Trulieve a risky LONG into earnings

The best part of the story is that Trulieve has entered into three additional state markets. The company has an avenue for growth beyond Florida with a store in both California and Connecticut and plans to enter Massachusetts.
The stock has a market cap of $1.2 billion and a reasonable path to achieve the 2020 EBITDA target of $150 million. A normal stock generating 50% EBITDA growth over the ~$100 million target in 2019 would normally trade at substantially higher multiples than 8x estimates. Even a doubling of the stock wouldn’t bring the valuation multiple above the norms for 50% EBITDA growth.
In addition, the EBITDA margin is expected to dip initially as Trulieve looks to expand beyond the well-established Florida market. The company forecasts a 500-basis point hit to margins in 2020 from the peak level at 43.5% in 2019.
For Q1 reported at the end of May, Trulieve reported impressive 192% revenue growth. The company reached quarterly revenues of $44.5 million and more importantly produced a positive adjusted EBITDA of $19.0 million.
The multi-state operator (MSO) hasn’t made aggressive acquisitions or wild moves into other states leaving a focus on Florida to generate solid margins. Trulieve recently opened the 30th dispensary in the state.
With a focus on Florida, Trulieve achieved Q1 gross margins of 67%. The ability to control operating expenses by not having wild expansion plans into 10 to 15 states has allowed for limited operating expenses of $11.9 million. The company only spends about 27% of revenue on operating expenses which opens up the door for large profits in a growth mode. SOURCE Smarter analysis

Trulieve Cannabis Corp. engages in the provision of medical cannabis products. The firm cultivates and produces its products in-house and distributes to its branded stores, as well as directly to patients via home delivery. Its products include smokable flower, inhalation, oral, sublingual, topical, inter-nasal, and concentrates. The company was founded on September 21, 2018 and is headquartered in Quincy, FL .
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