CURLF - Curaleaf Holdings, Inc.

Operator: Good day, and welcome to the Curaleaf Holdings' fourth quarter and full year 2025 conference call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Camilo Lyon, Chief Investment Officer. Please go ahead.
Camilo Russi Lyon: Good afternoon, everyone, and welcome to Curaleaf Holdings' fourth quarter and full year 2025 conference call. Today, I am joined by Chairman and Chief Executive Officer, Boris Jordan; and Chief Financial Officer, Ed Kremer. Before we begin, I'd like to remind everyone that the comments on today's call will include forward-looking statements within the meaning of Canadian and United States securities laws, which, by their nature, involve estimates, projections, plans, goals, forecasts and assumptions, including the successful integration of acquisitions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements on certain material factors or assumptions that were applied in drawing a conclusion or making a forecast in such statements. These forward-looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Additional information about the material factors and assumptions forming the basis of the forward-looking statements and risk factors can be found in the company's filings and press releases on SEDAR and EDGAR. During today's conference call, in order to provide greater transparency regarding Curaleaf's operating performance, we will refer to certain non-GAAP financial measures and non-GAAP financial ratios that involve adjustments to GAAP results. Such non-GAAP measures and ratios do not have a standardized meaning under U.S. GAAP. Any non-GAAP financial measures presented should not be considered to be an alternative to financial measures required by U.S. GAAP, should not be considered measures of Curaleaf's liquidity and are unlikely to be comparable to non-GAAP financial measures provided by other companies. Any non-GAAP financial measures referenced on this call are reconciled to the most directly comparable U.S. GAAP financial measure under the heading Reconciliation of non-GAAP Financial Measures in our earnings press release issued today and available on our Investor Relations website at ir.curaleaf.com. With that, I'll turn the call over to Chairman and CEO, Boris Jordan. Boris?
Boris Jordan: Thank you, Camilo. Good afternoon, everyone, and thank you for joining us to discuss our fourth quarter and full year 2025 results. We closed 2025 with clear momentum, delivering fourth quarter revenue of $333 million, our strongest performance in 6 quarters. Revenue increased 5% sequentially and 2% year-over-year, bolstered by a broad-based return to growth in nearly all of our domestic markets despite a persistently challenging pricing environment. Our international team closed out an impressive year with $51 million in the fourth quarter revenue, representing 10% sequential growth and 65% year-over-year revenue growth. Adjusted gross margin expanded to 49%, up 20 basis points from last year as the benefits from productivity gains in our cultivation facilities outweighed price compression. Adjusted EBITDA totaled $69 million or 21% of sales, inclusive of a 120 basis point drag from international. Operating and free cash flow from continuing operations were $42 million and $25 million, respectively. That's after paying $39 million in acquisition-related debt during the quarter. For the full year, revenue reached $1.27 billion with adjusted gross margin of 50% and adjusted EBITDA of $275 million or 22% of revenue. We generated $152 million in operating cash flow and $89 million in free cash flow from continuing operations, while ending the year with $102 million of cash on the balance sheet. These results were delivered despite a third consecutive year of double-digit price compression, underscoring the strength, discipline and resilience of our operating model and the success of our return to Roots plan. Reflecting on the progress we made in 2025, we took decisive actions to fundamentally reset and strengthen the business. First, we transformed our cultivation network. Through disciplined execution and best practice standardization, we doubled yields across our facilities, materially lowering production costs and mitigating the impact of sustained price compression on margins. Importantly, this increase in output did not come at the expense of quality. By leveraging genetics from Dark Heart, we significantly improved flower quality, consistency and strain diversity. In the fourth quarter, average flower potency across our facilities reached 31%, the highest level in our history. This combination of higher yields and higher quality represents a structural improvement in our cultivation platform, not a temporary gain. Second, we overhauled our buying, planning and merchandising functions to better align supply with demand at the local level. The impact was immediate, particularly in Florida, where stronger product allocation discipline paired with consistency -- consistently higher quality flower drove meaningful improvements in conversion, traffic and customer satisfaction. This created a virtuous cycle of stronger sell-through, improved in-stock positioning and enhanced customer loyalty. We are now systematically replicating this playbook across our other states, and we are