Trulieve Cannabis Corp. posted a 34% increase in third-quarter revenue amid strength in its overall business, but the company expects 2022 sales to be toward the low end of the projected range ahead of the key holiday period this year.
Trulieve TCNNF, +0.45% TRUL, -0.33% CEO Kim Rivers said the company remains cautious about the final months of 2022, given the uncertain economy.
Trulieve expects year-end revenue close to $1.25 billion, the lower end of its estimated range. In August, the company reduced its guidance for 2022 revenue to a range of $1.25 billion to $1.3 billion, from a range of $1.3 billion to $1.4 billion.
“We’ve said, alongside most cannabis retailers, that this holiday season will be an interesting one and will impact where we land at year’s end,” Rivers told MarketWatch. “We’re guiding at low end given our third-quarter pressures, which were market-specific as well as macroeconomic-influenced.”
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Along with the pot-specific observances on April 20 and July 10, the holidays are a time of brisk activity for Trulieve.
While markets vary from state to state, Trulieve has run into some of the same issues that the legal pot business on the whole has faced, including price pressure and a slower economy. Those have caused consumers to pare back their cannabis purchases.
The Florida-based company also absorbed the impact of the landing of Hurricane Ian in late September, which cost it about $3 million in sales during the third quarter.
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With a number of variables in play, analysts had a hard time pinning down a third-quarter revenue expectation for Trulieve.
“Analyst targets were all over the place, with a pretty wide range,” Rivers said.
Trulieve’s year-over-year increase in third-quarter revenue, to $301 million from $224 million, fell short of the consensus estimate of $307.4 million. The company swung to a net loss of $115 million, or 41 cents a share, from net income of $19 million, or 14 cents a share, in the year-ago quarter. Adjusted net income fell to 2 cents a share from 26 cents a share.
Alliance Global Partners analyst Aaron Grey reiterated a buy rating on Trulieve on the company’s “dominant” position in the Florida market, its strong balance sheet and its presence in Maryland, a state that just voted to approve adult-use sales.
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Trulieve’s $301 million in revenue fell short of Grey’s estimate of $310 million.
Trulieve, which grew sharply on its acquisition of Harvest Health & Recreation, continues to consider acquisitions while focusing on organic growth.
“We’re starting to see more distress in the marketplace, with operators with significant debt coming due, among other potential operational challenges,” Rivers said. “We always like to have our phone lines open [for potential deals].”
Looking ahead, Rivers noted that the Smart & Safe Florida campaign to introduce adult-use cannabis in the Sunshine State has now collected about a quarter of the signatures needed to get a pot referendum on the ballot in an upcoming election.
The Pennsylvania legislature may also take up the issue of adult-use cannabis under newly elected governor Josh Shapiro, who has been a proponent of legalized pot, Rivers said.
“We see a lot of opportunity for expansion in our core business,” she said. “When you think about the future of cannabis … there’s a lot of work to do and a lot of potential to explore the space.”
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Correction: This story was updated to remove incorrect information about the top end of Trulieve’s projected revenue range. The story has been corrected.