Trulieve Cannabis Corp’s Share Price Could Triple After Blockbuster Acquisition

Trulieve Cannabis Corp Now the Largest, Most Profitable U.S. Pot Company

Merger-and-acquisition activity in the cannabis industry is expected to ramp up in 2022, but 2021 has already seen its fair share of big deals.

Most notably, Trulieve Cannabis Corp (CNSX:TRUL, OTCMKTS:TCNNF), a Florida-based multistate pot operator, recently completed the acquisition of Harvest Health & Recreation Inc. (Source: “Trulieve Completes Acquisition of Harvest Health & Recreation Inc. Creating the Largest and Most Profitable U.S. Cannabis Operator,” Cision, October 1, 2021.)

The $2.0-billion+ deal created the biggest, most profitable, multistate pot operator in the world’s largest cannabis market.

Trulieve stock hasn’t seen much of a bounce since the announcement, however. It’s currently hovering at a support level near $25.00. While TCNNF stock is only up by 9.5% year-over-year, it’s down by 18.5% year-to-date.

The recent price movement has put Trulieve stock in an excellent trading range. Even Wall Street agrees.

Of the analysts providing a 12-month share-price forecast for Trulieve Cannabis Corp, their average target is $65.28, with a high estimate of $81.00. That points to potential gains from TCNNF stock of 154% and 215%, respectively.

Chart courtesy of StockCharts.com

About TCNNF Stock

There’s Trulieve before its acquisition of Harvest Health and Trulieve after the acquisition.

Before the acquisition, Trulieve Cannabis Corp was known as the first and leading medical cannabis company in the state of Florida, with more than 2.0 million square feet of indoor facilities and greenhouse cultivation space across the Sunshine State. (Source: “Overview,” Trulieve Cannabis Corp, last accessed November 4, 2021.)

The vertically integrated seed-to-sale pot company operates more than 100 dispensaries in Florida, cornering more than 50% of the Florida marijuana market.

In total, Trulieve has more than 150 dispensaries in 11 states and three strategic regional hubs, with market-leading positions in Arizona, Florida, and Pennsylvania.

Its acquisition of Harvest Health & Recreation Inc added Harvest Health’s successful line of brands across multiple form factors to Trulieve’s portfolio of in-house brands and national brand partners. The merged company has more than 900 stock-keeping units (SKUs).

With the acquisition, Trulieve Cannabis Corp became a lot bigger. It’s now the largest U.S. marijuana operator on a combined retail and cultivation footprint basis.

Another benefit of the acquisition is that Trulieve Cannabis Corp’s cash position increased to $289.0 million, while its cash equivalents grew to $71.0 million. (Source: Cision, October 1, 2021, op. cit.)

Trulieve recently announced a $350.0-million debt financing, and Harvest Health brought in proceeds of $55.0 million from the sale of its Florida license.

Record Q2 Results

For the second quarter ended June 30, Trulieve announced that its revenue increased by 78% year-over-year and 11% sequentially to $215.1 million. (Source: “Trulieve Reports Record Second Quarter 2021 Earnings and Expansion Into New Markets,” Trulieve Cannabis Corp, August 12, 2021.)

Its net income rallied by 114% year-over-year and 36% sequentially to $40.9 million, from $18.9 million in the same period last year and $30.1 million in the first quarter of 2021. This represents the company’s 11th consecutive quarter of profitability.

Trulieve Cannabis Corp generated second-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $94.9 million. That’s a 55% increase over the second-quarter 2020 adjusted EBITDA of $61.4 million and a four percent increase over the first-quarter 2021 adjusted EBITDA of $90.8 million.

Trulieve Cannabis Corp also attained second-quarter 2021 gross profits of $144.5 million, a 60% increase over the $90.5 million recorded for the same prior-year period and a seven percent increase over the $135.3 million recorded for the preceding quarter.

Other recent business highlights are that Trulieve:

• Opened three new locations in Miami
• Received notice of intent of a Class 1 production license in Georgia, becoming one of two companies to receive the largest pot licenses awarded and further solidifying its southeastern hub
• Completed its acquisition of Keystone Shops in Philadelphia, bringing its dispensary count in Pennsylvania to seven
• Commenced operations in West Virginia as the first medical cannabis company to start planting crops in the state

Kim Rivers, Trulieve Cannabis Corp’s CEO, commented, “Trulieve has changed considerably since our first sale in Florida in 2016, and we are only in the beginning stages of what we know we can achieve as a company.” (Source: Ibid.)

She continued, “We believe the next chapter, including the anticipated closing of the Harvest acquisition, will only continue to build on the strong foundations we have worked tirelessly to establish.” 

Will Trulieve Cannabis Corp announce its 12th consecutive quarter of profitability? Investors can find out when it announces its third-quarter results before the markets open on November 15.

Analyst Take

The broader cannabis stock market has been retreating over the last number of months. While many marijuana stocks deserve the reset, for Trulieve stock, the pullback has simply put it in a better trading range.

Trulieve Cannabis Corp’s closing of its acquisition of Harvest Health & Recreation Inc marks a transformational milestone in the company’s history and positions it as a leading cannabis operator in the U.S.