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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2022
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 000-56248
TRULIEVE CANNABIS CORP.
(Exact Name of Registrant as Specified in its Charter)
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British Columbia |
84-2231905 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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6749 Ben Bostic Road Quincy, FL |
32351 |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (850) 480-7955
Securities registered pursuant to Section 12(b) of the Act: None
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
N/A |
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N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 3, 2022, the registrant had 159,645,155 Subordinate Voting Shares and 26,235,054 Multiple Voting Shares (on an as converted basis) outstanding.
Trulieve Cannabis Corp.
Table of Contents
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking words such as “may”, “will”, “would”, “could”, “should”, “believes”, “estimates”, “projects”, “potential”, “expects”, “plans”, “intends”, “anticipates”, “targeted”, “continues”, “forecasts”, “designed”, “goal”, or the negative of those words or other similar or comparable words. Any statements contained in this Quarterly Report on Form 10-Q that are not statements of historical facts may be deemed to be forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, results of operations and future growth prospects. The forward-looking statements contained herein are based on certain key expectations and assumptions, including, but not limited to, with respect to expectations and assumptions concerning receipt and/or maintenance of required licenses and third party consents and the success of our operations, are based on estimates prepared by us using data from publicly available governmental sources, as well as from market research and industry analysis, and on assumptions based on data and knowledge of this industry that we believe to be reasonable. These forward-looking statements are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk Factors” and discussed elsewhere in this Quarterly Report on Form 10-Q and in “Part I, Item 1A – Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC after the date of this Quarterly Report on Form 10-Q.
ii
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Trulieve Cannabis Corp.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except per share data)
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September 30, 2022 |
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December 31, 2021 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
114,468 |
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$ |
230,085 |
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Restricted cash |
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— |
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3,013 |
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Accounts receivable, net |
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11,309 |
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8,563 |
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Inventories, net |
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301,239 |
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209,943 |
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Notes receivable - current portion |
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715 |
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1,530 |
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Prepaid expenses and other current assets |
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62,068 |
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68,145 |
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Assets associated with discontinued operations |
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2,838 |
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3,615 |
