Cannabis company Trulieve CEO Kim Rivers says 2022 revenue target is realistic

Trulieve Inc. CEO Kim Rivers said the cannabis company's low-than-expected revenue target for 2022 reflects its effort to remain realistic as possible as it weighs unknown factors in the coming year.

The company said it expects to generate $1.3 billion to $1.4 billion of revenue in 2022, which is slightly less than the estimate of $1.42 billion in a FactSet survey.

Trulieve is one of the few U.S. cannabis companies to offer estimates for its upcoming financial performance in its quarterly financial updates and it tries to be as data-driven as possible based on current operating conditions, Rivers said.

Rivers told MarketWatchon on Thursday that it was very solid guidance. We don't know what the macroeconomic environment will be and how that will continue. We always look at where we are going to and then put out our best guidance. We think it's better to be thoughtful than to be too exuberant. The company's fourth quarter revenue of $305.3 million was up from the Wall Street estimate of $1 million, a positive note for Trulieve.

Rivers said the stores it acquired from Harvest Health Recreation in its home state of Florida in a $2.1 billion all-stock deal last year and rebranded as Trulieve stores were some of the bright spots in the quarter. The cannabis dispensaries in West Virginia and Arizona were good performers, according to the company.

On the down side, Trulieve faced pressure on its business in Pennsylvania, which pulled approvals for some vape products and required registration of ingredients. Trulieve expects the hurdle to subside in 2022 after it won approval for vape products in the state.

In 2022, Trulieve is looking forward to the future, looking at opportunities in the New York and New Jersey adult-use cannabis markets, as well as building out locations in Georgia and West Virginia. She said that Maryland continues to be discussing adult-use cannabis and voters will likely approve a measure on the ballot in November.

He said there was a concern about a lack of key company-specific catalysts in the year ahead. While historically an under promiser, we would characterize the three-year Ebitda margin outlook as ambitious, especially as med markets such as Florida and Pennsylvania become more competitive. If Florida puts adult-use cannabis in a ballot vote in 2024, Trulieve could potentially benefit, but that remains an unknown.

We still view TRUL market leadership in Florida as a competitive moat as the company leverages its scale in the state and look for management to build its wholesale presence in other key markets i.e. Grey said that Pennsylvania and Arizona would be in 2022. If pricing pressure were to continue in key markets such as Florida and Pennsylvania without the offset of new adult-use sales, we see the risk to longer-term Ebitda margins. The shares of Trulieve went up by 0.5% on Thursday. The stock was down 19.9% in 2022 compared to a decline of 19.2% by AdvisorShares Pure U.S. Cannabis ETF MSOS.