Trulieve Cannabis (NYSE:TRLV) reported third-quarter revenue of $230 million, up 4% from both a year earlier and the prior quarter on a medical-only basis, as growth in Georgia and Pennsylvania helped the cannabis operator exceed its guidance.
The company generated net income of $1 million and adjusted earnings before interest, taxes, depreciation and amortization of $89 million, or 39% of revenue. Operating cash flow was $74 million, while free cash flow totaled $45 million after $29 million in capital spending.
Chief Executive Officer Kim Rivers said the results outperformed typical seasonal trends. Trulieve expects fourth-quarter revenue to rise by a low-single-digit percentage from the third quarter, supported by holiday sales and continued strength in Georgia.
Margins Improve as Growth Spending Rises
Third-quarter gross profit rose to $148 million from $139 million a year earlier, and gross margin increased by one percentage point to 64%. Chief Financial Officer Jan Reese attributed the margin performance to economies of scale, operating efficiencies and disciplined promotions.
Excluding nonrecurring items, net income would have been $18 million, or $0.09 per share, Reese said. Selling, general and administrative expenses were $88 million, while adjusted expenses were $78 million.
Trulieve raised its full-year capital spending forecast to approximately $105 million from $95 million to support growth markets. It maintained an expectation for at least $225 million in annual operating cash flow. Rivers said a portion of the additional capital spending is directed toward cultivation and production in Georgia.
The company ended the quarter with $327 million in cash and $289 million in debt. After the quarter ended, it repaid a $65 million mortgage on its cultivation campus in Jefferson County, Florida. Trulieve did not repurchase shares during the quarter under its program authorizing up to the lesser of $50 million or approximately 8.5 million shares.
For the fourth quarter, Reese expects gross margin to be comparable to recent quarters, with some pressure from holiday promotions. She also said noncash purchase accounting adjustments related to the deconsolidation of Harvest are expected to result in a net loss. Harvest is reported as an equity investment rather than a consolidated operation.
Georgia Expansion and Texas Launch
Rivers said Georgia is growing faster than Trulieve initially modeled. Traffic and units sold in the state increased sevenfold during the third quarter as the market expanded and the company introduced products including flower, concentrates and vapes.
Trulieve operates seven dispensaries in Georgia and has received approval for two more, which it expects to open in coming months. The company is also shipping products to nearly 20 independent pharmacies and said more than 30 others are prepared to begin selling its products pending licensure.
Georgia’s registered patient count recently surpassed 60,000, up 80% since the start of the year, Rivers said. Trulieve plans to apply for a 10th dispensary once the count reaches 65,000. The company is adding production capacity in stages into 2027.
In Texas, Trulieve is working to convert a conditional license into a final one. Rivers said the company’s initial production capacity is ready for inspection and that it has locations in each of the state’s 11 required regions. She said final licensure was relatively imminent and that the company was looking to launch in 2027, though openings remain subject to approvals and inspections.
Trulieve is also evaluating acquisitions, from smaller additions to larger single- and multistate operations. Rivers said the company would remain disciplined on price, strategic fit and its ability to manage acquired businesses.
Regulatory Changes and Tax Position
Rivers said the rescheduling of state-licensed medical marijuana to Schedule III allowed Trulieve to register its medical facilities with the Drug Enforcement Administration, remove the burden of Section 280E taxation and list its medical-only business on the New York Stock Exchange in June. She said the company had separated its nonmedical mixed-use operations from that business.
Reese said third-quarter income tax expense did not include a 280E liability. Trulieve has filed amended returns challenging the tax provision’s applicability to its business, and its balance sheet includes an uncertain tax position covering 2019 to the present, including more than $102 million in refunds received from the Internal Revenue Service and associated interest.
Rivers said Trulieve has seen increased availability of marketing and technology vendors and has held discussions with credit card companies. She added that payment providers appear to be looking for updated federal guidance before moving forward.
About Trulieve Cannabis (NYSE:TRLV)
Trulieve Cannabis Corp. is a vertically integrated cannabis company that cultivates, processes and sells medical and adult-use cannabis products. Its offerings include flower, pre-rolls, concentrates, vaporizers, edibles, tinctures, capsules and topical products, sold through retail dispensaries and other approved channels under brands such as Trulieve, Cultivar Collection, Muse, Roll One and Alchemy.
Founded in 2015, Trulieve initially built its business around Florida’s medical cannabis market and later expanded into additional U.S.
