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New Markets And Retail Operations Drive Gains For Key U.S. Players

November 26, 2019

Several U.S. cannabis companies reported earnings this week, including Harvest Health & Recreation, Curaleaf, and Green Thumb Industries. All told, the U.S. market appears to have had a strong quarter in which companies began to reap the benefits of multi-state investment and operation. Surging demand and retail infrastructure in key medical-use states like Arizona, Florida, and Pennsylvania drove gains, as the industry waits for new recreational markets like Michigan and Illinois to open in the near future.

Tempe, Arizona-based Harvest Health reported $33.2 million in revenue for the quarter ended September 30, rising nearly 200% from the same period last year and up 25% sequentially. The company’s net loss totaled $39.1 million, which it attributed to its rapid expansion and growth initiatives. During the quarter, Harvest opened six new retail locations and acquired four others. These openings and acquisitions include locations in Arizona, Florida, North Dakota, and Pennsylvania, among others, giving Harvest one of the broadest footprints in the country. Harvest took an EBITDA loss of $10.9 million, an improvement from $12.4 million the prior quarter.

Chicago, Illinois-based Green Thumb Industries enjoyed a 52% rise in quarter-to-quarter revenue to $68 million. Net losses narrowed to $17.1 million, down from $22.2 million in the second quarter of the year, and the company’s adjusted operating EBITDA continues to be in positive territory at $14.1 million. In addition to cultivation, Green Thumb operates retail locations under the Rise and Essence brands, whose revenue was up 68% in the quarter. The company recently opened new locations in Florida, Pennsylvania, and Ohio, bringing total openings this year to 14.

“We continue to make progress on the ‘Open and Scale’ chapter of the business,” said Green Thumb founder and CEO Ben Kovler. “We’re starting to see leverage in the platform we built. Our brand portfolio is now produced, distributed, and sold in eight markets, a significant improvement from our position just one year ago, and yet this is just the beginning.” Green Thumb expects to generate revenues of over $200 million in fiscal 2019 and is well positioned for the advent of Illinois’ recreational market in January.

Curaleaf had a relatively quiet quarter in terms of acquisitions and expansion, but nonetheless reported managed revenue of $73.2 million for the quarter, up from $55.1 million in the previous three-month period. More impressively, it posted a positive adjusted EBITDA of $9 million, which it attributed to reaching an “inflection point” in several key states. “Our increasing scale helped drive the strong financial results we posted this quarter,” noted Curaleaf CEO Joseph Lusardi.—Danny Sullivan

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