Weekly Roundup; Key Takeaways:
- Curaleaf to Pay $286 Million to Acquire Western Cannabis Operator Tryke; Curaleaf Q3 Revenue Increases 2% Sequentially to $317 Million.
- Verano to Enter Connecticut Cannabis Market with $113.25 Million Acquisition of Tuatara Owned Operator.
- Awakn Won Clinic of the Year and Drug Development Company of the Year Awards at WonderlandMiami.
- Columbia Care, Ascend Wellness & MedMen amongst Top Gainers in the Cannabis Sector in Third Quarter Earnings.
It has been a busy month where many large marijuana companies have reported their third-quarter earnings, and storylines have developed from the third quarter revenue reports. A strong earnings season has powered cannabis stocks to new record highs, helping to insulate equity investors from the volatility that has rocked bond markets in recent weeks. Of the more than 50 companies in the cannabis sector that have reported their earnings results, 81 per cent of them posted higher earnings than consensus estimates.
Quarterly earnings results give investors a look under the hood of a company’s financials for three months. They serve as an essential update for investors about how the company has performed over the previous three months. They also enable investors to get a pulse on how the business is trending and how management thinks about the future.
Here, we will have a roundup on some companies that reported high earnings in the sector and companies with a high optimism of continuing to do great in the coming months.
#1: Curaleaf
Curaleaf Holdings, Inc. (OTCMKTS: CURLF) is a Canada-based international provider of consumer products in the cannabis market. The company improves lives by providing cannabis for consumption. The company and its brands, including Curaleaf and Select, provide service, product selection and accessibility across the medical and adult-use markets.
On November 8, 2021, the cannabis multi-state operator signed a definitive agreement to acquire an Arizona-based MSO in a cash and stock transaction currently valued at $286 million.
The acquisition of Tryke Cos., which does business as Reef Dispensaries, will expand Curaleaf’s presence in Arizona, Nevada and Utah. This acquisition comes after Tryke agreed in September 2019 to be acquired by Cresco Labs Inc. (OTCMKTS: CRLBF). But Cresco, a Chicago-based MSO, pulled out of the $282.5 million purchase in April 2020 because of “regulatory delays, a decline in capital markets and now COVID-19, which brought additional risk to this transaction.”
The Curaleaf-Tryke deal is expected to close in the second half of 2022, contingent on regulatory and other approvals. Under the agreement terms, Massachusetts-based Curaleaf will pay $40 million in cash at closing and $75 million in cash in equal instalments on the closing’s first, second, and third anniversaries. Curaleaf also will pay 17 million shares of stock in equal instalments on the first, second and third anniversaries.
In addition, 1 million Curaleaf shares will be paid in 2023 based on the business exceeding specific profit targets for 2022.
In other news, Curaleaf reported its financial and operating results for the third quarter ended September 30, 2021. From the earnings report, the total revenue was $317 million for the third quarter of 2021, which increased 2% from $312 million in the second quarter of 2021 and 74% from $182 million in the third quarter of 2020.
Retail revenue reached $225 million, representing 1% sequential growth and 66% year-over-year growth. Retail revenue represented 71% of total revenue. The company opened two new dispensaries during the third quarter, including one in Bordentown, New Jersey and one in Wells, Maine, reaching 109 dispensaries.
#2: Verano Holdings
Verano Holdings Corp. (OTCMKTS: VRNOF) operates as a vertically-integrated multi-state cannabis operator in the United States. The company produces and sells a suite of cannabis products under a portfolio of consumer brands, including Encore, Avexia, MÃV, and Verano. It designs, builds, and operates dispensaries under the Zen Leaf and MÃV retail brands that deliver a cannabis shopping experience in medical and adult-use markets.
The Chicago-based cannabis multi-state operator, on November 10, 2021, announced its expansion into Connecticut with multiple acquisitions, including one completed deal and two pending purchases. One of the pending deals, the acquisition of a cultivation business, is valued at more than $130 million and will give Verano a vertically integrated presence in the state.
“These acquisitions are expected to be immediately accretive and accelerate vertical integration for Verano in Connecticut, one of the most recent states to pass adult-use legislation,” Verano said in a Wednesday news release.
