revenue of $333.2 million. Sequentially, revenue dropped by 3% compared to the previous quarter. The company attributes this decrease to ongoing market challenges, including regulatory pressures, aggressive competition, and pricing volatility within the U.S. cannabis industry.

Key financial metrics include:

Gross profit of $160.5 million, with a gross margin of 49%.

Adjusted gross margin increased by 312 basis points year-over-year, reaching 49%.

Adjusted EBITDA stood at $75.3 million, maintaining a consistent 23% margin, an increase of 23 basis points from the previous year.

Net loss attributable to Curaleaf Holdings, Inc. was $44 million, translating to a net loss per share of $0.07.

Cash reserves at the end of Q3 totaled $90 million. The company also reported operating cash flow of $42.3 million and free cash flow of $14.5 million from continuing operations, reflecting its focus on preserving liquidity and supporting organic growth amid market headwinds.

International Growth Drives Revenue Diversification

A significant highlight for Curaleaf this quarter was its international performance. International revenue surged by 82% year-over-year and 17% sequentially, reaching $30 million. The international market has proven to be a valuable area for growth, offering Curaleaf a hedge against U.S. market volatility and enabling a more balanced revenue stream.

The company’s expanding global presence supports its strategy to reduce reliance on domestic markets by capturing opportunities in emerging regions where regulatory frameworks are more favorable for cannabis operators. This diversification aligns with Curaleaf’s objective to mitigate concentration risk and capitalize on untapped global demand for cannabis products.

Securing New Credit Facility for Operational Flexibility

In addition to its quarterly financial results, Curaleaf announced the securing of a $40 million revolving credit facility at an interest rate of 7.99%. This credit line provides Curaleaf with enhanced liquidity to address operational needs and strategic investments, supporting its growth initiatives across both U.S. and international markets. Access to this facility positions the company to respond quickly to market opportunities, manage cash flow effectively, and maintain operational flexibility amid uncertain market conditions.

CEO Boris Jordan’s Strategic Vision: Sustainable and Profitable Growth

Boris Jordan, Curaleaf’s Chairman and CEO, has emphasized that the company’s strategy centers around sustainable, profitable growth. His approach involves focusing on operational fundamentals, maintaining market share in challenging regions, and expanding in strategic areas with strong growth potential. Jordan highlighted the company’s response to industry-wide pressures, including regulatory challenges, intense competition, and pricing fluctuations that have impacted the broader cannabis market.

Curaleaf’s shift towards a more measured approach reflects a commitment to delivering long-term shareholder value by adapting to evolving market conditions rather than pursuing aggressive expansion at the expense of profitability.

Financial and Operational Metrics

Curaleaf’s third-quarter results underscore a commitment to improving margins and maintaining cash flow, despite slight revenue declines. Notable metrics from Q3 2024 include:

Adjusted Gross Profit: At $161.3 million, the adjusted gross profit aligns with Curaleaf’s emphasis on efficiency and cost management.

Free Cash Flow: Year-to-date, Curaleaf reported $53 million in free cash flow from continuing operations, showcasing its focus on efficient cash use and cost optimization.

Adjusted Gross Margin: The 49% gross margin, an increase of 312 basis points year-over-year, reflects Curaleaf’s success in operational cost control amid a challenging market environment.

Outlook: Navigating Market Pressures with a Focus on Core Strengths

Curaleaf has highlighted that current market dynamics, including over-regulation, increased competition, and difficult economic conditions, pose significant challenges for the U.S. cannabis sector. However, the company remains focused on leveraging its core strengths, including an established international presence, disciplined cost management, and strong cash flow generation, to support its growth objectives.

As Curaleaf looks to 2025, it plans to continue expanding its global operations and investing selectively in markets that offer high growth potential. By prioritizing profitability and market share retention, Curaleaf is positioning itself to remain competitive, resilient, and adaptive in an ever-evolving industry.

Curaleaf’s third-quarter 2024 financial performance reflects a strategic pivot toward sustainable, profit-driven growth amidst a challenging U.S. cannabis market. With robust international expansion, solid cash flow, and a new credit facility to support operations, Curaleaf demonstrates a resilient approach focused on adapting to both domestic and international market conditions. As the cannabis industry faces increased scrutiny and fluctuating demand, Curaleaf’s financial discipline and strategic initiatives provide a stable foundation for continued growth and shareholder value.