Curaleaf Beats Expectations, Up 12% on Strong Q3

Curaleaf Beats Expectations, Up 12% on Strong Q3
Curaleaf Beats Expectations, Up 12% on Strong Q3

Curaleaf Holdings Inc (CAN:CURA / U.S.:CURLF) is up nearly 12% today in early trading (to US$6.15), on strong numbers from its third quarter for 2019.
 
  • Total revenue increased by 27% from Q2 to $61.8 million
  • Managed revenue increased by 32% from Q2 to $73.1 million
  • Gross margins increased in Q3 from 40% to 47%
  • Net loss fell by ~75% from Q2 to $6.8 million

The market is pushing Curaleaf higher today primarily on the strength of “beating expectations” on the topline. But shareholders (and potential investors) may be more enthused by Curaleaf’s bottom-line progress.

In Q2, the Company reported strong results, with one exception. It’s quarterly loss more than doubled (from Q1) to $24.5 million. In Q3, Curaleaf has more than reversed its bottom-line result.

Investors will also be encouraged by management’s observation that several key states have reached an “inflection point”. With continued revenue growth and strong (rising) margins, Curaleaf now appears poised to transition to profitability.

CEO Joseph Lusardi was openly enthusiastic.
 
“Our increasing scale along with the incredible efforts of our team around the country who ensure our patients and customers have a superior experience, helped drive the strong financial results we posted this quarter. We look forward to the closing and integration of the Select and Grassroots acquisitions which are expected to bring significant operational capacity to Curaleaf in key markets.”

Curaleaf’s acquisition of Illinois-based Grassroots, in particular, presents additional blue-sky potential. Grassroots is (was) “the largest private U.S. MSO”. Illinois is the most recent U.S. state to now offer recreational cannabis sales.

With cannabis stocks broadly higher today, it may not only be Curaleaf’s markets that have reached “an inflection point”.