Connecticut legalized recreational cannabis in June, with sales expected to begin in 2022. Verano’s Connecticut deals include Willow Brook Wellness, which operates one active dispensary in Meriden; Caring Nature, which operates one operational dispensary in Waterbury; and Connecticut Pharmaceutical Solutions, which uses an active cultivation and production facility in Rocky Hill.
The Willow Brook Wellness acquisition closed on October 25, while the other deals are pending.
From the acquisition report, Verano disclosed only the price tag for Connecticut Pharmaceutical Solutions, which is: Nearly $113.3 million worth of Verano subordinate voting shares when the transaction is complete, $18.5 million in further shares “upon the first adult-use sale of cannabis in Connecticut.” An unspecified number of additional shares based on performance milestones for 2021.
Verano’s Connecticut deals come on the heels of other expansion activity this year, including acquisitions in Pennsylvania announced in April and a purchase in Nevada announced in July.
#3: Awakn
Awakn Life Sciences Corp. (NEO: AWKN) (OTCQB: AWKNF) is a biotechnology company that engages in researching, developing, and delivering psychedelic therapeutics to treat addiction other mental health conditions in the United Kingdom and Europe. The company is headquartered in Vancouver, Canada.
In recent months, Awakn has made the headlines with some great news. From the closing of the acquisition of the leading Ketamine-Assisted Psychotherapy clinic in Norway to the Worlds’s first controlled study to investigate Ketamine-Assisted Psychotherapy, there is no doubt that Awkan has been making massive progress in psychedelic research and clinical trials.
Awakn is constantly dominating the financial headlines with news of more deals and announcements; this has led to us capturing Awakn in most of our previous articles. And it seems we aren’t the only financial news platform paying close attention to the enormous progress the company has been making.
On November 9, Awakn won Clinic of the Year and Drug Development Company of the Year awards during the 2021 Wonderland awards in Miami, Florida. To celebrate this huge milestone, the company tweeted, “We are extremely honoured to win “Clinic of the Year” and “Drug Development Company of the Year” during last night’s @MicrodoseHQ Awards at #WonderlandMiami. Thank you to everyone who voted for Awakn at this year’s awards!”
The company also posted another tweet thanking everyone who helped make Awakn a winner at this year’s Wonderland awards in Miami. Awakn tweeted, “…We’re honoured by your support as we continue our work developing revolutionary new approaches for treating substance and behavioural.”
Top Gainers in the Cannabis Sector From Third Quarter Earnings
#1: Columbia Care
Columbia Care Inc. (OTCMKTS: CCHWF) is a provider of cannabis-based health and wellness solutions. The company is engaged in cultivating, manufacturing and providing medical and adult-use cannabis products and related services with licenses in over 18 United States jurisdictions and the European Union (EU). The company operates facilities including dispensaries and cultivation and manufacturing facilities.
On November 12, 2021, the company reported financial and operating results for the third quarter ended September 30, 2021. The report recorded quarterly revenue of $132.3 million, an increase of 144%. The company had a quarterly adjusted gross profit of $64.5 million, an increase of 205%, and an adjusted EBITDA of $31.0 million, which increased 634% from the previous earnings.
#2: Ascend Wellness
Ascend Wellness Holdings, Inc. (OTCMKTS: AAWH) engages in cultivating, manufacturing, and distributing cannabis consumer packaged goods. The company’s cannabis product categories include flowers, pre-rolls, concentrates, vapes, edibles, and other cannabis-related products.
Ascend Wellness was another company in the cannabis sector that had higher earnings in its third quarterly report. Ascend’s net revenue increased 13.2% quarter-over-quarter to $94.4 million. The adjusted EBITDA increased 15.9% quarter-over-quarter to $23.5 million. The company ended the third quarter with $204.5 million of cash and cash equivalents.
#3: MedMen
MedMen Enterprises Inc. (OTCMKTS: MMNFF) is a Canada-based cannabis retailer. The company operates across the United States and stores in Los Angeles, Las Vegas and New York. It offers products under various categories, such as LuxLyte, MedMen, AlienLabs, Atlas, Bad Apple, Bloom, Breez, Caliva, BEBOE and Bic.
MedMen is also another cannabis multi-state operator that reported good earnings in their third-quarter reports. From the earnings report, the company’s first-quarter revenue from continuing operations increased 13.4% year-over-year, the total retail revenue, including New York, increased 17.6% year-over-year. During the quarter, the company announced transformative capital raise and restructuring of senior secured convertible note facility.