encouraged by the early traction. We believe there remains substantial runway to unlock incremental productivity and same-store growth. Third, we accelerated innovation across our product portfolio. In April, we launched Anthem Classic, our cigarette style pre-rolls in select markets to overwhelming consumer response. We followed that in September with Anthem Bold, our infused pre-roll line, which has also exceeded expectations. Demand has consistently outpaced supply. In less than a year, Anthem has become a top 5 national pre-roll brand in its 4 launch markets: New York, New Jersey, Illinois and Arizona, demonstrating the strength of our innovation engine and brand-building capabilities. These initiatives represent just a portion of the foundational work completed in 2025. We are now seeing the benefits of flow-through the P&L in the form of improved margins, stronger sell-through and organic growth momentum. Importantly, we believe there remains significant opportunity to further amplify these gains as we continue to scale the operating discipline and innovation framework we have put in place. While price compression continues to impact most markets, we believe 2025 represents the trough. Structural changes to the industry, most notably the federal hemp ban scheduled to take effect in November are expected to materially alter market dynamics. Over the past 3 years, we believe the regulated cannabis market was disrupted not by excess cultivation capacity, but by the rapid proliferation of low-cost, lightly regulated hemp-derived THC products that could be shipped nationally. As this loophole closes and consumers migrate back to the regulated dispensary channel, we expect demand to normalize, pricing pressures to abate and the industry to return to a more rational and sustainable pricing environment. A defining moment for the U.S. cannabis industry occurred last December when President Trump issued an executive order directing the reclassification of cannabis from Schedule I to Schedule III. This is the most consequential federal action taken on cannabis in the last 55 years. When, not if the final rule becomes effective, which we expect to occur ahead of the midterm elections, it will serve as the foundational catalyst for broader reform. Momentum from rescheduling will bring us closer to a U.S. exchange uplisting, expanded access to money center institutions and credit card usage, which will create a fundamentally improved operating and capital markets landscape. These anticipated regulatory and capital market improvements are already driving increased consolidation across the sector. We are seeing this primarily through asset sales by undercapitalized operators, targeted bolt-on retail acquisitions by scaled platforms seeking to leverage their fixed infrastructure and smaller category-specific brands merging to achieve scaled operations. As a result, we expect industry consolidation to accelerate meaningfully in 2026, led by a few operators of which Curaleaf is one, with strong balance sheet, access to capital and proven execution. We have built our business through both organic and acquisitive means and will leverage investor appetite to partner with scaled operators to further increase our leading position in the market. In support of this opportunity set, last week, we completed the refinancing of our $475 million senior secured notes maturing on December 15, 2026 of which $457 million was outstanding, issuing a new $500 million senior secured note with a 3-year maturity at an 11.5% coupon due February 18, 2029. This landmark transaction sets a new precedent as the largest transaction in U.S. cannabis, extends our runway and significantly enhances our financial flexibility. I am pleased with the strong demand expressed in our offering from both new and existing investors, demonstrating the growing institutional interest, not only in Curaleaf but also the broader cannabis industry. With this refinancing complete, we are well positioned to pursue growth initiatives while maintaining disciplined capital allocation. With our debt refinancing and Return to Our Roots plan now complete, we have decisively reset the foundation of our business. We have strengthened leadership across critical functions, embedded data-driven decision-making and sharpened operational execution. Our strong fourth quarter performance reflects the evolution of our Built for Growth initiative, driving organic growth through the -- through high-quality brand portfolio, premium customer experiences and operational excellence. We believe this positions the company for sustained growth and value creation as industry conditions improve. Importantly, the results we delivered in the fourth quarter provide tangible proof points that reinforce our conviction in the direction we are heading. During the quarter, the Curaleaf family of brands captured the #1 overall market share position according to Hoodie Analytics, with Select maintaining its #1 ranking in the vape category. These outcomes are a direct result of disciplined execution and brand focus, and they reflect the collective efforts of our employees across the organization who consistently support our portfolio of brands and deliver high-quality service to our customers. Domestically, our fourth quarter year-over-year