Mr. Matt Darin reports

CURALEAF REPORTS FOURTH QUARTER AND FISCAL YEAR END 2022 RESULTS

Curaleaf Holdings Inc. has released its financial and operating results for the fourth quarter and year ended Dec. 31, 2022. All financial information is reported in accordance with U.S. generally accepted accounting principles (GAAP) and is provided in U.S. dollars unless otherwise indicated.

Boris Jordan, executive chairman of Curaleaf, commented: "Two thousand twenty-two was another record year for Curaleaf that further solidified our leadership position in the industry. In the fourth quarter, we delivered sales growth of 14 per cent to $352.5-million, with an adjusted gross margin of 47 per cent and adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] margin of 21 per cent. For the year, we grew revenue by 12 per cent to $1.34-billion, with an adjusted gross margin of 50 per cent and adjusted EBITDA margin of 23 per cent. We generated $46-million in operating cash flow and ended the year with $163-million in cash on our balance sheet. We have a strong cash position and will continue to invest in the right opportunities for growth domestically and abroad. I am pleased that we took the necessary actions in Q4 and early Q1 to reduce expenses and streamline the organization, positioning us for years of profitable growth to come."

Matt Darin, chief executive officer of Curaleaf, stated: "Curaleaf accomplished a great deal last year; we launched 171 new products, introduced three new brands, opened 28 new stores, completed six acquisitions, expanded our European presence with the German market, converted to GAAP accounting and built out the management team with high-calibre talent. Further, we sold over $600-million of our own brands through our own stores, which speaks to the strength of our retail business as a key competitive advantage -- our gross margins are strong, we have an unrivalled geographically diverse footprint and are constantly improving the cannabis customer experience. We are excited about and well positioned for the future."

Fourth quarter 2022 financial highlights:

• Net revenue of $352.5-million, a 14-per-cent increase year-over-year, and 4-per-cent increase quarter-over-quarter;
• Gross profit of $78.1-million and gross margin of 22 per cent;
• Adjusted gross profit net of add-backs of $165.4-million, adjusted gross margin of 47 per cent, inclusive of a 240-basis-point impact from an expense reclassification into cost of goods sold;
• Net loss attributable to Curaleaf Holdings of $260.3-million or net loss per share of 36 cents;
• Adjusted net loss attributable to Curaleaf Holdings of $162-million or net loss per share of 23 cents.
• Adjusted EBITDA of $73-million or 21 per cent of revenue, excluding non-cash goodwill impairments and inventory writedowns totalling $225-million;
• Cash position at quarter-end totalled $163-million.

Full-year 2022 financial highlights:

• Net revenue of $1,336-million, a 12-per-cent increase year-over-year;
• Gross profit of $579-million and gross margin of 43 per cent;
• Adjusted gross profit net of add-backs of $671.9-million, an 18-per-cent increase year-over-year;
• Adjusted gross margin of 50.3 per cent inclusive of a 60 bp impact from an expense reclassification into cost of goods sold;
• Operating cash flow of $46-million;
• Net loss attributable to Curaleaf Holdings of $370-million or net loss per share of 52 cents;
• Adjusted net loss attributable to Curaleaf Holdings of $252-million or net loss per share of 35 cents;
• Adjusted EBITDA of $305-million or 23 per cent of revenue, excluding non-cash goodwill impairments and inventory writedowns of $225-million

Fourth quarter 2022 operational highlights:

• Added eight net new retail dispensaries, including four in Nevada, three in Florida and two in Arizona.
• Completed the acquisition of Tryke Companies, a vertically integrated multistate operator operating in Arizona, Nevada and Utah.
• Launched Find, a flower brand meeting the trend of the economizing consumer with high-quality cannabis flower at an accessible price point.
• Unveiled the national rebrand and continuing expansion of Grassroots premium flower brand and launched Grassroots Diamond infused prerolls.
• Began adult-use sales at Bordentown township, New Jersey, location, the company's third location to sell adult-use cannabis in the Garden State.

Full-year 2022 operational highlights:

• Opened 28 locations across key strategic markets, including Arizona, Florida, Maryland and Pennsylvania:
  • Twenty-one new stores opened and seven stores added via acquisition.
• Introduced 171 products to market in 2022, with three new brand launches throughout the year:
  • New brand launches include Endless Coast, Find and Plant Precision, targeting a variety of price points and product need states;
  • New products launched in 2022 accounted for approximately 18 per cent of full-year 2022 revenue.
• Completed the acquisition of Bloom Dispensaries in Arizona.
• Completed majority stake acquisition of Germany's Four20 Pharma.

Highlights subsequent to fourth quarter 2022:

• Announced cost reduction plan and discontinued operations in California, Colorado and Oregon as a part of Curaleaf's continued effort to streamline its business.
• Reduced payroll hours by 10 per cent coupled with other expense reductions across the organization, resulting in over $60-million of annual gross run rate expense savings, above the previously anticipated savings of $40-million.
• Continued to strategically expand its retail footprint in Florida, opening five additional stores. As of May 1, 2023, Curaleaf retail operations totalled 152 nationwide.
• Gained approval to sell to adult-use customers at its Stamford, Conn., location in January immediately following the opening of adult-use sales, and at its Hartford, Conn., location in March.
• Completed the acquisition of Deseret Wellness, providing three dispensaries in Utah.

