Trulieve Set To Tackle New Fiscal Year Well Positioned For Growth
2022.04.05 13:51
Challenges are nothing new for stakeholders in the North American cannabis sector. But as a measure of just how big those challenges have been, you need not look any further than how Trulieve Cannabis (OTC:TCNNF) has performed in the last year.
The Florida-based marijuana grower has been recognized as the most profitable marijuana company in the US, but its latest earnings report, which was unveiled last week, included a significant loss. The two features that dominated Trulieve’s recent earnings: an impressive 81% increase in net sales and the absorption of a major acquisition that resulted in a quarterly loss of $71.5 million.
Trulieve Weekly Chart.
The acquisition was the $2.1-billion deal closed early last year that saw the absorption of Harvest Health & Recreation, an Arizona-based vertically integrated cannabis company, which like Trulieve, built its business as a multi-state operator.
The Trulieve purchase of Harvest Health stands as the biggest cannabis deal in the US so far. The combined business gives Trulieve a footprint in 11 states, 22 cultivation and processing facilities and 126 dispensaries, which cater to both the medical and adult recreational markets.
The sheer scope of the takeover deal is what put a significant wrinkle in Trulieve’s financials for the last three-month period. But the filing of the fourth-quarter report also provided a view of the full-year results. And that is where Trulieve showed promise—along with continued growth.
For the full year, sales saw an 80% increase, hitting $938 million. Net income came in at $18 million, which was significantly below the $63 million seen in fiscal 2020. Had these figures not included the Harvest acquisition, earnings would have come in at $123 million.
Said Trulieve CEO Kim Rivers:
“2020 was a phenomenal year for Trulieve, full of monumental achievements, punctuated by the completion of the Harvest acquisition. We delivered another record year, while making substantive progress toward achieving our long-term goals.”
Rivers also offered optimistic guidance for the coming fiscal year. Trulieve is predicting sales to fall somewhere between $1.3 billion and $1.4 billion. If you use the mid-point of that guidance range—$1.35 billion—that represents a 44% increase.
Shares of Trulieve reacted to the latest reporting, going from $20.48 at the close on Mar. 30 to $21.20 at the close last Friday, Apr. 1, a 3.5% gain. Yesterday, the stock was headed for another gain, trading at a high at one point in the afternoon session at $21.42, before dropping off sharply just before the final bell, closing at $20.62, representing a 2.74% loss on the day.
Canadian Cannabis Sector Continues To Grow
The Canadian cannabis sector generated C$11.5 billion (US$9.23 billion) in economic activity in January of this year, according to the latest Gross Domestic Product statistics released last week by Statistics Canada.
This figure includes C$8.5 billion (US$6.8 billion) from the licensed cannabis sector.
This overall figure for January represents a 1.4% increase over the previous month, when C$11.3 billion (US$9.15 billion) was generated by the sector, including C$8.32 billion (US$6.68 billion) from the licensed cannabis sector. The numbers point to the growing licensed activity, as the sector expands.
