Rapid Reaction: Can Trulieve Translate Its Winning Model to Markets Outside Florida?

Florida-based Trulieve Cannabis Corp. (CSE: TRUL; OTC: TCNNF) solidified its position as the most profitable U.S. public marijuana company with its fourth-quarter and full-year earnings results, filed after the markets closed Wednesday.

Here are the top takeaways:

Earnings Highlights

  • Trulieve reported fourth-quarter revenue of $35.9 million, up from $28.3 million in the same quarter last year. The sales gains continued to be fueled by the multistate operator’s dominating market position in Florida, where it leads with 65% of all medical marijuana sales from its 26 dispensaries.
  • Full-year revenues grew to $102.8 million – a more than 415% increase year-over-year.
  • Net income for the quarter climbed to $10.7 million, up substantially from the $300,000 posted during the same quarter in 2017. Net income for the full year rang in at $43 million compared with $3.6 million in 2017.
  • Among the most eye-popping figures driving Trulieve’s revenue is its monster year-over-year, same-store sales growth – which spiked more than 340% in 2018, executives said. That figure is tied to 13 dispensaries that were open for the entirety of 2018. The company closed out the year with 22 dispensaries.
  • Across the 13 stores singled out, average daily sales ranged from $9,000 to $16,000, the company said.

Analyst Insights: “That kind of growth is impossible in any other business besides cannabis,” said Robert Fagan, an analyst with GMP Securities in Canada. “It underscores the incredible secular growth opportunity that exists.”

Profit Powerhouse

While Trulieve doesn’t have the massive, multistate reach of its peers, the company’s performance positions it as the most profitable public U.S. cannabis company among those that have reported earnings so far this year.

Consider the landscape:

  • Green Thumb Industries, which has operations in 12 states, reported a Q4 loss of $20.8 million on revenue of $3.1 million.
  • Acreage Holdings, which spans 19 states, reported Q4 revenue of $10.5 million with a quarterly loss of $217.6 million.
  • Curaleaf, which operates in 12 states, posted Q4 revenue of $32 million and a quarterly loss of $16.5 million.

Investor Intelligence Takeaway: While competitors deploy massive amounts of capital to build out their national footprints, Trulieve has differentiated itself by setting out to establish dominance in key markets, including its home state of Florida. The company is also expanding into California and Massachusetts. Trulieve’s ability to compete on a national scale – and win in states beyond Florida – will become a focal point for investors as they continue to size up multistate operators.

“They have a track record going back several quarters now of holding on to their leadership position very well, even when competitors are growing all around them,” Fagan said. “That speaks well for their ability to translate that success in Florida to other states they pursue.”

On the Horizon

Trulieve reaffirmed its fiscal 2019 guidance of $214 million in revenue and gross profit of $145 million – which would be a 68% spike year-over-year.

That forecast doesn’t factor in sales from recently announced acquisitions in California and Massachusetts or the anticipated opening of 14 new recreational dispensaries in Florida.

Trulieve expects to update the outlook as it gains more insight on the timing of those new additions, executives told analysts during a shareholder call Thursday.