outperformance was driven primarily by strength in Ohio, Utah, Pennsylvania and Florida, each a clear example of our operating [ lease, net ] translating into tangible results. Ohio continues to benefit from its transition to adult use, coupled with the successful ramp of 2 new stores. Early performance has exceeded expectations, reflecting both favorable market dynamics and disciplined execution at the store level. Utah remains a healthy and stable medical market, where we are gaining share through increased consumer adoption of our brand portfolio and expanded wholesale penetration. Our focused approach to product mix and distribution continues to unlock incremental growth. Pennsylvania delivered strong performance throughout the year, driven largely by the consistently high-quality flower output from our cultivation network. The improvements we made in yield, potency and strain diversity have directly translated into stronger sell-through and brand loyalty. Similarly, Florida's resurgence is directly tied to a step change improvement in our flower quality and in-store execution. As product consistently improved, we saw corresponding gains in traffic, conversion and customer satisfaction, validating the structural work completed earlier in the year. I would be remiss if I didn't highlight that we believe is one of our most significant and fastest-growing opportunities in 2026, New York. After growing our business in the state by 14% last year and achieving the #1 overall brand share position, we have established a leadership platform in one of the most important emerging adult-use markets in the country. We are now intensely focused on extending that leadership by becoming the brand house of choice for wholesale partners statewide. Our portfolio is uniquely positioned to capture growth across multiple segments with Anthem driving momentum in pre-rolls, Select strengthening our vapes and Dark Heart elevating our premium flower offering. As distribution expands and market infrastructure matures, we believe our scale, brand equity and execution discipline position us to capture disproportionate share as the market ramps. New York represents not only a near-term growth catalyst, but a strategic long-term value driver within our U.S. portfolio. The common thread across all these states is clear: high-quality products, disciplined execution and elevated service levels. That formula is repeatable, scalable and central to how we intend to drive performance in 2026. Innovation remains a core driver to our growth strategy. To expand our addressable market and attract new customers, we must consistently lead with differential products, new flower genetics, advanced delivery technologies and category-defining formats that elevate both quality and customer experience. As part of that commitment, next month, we will launch Briq 2.0, the next generation of our highly successful vape platform across 13 states. Building on the strong performance of Briq, this upgraded version enhances functionality, reliability and overall user experience, positioning us to further strengthen our share in the vape category. In parallel, we are expanding Dark Heart as our flagship premium flower offering, reinforcing our ability to compete at the high end of the market with differentiated genetics and superior consistency. We will share more details on that expansion in the coming months. Our objective in every category we enter is not simply participation but leadership through uncompromising product quality and a superior customer service. Sustained focus and disciplined execution against these principles will enable durable market share gains, stronger brand equity and long-term value creation for shareholders. Curaleaf International delivered another exceptional revenue quarter, generating revenue of $51 million, an increase of 65% year-over-year and putting the business on an annual run rate of over $200 million, led by strong performance in Germany and the United Kingdom. This momentum reflects the strength of our differentiated platform across key European markets. In Germany, not only are we the largest supplier of flower to the market, but also consumer demand remained robust for our portfolio of brands. Our value tier brand, [indiscernible] continued to gain traction with cost-conscious patients, while our [ QMID ] vape, the first medically approved inhalation device also benefited from strong consumer adoption. Germany remains one of the most dynamic and scalable medical markets in Europe, and we are well positioned across both premium and value tiers to further leverage our strong market position. In the U.K., Curaleaf Clinic expanded its active patient count once again, reinforcing our #1 market share position. The U.K. continues to be a steady, consistently growing market for us, underpinned by disciplined patient acquisition, high retention rates and vertically integrated operations that leverage technology. Elsewhere, Poland began to recover meaningfully following the easing of our prior regulatory restrictions on telemedicine. Patient access has improved, demand trends are strengthening, and we are seeing tangible momentum reemerge, positioning the market for continued growth as we move into 2026. In Australia, we are prioritizing expansion in 