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Total current assets |
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492,637 |
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524,894 |
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Property and equipment, net |
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795,506 |
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779,413 |
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Right of use assets - operating, net |
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100,864 |
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|
|
111,723 |
|
Right of use assets - finance, net |
|
|
75,305 |
|
|
|
66,764 |
|
Intangible assets, net |
|
|
1,027,058 |
|
|
|
1,081,240 |
|
Goodwill |
|
|
791,495 |
|
|
|
765,358 |
|
Notes receivable, net |
|
|
12,059 |
|
|
|
12,147 |
|
Other assets |
|
|
21,531 |
|
|
|
17,640 |
|
Long-term assets associated with discontinued operations |
|
|
4,503 |
|
|
|
52,167 |
|
TOTAL ASSETS |
|
$ |
3,320,958 |
|
|
$ |
3,411,346 |
|
LIABILITIES |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
87,773 |
|
|
|
93,801 |
|
Income tax payable |
|
|
4,681 |
|
|
|
28,084 |
|
Deferred revenue |
|
|
6,385 |
|
|
|
7,168 |
|
Notes payable - current portion, net |
|
|
4,823 |
|
|
|
10,052 |
|
Operating lease liabilities - current portion |
|
|
10,779 |
|
|
|
10,020 |
|
Finance lease liabilities - current portion |
|
|
8,719 |
|
|
|
6,185 |
|
Construction finance liabilities - current portion |
|
|
1,137 |
|
|
|
991 |
|
Contingencies |
|
|
25,590 |
|
|
|
13,017 |
|
Liabilities associated with discontinued operations |
|
|
390 |
|
|
|
92 |
|
Total current liabilities |
|
|
150,277 |
|
|
|
169,410 |
|
Long-term liabilities: |
|
|
|
|
|
|
Notes payable |
|
|
7,942 |
|
|
|
6,456 |
|
Private placement notes, net |
|
|
540,301 |
|
|
|
462,929 |
|
Warrant liabilities |
|
|
268 |
|
|
|
2,895 |
|
Operating lease liabilities |
|
|
110,625 |
|
|
|
107,570 |
|
Finance lease liabilities |
|
|
75,011 |
|
|
|
65,244 |
|
Construction finance liabilities |
|
|
182,257 |
|
|
|
175,198 |
|
Deferred tax liabilities |
|
|
220,206 |
|
|
|
241,882 |
|
Other long-term liabilities |
|
|
8,616 |
|
|
|
8,400 |
|
Long-term liabilities associated with discontinued operations |
|
|
14,575 |
|
|
|
23,989 |
|
TOTAL LIABILITIES |
|
|
1,310,078 |
|
|
|
1,263,973 |
|
Commitments and contingencies (see Note 22) |
|
|
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
Common stock, no par value; unlimited shares authorized. 185,880,209 issued and outstanding as of September 30, 2022 and 180,504,172 issued and outstanding as of December 31, 2021. |
|
|
— |
|
|
|
— |
|
Additional paid-in-capital |
|
|
2,041,748 |
|
|
|
2,008,100 |
|
Accumulated (deficit) earnings |
|
|
(31,299 |
) |
|
|
137,721 |
|
Non-controlling interest |
|
|
431 |
|
|
|
1,552 |
|
TOTAL SHAREHOLDERS' EQUITY |
|
|
2,010,880 |
|
|
|
2,147,373 |
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
|
$ |
3,320,958 |
|
|
$ |
3,411,346 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
Trulieve Cannabis Corp.
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited)
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, 2022 |
|
|
September 30, 2021 |
|
|
September 30, 2022 |
|
|
September 30, 2021 |
|
Revenues, net of discounts |
|
$ |
300,793 |
|
|
$ |
224,092 |
|
|
$ |
937,612 |
|
|
$ |
633,037 |
|
Cost of goods sold |
|
|
132,760 |
|
|
|
70,147 |
|
|
|
405,278 |
|
|
|
199,345 |
|
Gross profit |
|
|
168,033 |
|
|
|
153,945 |
|
|
|
532,334 |
|
|
|
433,692 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
75,915 |
|
|
|
51,724 |
|
|
|
224,026 |
|
|
|
142,858 |
|
General and administrative |
|
|
37,646 |
|
|
|
28,223 |
|
|
|
104,840 |
|
|
|
55,874 |
|
Depreciation and amortization |
|
|
30,190 |
|
|
|
7,728 |
|
|
|
88,645 |
|
|
|
19,829 |
|
Impairment and disposal of long-lived assets, net |
|
|
52,035 |
|
|
|
(5 |
) |
|
|
70,151 |
|
|
|
(5 |
) |
Total expenses |
|
|
195,786 |
|
|
|
87,670 |
|
|
|
487,662 |
|
|
|
218,556 |
|
