Mr. Boris Jordan reports

CURALEAF REPORTS SECOND QUARTER 2023 RESULTS

Curaleaf Holdings Inc. has released its financial and operating results for the second quarter ended June 30, 2023. All financial information is reported in accordance with United States generally accepted accounting principles (GAAP) and is provided in United States dollars unless otherwise indicated.

Boris Jordan, executive chairman of Curaleaf, stated: "Our second quarter revenue grew 4 per cent year over year to $339-million, adjusted gross margin was 44 per cent and adjusted EBITDA was 21 per cent. We ended the second quarter with $85-million in cash on the balance sheet and generated $37-million in year-to-date cash flow from continuing operations. As the U.S. industry regains its supply-demand equilibrium and we eagerly anticipate the game-changing catalysts on the horizon, we continue to control costs and remain focused on long-term growth opportunities, particularly in Europe and our advantage in Germany specifically. We remain committed to the long game and will continue to position the company globally for years of robust growth and margin improvement in '24, '25, '26 and beyond."

Matt Darin, chief executive officer of Curaleaf, commented: "In Q2 we continued to prioritize the highest-return growth opportunities balanced by a relentless focus on driving efficiencies across the business. We made solid progress towards these objectives by shrinking our expense base by 7 per cent, increasing our retail vertical mix to 65 per cent and reducing our inventory by $17-million from the first quarter. As we further optimize our best-in-class CPG portfolio with a continuously innovative and growing brand and product assortment, our focus remains on profitable, responsible growth in every aspect of our business, both in the U.S. and Europe. The fact is that no company is better positioned than Curaleaf to capitalize on the global cannabis market opportunities when the sector eventually and fully unlocks."

Second quarter 2023 financial highlights

• Net revenue of $338.6-million, a year over year increase of 4 per cent compared with Q2 2022 revenue of $327.0-million, which excludes discontinued operations. Sequentially, net revenue grew 1 per cent.
• Gross profit of $146.5-million and gross margin of 43 per cent.
• Adjusted gross profit of $149.9-million, resulting in adjusted gross margin of 44 per cent, which includes an 80-basis-point impact from an additional expense reclassification into cost of goods sold.
• Net loss attributable to Curaleaf Holdings, including discontinued operations, of $71.2-million or net loss per share 10 cents.
• Adjusted net loss from continuing operations attributable to Curaleaf Holdings of $68.9-million or adjusted net loss per share of nine cents.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $70.0-million or 21 per cent of revenue.
• Cash position at quarter-end totalled $85.0-million.
• Free cash flow from continuing operations of $8-million.

Six months ended June 30, 2023, financial highlights

• Net revenue of $675.1-million, an 8-per-cent increase year over year;
• Gross profit of $307.3-million and gross margin of 46 per cent;
• Adjusted gross profit of $312.1-million, a 9-per-cent decrease year over year;
• Adjusted gross margin of 46 per cent;
• Operating cash flow of $27.6-million;
• Net loss attributable to Curaleaf Holdings of $125.6-million or net loss per share of 17 cents;
• Adjusted net loss attributable to Curaleaf Holdings of $115-million or net loss per share of 15 cents;
• Adjusted EBITDA of $143.2-million or 21 per cent of revenue.

Second quarter 2023 operational highlights

• Completed the acquisition of Deseret Wellness in Utah;
• Continued to strategically expand our retail footprint in Florida by adding two additional stores reaching 60 in the state, and 152 stores nationwide;
• Launched new Curaleaf mobile app;
• Introduced Grassroots brand to Florida;
• Expanded Find, the company's value flower line, to six additional states including Florida, Nevada, New York, Ohio, Pennsylvania and Utah; Find is now in 12 markets;
• Introduced Jams, the company's new edibles line, in Arizona, Florida and New Jersey;
• Launched Grassroots diamond infused prerolls in Arizona, Illinois, Maryland and Nevada;
• Completed sale of Colorado cultivation assets.

Postsecond quarter 2023 operational highlights

• In Connecticut, the company opened its third store for adult-use sales and its fourth location got approved for adult use in August.
• Launched Briq, the company's revolutionary two-gram vape, into six key markets including Arizona, Florida, Maryland, Maine, Michigan and New York, which set record breaking sales of $2-million in the first month. Briq is expanding four more states in August.
• Successfully launched adult-use sales in Maryland across the company's four stores and wholesale.
• Completed the acquisition of EU GMP (European Union good manufacturing practice) processing assets from Clever Leaves in Portugal to further vertically integrate our European supply chain.
• Unveiled the rebrand of the company's Select cannabis lifestyle brand.
• Entered into an agreement to sell the company's Oregon assets.

Total revenue was a record $338.6-million in the second quarter of 2023, a increase of 1 per cent from $336.5-million in the first quarter of 2023 and an increase of 4 per cent from $327.0-million in the second quarter of 2022. The company's year-over-year revenue growth primarily reflects continued organic growth driven by strength in Nevada, Arizona, Connecticut, New Jersey, Arizona and Massachusetts, and its international segment.

Retail revenue was $277.4-million, compared with $273.0-million in the first quarter of 2023, and up 10 per cent from $251.1-million in the second quarter of 2022. Retail revenue represented 82 per cent of total revenue. Curaleaf's year-over-year retail revenue growth was supported by product expansion, new store openings and the further expansion of adult-use cannabis around the country.

Wholesale revenue was $59.7-million, a decrease of 4 per cent from the first quarter of 2023 and represented 18 per cent of total revenue. Wholesale revenue declined 20 per cent year over year due to price compression, a pro-active reduction of wholesale accounts and an intentional reduction of low profit raw material sales.

Balance sheet and cash flow

As of June 30, 2023, the company had $85.0-million of cash and $574.1-million of outstanding debt net of unamortized debt discounts.

As of the end of the second quarter, Curaleaf has invested $34.9-million, net in capital expenditures, focused on cultivation, processing and selective retail expansion in strategic markets.

Shares outstanding

For the second quarter of 2023 and 2022, the company's weighted average subordinate voting shares plus multiple voting shares outstanding amounted to 719,269,057 and 709,965,526 shares, respectively.

Conference call information

The company will host a conference call and audio webcast for investors and analysts on Wednesday, Aug. 9, 2023, at 5 p.m. ET to discuss Q2 2023 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 2931212.

A replay of the conference call can be accessed at 1-877-344-7529, or internationally 1-412-317-0088, or from Canada 1-855-669-9658 using the replay ID 1724947.

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 Aug. 9, 2023, and will end at 11:59 p.m. ET on Aug. 16, 2023.

About Curaleaf Holdings Inc.

Curaleaf Holdings is a leading international provider of consumer products in cannabis with a mission to enhance lives by cultivating, sharing and celebrating the power of the plant. 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.

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