2026 by leveraging our European innovation pipeline to introduce new products tailored to local demand. We see a clear opportunity to capture incremental market share through product quality, brand positioning and disciplined commercial execution. Collectively, these markets demonstrate the breadth and resilience of our international platform. They provide multiple growth vectors and reinforce our ability to allocate capital towards markets with favorable regulatory trajectories and attractive long-term returns. Turning to Four 20 Pharma, our premium German brand. As anticipated, the put option on the remaining 45% ownership stake was exercised, and we will fully own the business and the brand. Upon closing, we will have 100% ownership of our international operations following the buyout of our minority partner in Curaleaf International last summer. Full ownership meaningfully simplifies our corporate structure, enhances transparency around the performance and valuation of our International segment. This is particularly relevant in the recent cross-border transactions between Canadian and German operators, which have helped clarify valuation benchmarks in the European market. With complete control of our international platform, we are better positioned to drive strategic alignment, capture full economic upside and maximize long-term shareholder value. Turning to new international [indiscernible] in France and Turkey. Regulators in each country are actively advancing rule-making process that will define their respective medical cannabis frameworks. In Spain and France, we could see programs commence as early as the fourth quarter with initial commercialization centered predominantly on extracts and distribution expected through hospital pharmacy channels. In Turkey, we currently anticipate a program launch in the first quarter of 2027, while precise timing remains subject to regulatory finalization, progress continues to move constructively. As we have seen across other European markets, these programs are likely to begin modestly in scale before ramping over time as patient enrollment expands, supply chains mature and regulatory clarity improves. Importantly, as form factor restrictions evolve beyond extracts and access broadens, we expect growth trajectories to accelerate meaningfully. Over the longer term, we believe these markets will -- markets with a combined population of over 200 million people have the potential to become significant contributors to our international business, reinforcing our first-mover advantage and disciplined expansion strategy in Europe. In light of the restrictive regulatory challenges affecting hemp-derived THC products expected to take effect later this year, we made the deliberate decision to discontinue our hemp business. The revenue impact was de minimis as the business was still in its early start-up phase. Similarly, we also decided to exit Missouri, a state in which we were subscale producers of formulated products with no vertical presence. These decisions reflect our disciplined approach to capital allocation and our focus on opportunities where we have scale, visibility and clear path to attractive returns. While we believe there may be ultimately a role for hemp-derived THC beverages within the broader consumer landscape, the timing, regulatory framework and economic parameters of that category remain highly uncertain. That said, consumer adoption of alternatives to alcohol continues to accelerate, representing a meaningful long-term trend. We will continue to monitor regulatory developments closely, including ongoing discussions among members of Congress, and we will reassess our participation if and when the category evolves into a more defined regulated economically compelling opportunity. 2025 was a pivotal and highly productive year for our company. We executed a necessary and comprehensive reset of the business. And with each successive quarter, our Return to Our Roots plan gained traction and delivered measurable results. That work has now established a structurally stronger, more disciplined operating foundation. We are transitioning from stabilization to acceleration with our Build for Growth strategy. By leveraging the platform we have strengthened, improved cultivation economics, tighter merchandising discipline, brand-led innovation and enhanced execution, we are positioned to drive sustainable organic growth. At the same time, we will remain disciplined but opportunistic in pursuing acquisitions that enhance scale, expand capabilities and accelerate market share gains. Together, these initiatives position us to capture incremental share in 2026 and beyond. As the global leader in cannabis, we recognize our responsibility to advance the industry across regulatory environment, responsible adoption and scientific research, areas where we will continue to commit capital. I want to recognize and thank our global team for the extraordinary focus and execution over the past year. Their commitment has reshaped the business and built a foundation capable of supporting growth, both domestically and internationally. With that foundation now firmly in place, I'm confident in our trajectory and energized by the opportunities ahead. With that, I'll turn the call over to our CFO, Ed Kremer. Ed?