Financial results for the fourth quarter ended Dec. 31, 2022

Revenue

Total revenue was a record $352.5-million in the fourth quarter of 2022, an increase of 4 per cent from $339.7-million in the third quarter of 2022 and 14 per cent from $308.7-million in the fourth quarter of 2021. The company's year-over-year revenue growth primarily reflects continued organic growth driven by new retail store openings and the significant focus on research and development, resulting in the introduction of 171 products in 2022 and three new brand launches.

Retail revenue was $277.5-million, compared with $259.7-million in the third quarter of 2022, and up 23 per cent from $225.6-million in the fourth quarter of 2021. Retail revenue represented 79 per cent of total revenue. Curaleaf's year-over-year retail revenue growth was supported by 28 new stores added in 2022, and the further expansion of adult-use cannabis around the country.

Wholesale revenue was $73.8-million, a decrease of 6 per cent from the third quarter of 2022, and represented 21 per cent of total revenue. Wholesale revenue declined 10 per cent year-over-year due to price compression, a pro-active reduction of wholesale accounts in California and an intentional reduction of low-profit raw material sales.

Net income/loss

Net loss attributable to Curaleaf Holdings was $260.3-million, compared with a net loss of $51.4-million in the third quarter of 2022 and $73-million in the fourth quarter of 2021. The year-over-year degradation in net loss was mainly due to $225-million of non-cash goodwill impairments and inventory writedowns primarily associated with the state exits of California, Colorado and Oregon.

Financial results for the year ended Dec. 31, 2022

Revenue

Total revenue for the year ended 2022 was a record $1,336-million, an increase of 12 per cent from $1,196-million for the year ended 2021.

Retail revenue was $1,015-million for the year ended 2022, an increase of 18 per cent from $860-million for the year ended 2021. The increase in retail revenue was primarily driven by organic growth from new store openings, expansion of cultivation and production capacity, and new product introductions. In 2022, Curaleaf launched the brands Endless Coast, Find and Plant Precision, targeting a variety of price points and product need states.

Wholesale revenue was $316-million, a decrease of 5 per cent from $333-million for the year ended 2021. The decline in wholesale revenue was primarily due to price compression, a reduction of wholesale accounts in California and an intentional reduction of low-profit raw material sales.

Net income/loss

Net loss attributable to Curaleaf Holdings for the year ended 2022 was $370-million, compared with a net loss of $206-million for the year ended 2021. The $164-million degradation in net loss in 2022 was primarily due to the $225-million non-cash goodwill impairment and inventory writedowns associated with the California, Colorado and Oregon state exits, as well as increased selling, general and administrative expenses.

Balance sheet and cash flow

As of Dec. 31, 2022, the company had $163-million of cash and $623-million of outstanding debt net of unamortized debt discounts.

During the fourth quarter of 2022, Curaleaf invested $39-million, net in capital expenditures, focused on cultivation, processing and selective retail expansion in strategic markets. For the year ended 2022, Curaleaf invested $138-million, net in capital expenditures.

Shares outstanding

For the fourth quarter of 2022 and 2021, the company's weighted average subordinate voting shares outstanding amounted to 715,796,271 and 707,450,310 shares, respectively.

For the years ended Dec. 31, 2022, and Dec. 31, 2021, the company's weighted average subordinate voting shares outstanding amounted to 711,159,444 and 698,759,274 shares, respectively.

As of Dec. 31, 2022, and Dec. 31, 2021, the company's issued and outstanding subordinate voting shares plus multiple voting shares amounted to 717,490,830 and 708,340,434 shares, respectively.

2021 and 2022 restatement update

As previously disclosed, the 2022 full-year results include restated revenue amounts for the first, second and third quarters of 2022 as compared with what was previously reported, and the reduction of aggregate revenue for the full 2022 fiscal year is 0.5 per cent. Similarly, 2021 full-year results were also restated, and the reduction of aggregate revenue for the year was 1.1 per cent of revenue.

Conference call information

The company will host a conference call and audio webcast for investors and analysts on Monday, May 1, 2023, at 5 p.m. ET to discuss Q4 and 2022 earnings results. The call can be accessed by dialling 1-844-512-2926 in the United States, internationally 1-412-317-6300 or from Canada 1-416-639-5883. The conference ID is 7713604.

A replay of the conference call can be accessed at 1-877-344-7529, internationally 1-412-317-0088 or from Canada 1-855-669-9658 using the replay ID 1100731.

A webcast of the call can be accessed on the investor relations section of the Curaleaf website. The teleconference will be available for replay starting at approximately 7 p.m. ET on May 1, 2023, and will end at 11:59 p.m. ET on May 8, 2023.

About Curaleaf Holdings Inc.

Curaleaf Holdings is a leading international provider of consumer products in cannabis with a mission to improve lives by providing clarity around cannabis and confidence around consumption. As a high-growth cannabis company known for quality, expertise and reliability, the company and its brands, including Curaleaf, Select and Grassroots, provide industry-leading service, product selection and accessibility across the medical and adult-use markets. In the United States, Curaleaf currently operates in 19 states with 152 dispensaries, and employs nearly 5,500 team members. Curaleaf International is the largest vertically integrated cannabis company in Europe with a unique supply and distribution network throughout the European market, bringing together pioneering science and research with cutting-edge cultivation, extraction and production. Curaleaf is listed on the Canadian Securities Exchange under the symbol CURA and trades on the OTCQX market under the symbol CURLF.

We seek Safe Harbor.