Curaleaf Holdings Inc (CNSX:CURA) (OTCMKTS:CURLF) came out with Q4 and FY earnings after the bell today. Much to the comfort of investors, the report—and subsequent conference call—was filled with a plethora juicy details that should support a buoyant open tomorrow morning.

Beginning with Curaleaf Holdings quarterly results, revenue growth hasn’t skipped a beat. Total revenue reached $32.0 million, representing 49% growth over the prior quarter. This was actually three percent higher than sequential QoQ revenue increase last quarter—despite tougher comps. Managed revenue was $34.9 million, up 43% from the previous quarter, demonstrating accelerating sequential growth QoQ throughout 2018. An expected big net loss total was halved to $16.52M (Q3 $33.67M), leaving the Curaleaf with a still-bountiful $266.6 million of cash to ride out continued OPEX burn and/or make strategic operations.

Curaleaf Holdings’ full year picture looks just as upbeat. Total FY 2018 revenue increased 298% to $77.1 million, compared to $19.3 million in FY 2017. Full year managed revenue chimed-in at $87.8 million, compared with $28.4 million in FY 2017 (↑309.15%). Retail and wholesale revenue exploded 514% to $57.5 million.

But most of all—and this is a big one in the weedstocks space—the company reaffirmed previous-stated guidance.

Curaleaf reaffirmed its FY 2019 outlook for managed revenue of $400 million and free cash flow of $100 million. The revenue target maintains similar guidance made back in November, meaning it achieved most or all of its operational benchmarks for the quarter. The guidance is based on a number of assumptions, including rising same store sales, continued forward momentum of the regulatory landscape, and more.

Either way, it’s a bold move for Curaleaf to put itself out there since most licensed producers/MSOs don’t give guidance of any kind. Among the few exceptions is Tier-1 Canadian LP Aurora Cannabis, which projected Q2 2019 revenue of between $50-55 million back in January.

Curaleaf Saves The Best For Last

Although the report speaks for itself, Curaleaf Holdings saved its most material news for the post-release conference call.

The company announced an agreement with CVS Health Corp. to begin selling CBD-infused products at 800 stores in eight states. The products include topicals such as creams, sprays, roll-ons, lotions and salves. With over 10,000 pharmacies worldwide, CVS could potentially extend Curaleaf’s sales channel further should the introductory rollout prove a success.

*CVS WILL BEGIN SELLING CURALEAF CBD PRODUCTS, CURALEAF CEO SAYS /position $CURA.c $CURLF — Todd Harrison (@todd_harrison) March 20, 2019

CVS Has Started Selling CBD Products In 8 States Products include topicals such as creams, sprays, roll-ons, lotions and salves. These products are available in 8 states: Alabama, California, Colorado, Illinois, Indiana, Kentucky, Maryland and Tennessee. https://t.co/KjuPdFc4pk pic.twitter.com/5bRyfMTJHM — Marijuana News (@WeedFeed) March 20, 2019

And more national retail exposure could be on the way. According to BNN Bloomberg, Curaleaf CEO Joseph Lusardi told conference callers that, “We’ve been having dialogue with national retailers for many months now. We’ve got a number of potentially exciting partnerships in the pipeline.”

Furthermore, the company laid out plans to delay the release of post-lock up shares poised to hit the market. The newfound lock-up agreements with insiders and material shareholders will keep over 4/5ths (81%) of the total shares outstanding from becoming free floating prior to October 20, 2019.

With 249,037,550 subordinate voting shares and 122,170,705 multiple voting shares waiting to be unlocked, the delay should help ease pressure on CURA stock near term. The issue’s average daily volume is currently a moderate 482,337 shares per day.

Fly In The Ointment?

If there’s one acute point of contention within the report, it might be lagging revenue-per-store metrics, which trails some of its competitors.

For example, MedMen Enterprises increased revenue sequentially by 39% to $29.9 million, despite have only 17 operational stores open during their previous fiscal quarter. That works out to approximately $1.76M generated on average per store—a far cry from Curaleaf’s $887k-$1.10M average.

The same can be said for Trulieve Cannabis, which is Curaleaf’s biggest competitor in Florida. Trulieve generated aggregate revenue of $28.3 million in Q3 2018 with less than 19 dispensaries open for the quarter. Obviously, Curaleaf’s revenue-per-store average is a laggard here as well.

Whether this is something endemic to the company’s operating model or simply competitors established in more mature markets is unclear. Midas Letter will be watching this metric with increasing curiosity as the quarter drift by.

Final Thoughts

Undoubtedly, Curaleaf hit all the right notes with its latest earnings release. Top line growth numbers were strong, and they continued to execute as evidenced by the re-affirmation of aggregate managed revenue guidance delivered in November.

The multi-state CVS deal was rich icing on the cake, as it perhaps shows Curaleaf’s hemp/CBD strategies are more advanced than given credit for. Approaching lock-up concerns—while not completely alleviated—will be mostly shuttled until late October. By then, perhaps a strengthening banking reform news cycle will drown out such concerns, thickening up the bid to allow timely divestiture of partial positions.