Edward Kremer: Thanks, Boris. All my comments will reflect continuing operations, which exclude Hemp and Missouri, 2 business units we exited in the fourth quarter. Total revenue for the fourth quarter was $333 million, representing 5% sequential growth and a 2% increase compared to the same period last year. Strength was broad-based as most of our markets saw sequential growth led by Ohio, International, Florida and Pennsylvania. International revenue grew by 65% year-over-year, driven primarily by Germany and the U.K. By channel, retail revenue was $237 million compared to $247 million in the fourth quarter of 2024, a decline of 4% year-over-year, partially offset by strength in wholesale, which increased 15% year-over-year to $91 million, representing 27% of total revenue. The robust momentum in wholesale was driven by market share gains in Curaleaf International, a strong recovery in Massachusetts, strong sell-through and reorders in Arizona and Ohio, all supported by the increased quality and product availability of our brands. For 2025, total revenue was $1.27 billion. Retail revenue was $923 million, while wholesale revenue was $332 million. We opened a total of 9 new dispensaries, including 5 in Florida, 3 in Ohio and 1 in Maine. International revenue of $172 million grew by a very healthy 63% over 2024. The work our commercial and operations teams accomplished in 2025 resulted in the strong market share position we maintained throughout the year. In the fourth quarter, that work to prioritize high-quality flower culminated in the Curaleaf portfolio of brands reaching the #1 share position according to Hoodie Analytics data. What's more, Select continued to command the #1 vape share in the market. Our relentless focus on quality and innovation are pillars for us to build long-term durable brands and consumers will see more of this innovation in 2026. Fourth quarter adjusted gross profit was $162 million, resulting in a 49% adjusted gross margin, an increase of 20 basis points compared to the prior year period. Continued productivity and efficiency gains in our cultivation facilities were the primary drivers of the margin expansion, partially offset by pricing pressure. These gains were partially offset by price compression and higher utility expenses. For the year, our adjusted gross profit was $633 million, resulting in a 50% adjusted gross margin, an increase of 150 basis points compared to the prior year. SG&A expenses were $111 million in the fourth quarter, an increase of $11 million from the year ago period. Core SG&A, which excludes add-backs, was $107 million, an increase of $10 million from the prior year. The year-over-year increase in our core SG&A primarily reflects international expansion and new store openings in Florida and Ohio. Core SG&A was 32% of revenue in the fourth quarter, a 260 basis point increase compared to the prior year due to aforementioned investments. For the year, SG&A and core SG&A was $428 million and $413 million, respectively. As a percent of sales, core SG&A was 33%. Fourth quarter net loss from continuing operations was $49 million or a loss of $0.06 per share. Excluding onetime noncash impairments of $6 million, adjusted net loss from continuing operations was $39 million or a loss of $0.05 per share. For 2025, net loss from continuing operations was $202 million or a loss of $0.26 a share. Excluding onetime noncash impairments and other add-backs, adjusted net loss from continuing operations was $176 million or a loss of $0.23 per share. In the fourth quarter, adjusted EBITDA was $69 million, a decrease of 9% compared to last year. Fourth quarter adjusted EBITDA margin was 21%, a decrease of 260 basis points versus last year. Our International segment profitability is improving. However, margins remain below the corporate average and thus weighed on fourth quarter EBITDA by 120 basis points. The year adjusted EBITDA was $275 million, and adjusted EBITDA margin was 22%, a decrease of 100 basis points compared to the prior year. Turning to our balance sheet and cash flow. We ended the quarter with cash and cash equivalents of $102 million. Inventory increased $8 million or 4% compared to last year's fourth quarter due to growth in our International segment. Our domestic inventory decreased 2% compared to last year. Operating and free cash flow from continuing operations were $42 million and $25 million, respectively. For the full year 2025, we generated operating and free cash flow from continuing operations of $152 million and $89 million, respectively. Capital expenditures in the fourth quarter were $17 million, bringing the total spend for the year to $63 million. The expenditures were driven by investments of facility upgrades, retail dispensary openings and IT infrastructure projects. For 2026, we expect capital expenditures to be approximately $80 million. The primary buckets of investment include international, automation, relocation and renovation of existing stores, coupled with at least 10 new dispensary openings in select locations, IT infrastructure and expenses associated with the relocation of our corporate headquarters. Our outstanding debt at quarter end was $549 million. During the year, we reduced our acquisition debt by $57 million. Last week, we completed the refinancing of our $475 million senior secured note due December 2026 with a $500 million, 11.5% senior secured note due February 2029. This highly successful and oversubscribed transaction extends our maturities, gives us ample financial flexibility and allows us to fund the buyout of the put option for the remaining 45% of the Four 20 Pharma business in Germany, we did not own. Once that transaction is completed, we will own 100% of our international business. Turning to guidance for the first quarter. Due to normal seasonality, we expect total revenue to be down mid-single digits sequentially from the fourth quarter. And with that, I'll turn the call back over to the operator to open the line for questions.
