It is no surprise that companies operating in Canada have been venturing aggressively into the cannabis space. With only a few weeks before the product is federally legalized and therefore made commercially viable for most entities, cannabis is promising investors a high return while operating within a well-established market. Upon this backdrop, Trulieve Cannabis (CNSX:TRUL) is therefore poised for growth.
The firm which has been operating in the cannabis sector over the recent past got listed on the Canadian Stock Exchange earlier this week to the jubilation of their shareholders. Through this, it is believed that they will inevitably have a better shot at raising capital both for expansion and growth, a factor which is critical in the current competitive cannabis space. Their goal, outperforming their competition, is driven further by this move.
During their initial trading day, the firm’s share price surged upwards, rising to $12 from $10 by close of day. It further rallied to highs of $19 by the end of the week, presenting shareholders with a 90% capital gain on their investment. However, since Wednesday 3rd September, the share has been steadily on the decline, falling from its previous high to its current price which is just shy of $14. Over this period, moreover, the company has traded over 350,000 shares, setting a new record for themselves.
Readers can review the above price action in the chart below:
This price action as well as high valuation speaks to a company with a long track record and regarded as a buy by investors. However, we have yet to establish what has caused the steep decline in the company’s share price over the past 48 hours and have therefore evaluated the company and come up with the following report.
History of TRUL
Before going into the intricacies, let us first take a look at the firm’s history.
Trulieve Cannabis Corp. is a Florida-based company which operates within the medical cannabis space. Founded in 1940, Trulieve was then known as Schyan Exploration Inc. However, as a result of the company’s morphosis, they changed their name to its current name and begun operating within Florida. Moreover, on 21st September 2018, TRUL US merged with its wholly-owned subsidiary to form the current TRUL Corp which currently trades on the Canadian Securities Exchange.
TRUL has created a positive brand among its clients – through its large database of patients – and harnesses this to sell its branded products which include nasal sprays, capsules, and syringes as well as vaporizers, topical creams and vape cartilages. The firm operates in two ways: through their 17 retail locations (dispensaries) as well as through home deliveries.
Merger and Listing on CSE
As previously stated, TRUL has grown into its current form and shape. Since it first changed its name and strategic objectives, they have grown into one of the largest medical cannabis players within the Florida region, a factor which has played a crucial role in the firm’s valuation.
To put this into perspective, TRUL US is the first and largest licensed medical cannabis company operating in Florida state. The firm has grown significantly and currently serves over 80,000 patients currently in their database. They also have over 450,000 square feet cultivation space which they harness for the production of marijuana and which they expect to add 80,000 square feet to over the course of 2018. Moreover, through their 17 dispensaries, they deliver the product to their patients, allowing for the full vertical integration.
The merger will thus see Trulieve Cannabis Corp be formed and receive Subordinate Voting Shares which are currently being traded on the Canadian Securities Exchange. This milestone is no mean feat for the company and is expected to boost their operating capacity as well as synergies in both the short and long-run. According to the company’s Chief Executive Officer, Kim Rivers:
“Achieving this important milestone of a public listing enhances our ability to expand and serve more patients while allowing investors to participate in our growth…”
Performance Over the Past Quarter
In addition to the listing, the company announced their most recent financial performance information. From the analysis, their performance was nothing short of outstanding. Their revenue position went up from $15.2 million over the first quarter to $23.3 million over the second, a 53% increase while their EBITDA increased from $11.4 million to $14.3 million signaling a 25% increase. Moreover, they currently have over 83,000 unique patients in their database, a statement which speaks to the trust the firm has developed with their clients over the recent past.
The above increases in the firm’s financial performance speak to the continued output which the management, as well as employees, have continued to seek and achieve. This is best underscored by their Chief Executive Officer who further stated:
“The second quarter of 2018 demonstrated our ability to scale our business profitably with growth in dispensaries and patients served… This momentum is continuing in the current quarter and we expect strong results throughout 2018.”
With the continued growth in the number of patients on their database, TRUL continues to ensure their underlying fundamentals remain stable therefore ensuring their financial performance keeps growing. With this being the case, we believe TRUL will continue to grow into the future thus believe it to be a buy stock.
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Disclosure: We have no position in TRUL and have not been compensated for this article.