Trulieve is an upstate cannabis dispensary. After a difficult first year, the company recorded “strong” Q2 2018 financials that included $11M in sales and record cash balance of $48M. However, it warned that its accounting results are inconsistent because of weak internal controls over certain areas including inventory management and work orders.
Trulieve is a company that provides medical cannabis to patients in Florida. Trulieve has reported strong financials for the second quarter of 2018, with sales increasing by more than 20% and gross margins also increasing. However, the company admitted that it had an accounting weakness which caused its stock price to drop. Read more in detail here: tcnnf stock.
Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) reported its results for the quarter ended September 30, 2021, reporting sales of $224.1 million, up 64 percent year over year and $2 million more than expected. Trulieve also earned $18.6 million in net income, despite $16.4 million in one-time compensation and transaction expenses mostly related to the Harvest purchase, according to the business.
Trulieve reported profits of $0.15 per share on a basic basis and $0.14 per share on a diluted basis. This fell short of the $0.24 average analyst expectation on Yahoo Finance.
“Our third-quarter results demonstrate our dedication to operational excellence and achieving our stated objectives,” said Trulieve CEO Kim Rivers. “We are staying true to our promise of pursuing profitable growth while implementing our hub strategy.” Harvest was acquired in less than five months, and our team met growth objectives in numerous areas at the same time. We’re looking forward to keeping the momentum moving into 2022 as we completely integrate Harvest while expanding size and depth in our key markets.”
Money Flows
Trulieve made improvements to its balance sheets throughout the quarter. The business completed a 350 million private offering of 8% senior secured notes due October 2026, allowing it to pay down $270.1 million in high-cost, short-term Harvest debt, including debt due following a change in management. Additionally, Trulieve paid down $18 million in notes due. For the nine months ended September 30, 2021, the firm generated a positive cash flow from operations of $75.1 million. As of September 30, 2021, Trulieve has $213.6 million in cash.
Weaknesses in Accounting Have Been Found
In its 10-Q, Trulieve also revealed that its management team discovered irregularities in the accounting for leases and asset purchases. “Management investigated these errors and determined that the root cause was due to the control environment component of internal control, as the company did not have a sufficient complement of personnel with the appropriate level of knowledge, experience, and training in certain areas critical to financial reporting.” Even though a major misstatement in the company’s financial statements was not found during 2021, it was concluded that there was a reasonable chance that a material misstatement in the company’s financial statements would not have been avoided or recognized on a timely basis.”
“We have taken actions to remediate the material weakness in our internal control over financial reporting,” the note continued, “including adding additional positions such as 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 expert assistance in certain areas important to financial reporting.”
News from the Dispensary
The enormous cannabis corporation had a very busy quarter. With new retail sites in Morgantown and Weston, Trulieve welcomed the inauguration of its first medical dispensaries in West Virginia. It also built three Trulieve stores in Florida and converted 14 previous Harvest dispensaries to Trulieve branded retail outlets. In the United States, the corporation claims to have 155 retail dispensaries and 3.5 million square feet of growing and processing capacity.
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