Operator: [Operator Instructions] And the first question will come from Aaron Grey with Alliance Global Partners.
Aaron Grey: Nice finish to the year for 2025. I want to talk a bit about pricing pressure and outlook. Boris, you spoke to another year of double-digit pricing pressure. So I want to get some color in terms of your outlook for 2026 on pricing, if you're starting to see some price stabilization in certain markets? And then second part to that question, just relating to your comfort in terms of having levers available to offset the pricing pressure as we saw in 2025, albeit from your back to Roots initiative or yield improvements.
Boris Jordan: Aaron, thank you. Yes, we continue to see pricing pressure across most markets in the United States. And I think that, that will probably continue through the first half of the year. I do expect, however, as the hemp ban comes into play towards the end of the year, a stabilization in pricing across markets as what we're starting to see is a short -- in some markets, we're starting to see shortage of certain products. And I think that, that's led by the fact that hemp has been prevalent on shelves across the whole country. Slowly some of those products are starting to disappear. We're starting to see less advertising. I think a lot of the C-stores are going to stop carrying a lot of these hemp products over the next several months. And as that happens, I think you will see a certain migration of customers over to the regulated market. We certainly think about 50% of the $25 billion estimated revenue of the hemp market will probably move over to the regulated market. That's largely the flower, vape and edibles part of the market, whereas we anticipate that beverage will probably stay within the hemp market and the structure that will be established for it. But otherwise, we do start -- I think we will start to see a firming of pricing going into the year-end and probably maybe even some price moves higher going into 2027. In terms of our ability to fight those price compressions across markets, we are constantly focused on our efficiencies. We're getting more and more efficiencies out of our grow operations. We're doing a lot of improvements in both automation as well as in the grows themselves. We don't believe that we have squeezed every possible thing we can out of these efficiencies, and we do expect more of these efficiencies to come to fruition this year and feel comfortable that we'll be able to hold on to our margin profile that we have now.
Operator: The next question will come from Russell Stanley with Beacon.
Russell Stanley: Just on the international business, I'm wondering how you're thinking about margin expectations there in '26, given the drag in Q4 at 120 bps. Germany is continuing to scale nicely as a tailwind, but you've got multiple new markets that justify their own investment. So I'm wondering where you think the margin drag will be this year and next? Just wondering what your mind's eye is showing on that front.
Boris Jordan: So we anticipate European margins to stay basically flat to where they were this year. As our business scales, we do anticipate small improvements in those margins heading closer to the U.S. margins that we receive in the business. However, we think that it's probably a little bit early as we are continuing to invest in our new markets, as I said, France, Spain and Turkey, which is a drag and those markets will not hit -- will not start to revenue generate until at best the fourth quarter of this year and early next year. So I think that as the business scales in 2027, margins will start to improve and start to get better closer to that 50% gross margin. But this year, we anticipate margins being at the same sort of level of 42% to 43% that we're achieving. However, I do want to say that we have the absolute best-in-class gross margins in the European market of any other operator in the market today. And so we're very proud of the way we operate our business in Europe. And those margins of Curaleaf are substantially better than all of our competition in European market. Using our U.S. experience in running the business and applying that in the European markets has helped us receive the best-in-class margins in Europe.
