Trulieve Cannabis (OTC:TCNNF) reported its fourth-quarter earnings on March 30. The company’s revenue for the period ending Dec. 31 totaled $305.3 million, for a year-over-year increase of 81%. These latest results include contributions from Harvest Health & Recreation, which officially became a part of Trulieve’s business on Oct. 1, 2021.
Although on a year-over-year basis, the company’s numbers look good, they were less impressive compared to Q3. Trulieve’s gross margin this quarter was just 43% compared to 69% in the previous period. Adjusted EBITDA earnings of $100.9 million were only moderately higher than the $98 million that Trulieve reported in Q3 – despite generating more revenue. And on a pro-forma basis, the top line was actually down. Trulieve and Harvest Health reported a total of $316 million for the period up until September, meaning that this past quarter they combined for less revenue.
Despite becoming larger with the acquisition of Harvest Health, these results don’t suggest Trulieve is a much more profitable company due to the move. Costs will likely come down as the businesses reduce inefficiencies and redundancies due to consolidation. But with more complexity overall and more markets in the mix, it seems likely that Trulieve’s margins won’t likely be as high as they were when its focus was mainly on just Florida.
Overall, Trulieve’s business is more diverse now that it has more exposure outside of just Florida, but for investors, that doesn’t necessarily mean the business itself will be a better buy.
Shares of Trulieve are down a whopping 53% in the past 12 months. And with more competition, generating strong growth numbers may no longer be an automatic.