(Loss) Income from operations |
|
|
(27,753 |
) |
|
|
66,275 |
|
|
|
44,672 |
|
|
|
215,136 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(19,264 |
) |
|
|
(6,145 |
) |
|
|
(56,815 |
) |
|
|
(20,693 |
) |
Change in fair value of derivative liabilities - warrants |
|
|
365 |
|
|
|
— |
|
|
|
2,627 |
|
|
|
— |
|
Impairment and disposal of non-operating assets, net |
|
|
(2,604 |
) |
|
|
— |
|
|
|
(6,004 |
) |
|
|
— |
|
Other income (expense), net |
|
|
448 |
|
|
|
89 |
|
|
|
3,016 |
|
|
|
385 |
|
Total other expense |
|
|
(21,055 |
) |
|
|
(6,056 |
) |
|
|
(57,176 |
) |
|
|
(20,308 |
) |
(Loss) Income before provision for income taxes |
|
|
(48,808 |
) |
|
|
60,219 |
|
|
|
(12,504 |
) |
|
|
194,828 |
|
Provision for income taxes |
|
|
28,199 |
|
|
|
41,603 |
|
|
|
116,742 |
|
|
|
105,254 |
|
Net (loss) income from continuing operations and comprehensive (loss) income |
|
|
(77,007 |
) |
|
|
18,616 |
|
|
|
(129,246 |
) |
|
|
89,574 |
|
Net loss from discontinued operations, net of tax benefit of $12,981, $ - , $14,439, and $-, respectively |
|
|
(38,065 |
) |
|
|
— |
|
|
|
(42,329 |
) |
|
|
— |
|
Net (loss) income |
|
|
(115,072 |
) |
|
|
18,616 |
|
|
|
(171,575 |
) |
|
|
89,574 |
|
Less: Net loss and comprehensive loss attributable to non-controlling interest from continuing operations |
|
|
(518 |
) |
|
|
— |
|
|
|
(2,555 |
) |
|
|
— |
|
Net (loss) income and comprehensive (loss) income attributable to common shareholders |
|
$ |
(114,554 |
) |
|
$ |
18,616 |
|
|
$ |
(169,020 |
) |
|
$ |
89,574 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share - Continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.41 |
) |
|
$ |
0.15 |
|
|
$ |
(0.68 |
) |
|
$ |
0.73 |
|
Diluted |
|
$ |
(0.41 |
) |
|
$ |
0.14 |
|
|
$ |
(0.68 |
) |
|
$ |
0.68 |
|
Net loss per share - Discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.20 |
) |
|
|
— |
|
|
$ |
(0.23 |
) |
|
|
— |
|
Weighted average number of common shares used in computing net (loss) income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
188,597,094 |
|
|
|
128,146,298 |
|
|
|
187,549,359 |
|
|
|
122,983,729 |
|
Diluted |
|
|
188,597,094 |
|
|
|
136,909,266 |
|
|
|
187,549,359 |
|
|
|
130,927,083 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Trulieve Cannabis Corp.
Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Super Voting Shares |
|
|
Multiple Voting Shares |
|
|
Subordinate Voting Shares |
|
|
Total Common Shares |
|
|
Additional Paid-in-Capital |
|
|
Accumulated (Deficit) Earnings |
|
|
Non-Controlling Interest |
|
|
Total |
|
Balance, January 1, 2022 (audited) |
|
|
— |
|
|
|
51,916,999 |
|
|
|
128,587,173 |
|
|
|
180,504,172 |
|
|
|
2,008,100 |
|
|
|
137,721 |
|
|
|
1,552 |
|
|
|
2,147,373 |
|
Share-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,564 |
|
|
|
— |
|
|
|
— |
|
|
|
4,564 |
|
Exercise of stock options |
|
|
— |
|
|
|
— |
|
|
|
45,775 |
|
|
|
45,775 |
|
|
|
108 |
|
|
|
— |
|
|
|
— |
|
|
|
108 |
|
Shares issued for cash - warrant exercise |
|
|
— |
|
|
|
— |
|
|
|
1,648 |
|
|
|
1,648 |
|
|
|
22 |
|
|
|
— |
|
|
|
— |
|
|
|
22 |
|
Shares issued under share compensation plans |
|
|
— |
|
|
|
— |
|
|
|
16,257 |
|
|
|
16,257 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
- |
|
Tax withholding related to net share settlements of equity awards |
|
|
— |
|
|
|
— |
|
|
|
(10,005 |
) |
|
|
(10,005 |
) |
|
|
(230 |
) |
|
|
— |
|
|
|
— |
|
|
|
(230 |
) |
Conversion of Multiple Voting to Subordinate Voting Shares |
|
|
— |
|
|
|
(2,699,100 |
) |
|
|
2,699,100 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Shares issued for PurePenn, Pioneer, and Solevo earnouts |
|
|
— |
|
|
|
— |
|
|
|
3,626,295 |
|
|
|
3,626,295 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Distribution |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(50 |
) |
|
|
(50 |
) |
Divestment of variable interest entity |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(111 |
) |
|
|
(111 |
) |
Net loss and comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(31,975 |
) |
|
|
(507 |
) |
|
|
( |