Operator: The next question will come from Bill Kirk with ROTH Capital.
William Kirk: What gives you guys confidence that the intoxicating hemp group won't be able to delay the ban or find some sort of reprieve? And then in states where you've effectively seen a ban already like Massachusetts, what have you seen in your dispensaries in Massachusetts as intoxicating hemp has gone away?
Boris Jordan: So again, I want to reiterate that the federal ban on hemp products is a 1-year ban from the time it was enacted in November of last year. And so even in Massachusetts, where you have local bans in other states as well, you still see those products because federally, those products are allowed to be sold in those markets. However, specifically in Massachusetts, Curaleaf, not directly related to the hemp ban, we have seen a marketable improvement in both margin and performance for Curaleaf in Massachusetts. However, in terms of our confidence, as you know, we spent an enormous amount of time in Washington down the hill, and we are hearing there is 0 chance that the Republicans are going to vote for an extension of the hemp ban at this point in time. There may be some compromises around some of the medical programs that are going to play. And there may be, at some point, a compromise around beverage. But I can tell you that I think chances are pretty low on that right now. And at the moment, the Republican side of which controls both the House and the Senate at this point in time has no interest. And I believe today, there was more information that came out of Washington. They have no interest in voting on extension of the hemp program.
Operator: And the next question will come from Frederico Gomes with ATB Cormark Capital Markets.
Frederico Yokota Gomes: Question is on the pricing environment in Germany and the U.K., Boris. Are prices holding up well in those 2 markets? Or do you see any sort of pressures coming there this year?
Boris Jordan: I think the growth profile in both of those markets are very early stage. I mean, Germany is still around $1 billion market. The U.K. is around 50,000 to 70,000 patients. These are very, very early-stage markets. So we anticipate growth to continue to be very, very strong in both of those markets going forward. If you think about it, Germany has a program that is less than half the size of Florida, and it's got 4.5x the population. So we're not particularly concerned about the growth profile in these markets. However, there has been pressure on prices in both Germany and less so in the U.K., but it's starting in the U.K. But Curaleaf tends to operate at the upper end of the product segment. And so therefore, we've been able to hold on to our margins, given that our supply chain and our facilities that are available for us to move product are best-in-class, and we've been able to continue to hold on to our margins at the higher level. Again, we think growth will help in the scalability of the business and therefore, holding margins. But we are seeing at the low end of the product portfolio, which we do not participate in, we are definitely seeing pricing pressures at the low end.
Operator: [Operator Instructions] Our next question will come from Kenric Tyghe with Canaccord Genuity.
Kenric Tyghe: Boris, if we look at this through the lens of the consumer, what were the biggest changes from your Return to Our Roots plan that supported the outperformance in key markets like New York, Ohio, Florida, Pennsylvania in the quarter. I mean, essentially, what you're speaking to here is an increased share of wallet in a very tough backdrop, which takes some doing. What were the changes that drove it? And how sticky do you think those changes will prove in the eyes of the consumer?
Boris Jordan: I think in Curaleaf's case, it was definitely product quality. We had a massive focus since I became the CEO 1.5 years ago on improving the product quality, also assortment and making sure that we have the right products in the right places at the right time. So between product quality and supply chain as well as being able to be more efficient in the manufacturing process and therefore, bringing down our cost base and the manufacturing of our products, all of those things contributed for us to be able to grow transactions. And I think that with our marketing launches that you're going to start seeing here at the end of the third quarter going to the fourth quarter, a lot of revamps, we think we'll continue to see an improvement in traffic in not only our stores, but also through our marketing efforts, our products in third-party stores where we're wholesaling.
Operator: And this will conclude our question-and-answer session. I would now like to turn the conference back over to Mr. Camilo Lyon for any closing remarks. Please go ahead.
Camilo Russi Lyon: Thank you, everyone, for joining. We will talk to you again in May for our Q1 earnings results. Have a great night.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.