Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) announced its results for the quarter ended September 30, 2021, as revenue increased 64% year-over-year to $224.1 million, beating estimates by $2 million. Trulieve also delivered a net income of $18.6 million, although the company did note that it was impacted by $16.4 million of one-time compensation and transaction costs primarily associated with the Harvest acquisition.
Trulieve reported earnings with a basic net income of $0.15 per share and diluted net income of $0.14 per share. This missed the Yahoo Finance average analyst estimates for earnings of $0.24.
“Our third-quarter results underscore our commitment to operational excellence and adherence to our stated goals,” said Kim Rivers, Trulieve CEO. “We continue to deliver on our promise to pursue profitable growth while executing on our hub strategy. Our team closed the Harvest acquisition in under five months while simultaneously meeting expansion targets in several markets. We are excited to keep the momentum going into 2022 as we fully integrate Harvest while further building scale and depth in our cornerstone markets.”
During the quarter, Trulieve made improvements to its balance sheets. The company closed on a 350 million private placement of 8% senior secured notes due October 2026, this allowed the company to retire $270.1 million of high-cost and short-term Harvest debt, including debt due upon a change in control. In addition to that, Trulieve retired $18 million in notes payable. The company has had a positive cash flow from operations of $75.1 million for the nine months ending September 30, 2021. Trulieve had cash of $213.6 million as of September 30, 2021.
Accounting Weaknesses Identified
Trulieve also disclosed in its 10Q that the management team identified errors in the accounting for leases and asset acquisitions. “Management reviewed these errors identifying the root cause due to the control environment component of internal control as the company did not maintain a sufficient complement of personnel with the appropriate level of knowledge, experience, and training in certain areas important to financial reporting. During 2021, even though a material misstatement was not identified in the company’s financial statements, it was determined that there was a reasonable possibility that a material misstatement in the company’s financial statements would not have been prevented or detected on a timely basis.”
The note went on to say, “We have taken actions toward the remediation of the material weakness in our internal control over financial reporting including adding additional positions including Chief Accounting Officer, Director of Financial Reporting, Assistant Controller, Director of Shared Services, Northeast Controller, and Tax Director to provide enhanced oversight and technical experience in certain areas important to financial reporting; engaging third party experts to assist management in assessing current processes and designing improved processes and controls for the consolidated Company; adding a Chief Technology Officer to enhance the information technology environment.”
It was a super busy quarter for the massive cannabis company. Trulieve celebrated the opening of its first medical dispensaries in West Virginia with new retail locations in Morgantown and Weston. It also converted 14 former Harvest dispensaries to the Trulieve branded retail locations and opened three Trulieve locations in Florida. The company said it currently operates 155 retail dispensaries and 3.5 million square feet of cultivation and processing capacity in the United States.