Trulieve Cannabis Corp

Good morning, everyone, and welcome to the Trulieve Cannabis Corporation Second Quarter 2026 Financial Results Conference Call. My name is Chris, and I will be your conference operator today. As a reminder, this conference call today is being recorded. I would now like to turn the conference call over to Christine Hersey, Chief Corporate Affairs and Strategy Officer for Trulieve, who will be your moderator for today. You now may begin.

Thank you. Good morning and thank you for joining us. During today's call, Kim Rivers, Chief Executive Officer, and Jan Reese, Chief Financial Officer, will deliver prepared remarks on the financial performance and outlook for Trulieve. Following the prepared remarks, we will open the call to questions. This morning, we reported second quarter 2026 results. A copy of our earnings press release and PowerPoint presentation may be found on the investor relations section of our website www.trueleave.com An archived version of today's conference call will be available on our website later today. As a reminder, statements made during this call that are not historical facts constitute forward-looking statements and these statements are subject to risks, uncertainties, and other factors that could cause our actual results to differ materially from our historical results or from our forecasts including the risks and uncertainties described in the company's filings with the Securities and Exchange Commission, including item 1A, risk factors of the company's most recent annual report on Form 10-K, as well as our periodic quarterly filings. Although the company may voluntarily do so from time to time, it undertakes no commitment to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. During the call, management will also discuss certain financial measures that are not calculated in accordance with the United States generally accepted accounting principles or GAAP. We generally refer to these as non-GAAP financial measures. These measures should not be considered in isolation or as a substitute for Trulieve's financial results prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is available in our earnings press release that is an exhibit to our current report on Form 8K that we furnished to the SEC today and can be found in the investor relations section of our website. Lastly, at times during our prepared remarks or responses to your questions, we may offer metrics to provide greater insight into the dynamics of our business or our financial results. Please be advised that we may or may not continue to provide these additional details in the future. I'll now turn the call over to our CEO, Kim Rivers.

Thank you, Christine. Good morning, everyone, and thank you for joining us today. We are thrilled to report second quarter results for the first time as a company listed on the New York Stock Exchange. For those of you who may be new to Trulieve, we are the largest medical cannabis operator in the U.S., Our mission is to expand access to cannabis while serving customers with high quality products and exceptional experiences. Ten years ago, Trulieve served the first medical cannabis patient in Florida. And over the past decade, we have grown from a single dispensary to 207 medical dispensaries and 3.5 million square feet of production capacity. When we include Trulieve branded adult and medical mixed use dispensaries owned by Harvest, Our branded retail network includes 241 retail locations and over 4 million square feet of production capacity. Last month, Trulieve was named to Times America's Best Companies 2026 list, a prestigious recognition awarded to the top 1,000 companies, highlighting our commitment to employee growth and career development. I am so proud of the team and what we have built together. Since the very beginning, Trulieve has led from the front, pushing for reform. For the past two years, we have actively supported federal reclassification of marijuana. In December, President Trump issued an executive order to support rescheduling, delivering on his campaign promise to address cannabis reform. In April, Attorney General Todd Blanch rescheduled state-licensed medical marijuana to Schedule 3, completing the first meaningful federal reform in over 50 years. In conjunction with state-licensed medical marijuana rescheduling, the Treasury Department confirmed that punitive 280e tax no longer applies to state-licensed medical marijuana operations beginning in 2026. The removal of this tax burden provided an immediate boost to our reported net income and cash flow. At the same time, AG Blanch resumed the broader rescheduling process for marijuana. Hearings concluded last month, and we expect a final order to be issued this year. As part of the final order to reschedule state-licensed medical marijuana, a new process was created for operators to register with the DEA. Truly registered all of its medical-only marijuana dispensaries and production facilities with the DEA, complying with the six-month grandfathering provision in the final order. To date, the DEA has completed inspections at 100% of our dispensaries across Florida, Pennsylvania, and West Virginia. We anticipate facility approvals in the coming weeks. In order to facilitate listing on the New York Stock Exchange, Trulieve segregated the medical-only state-licensed DEA-registered business from the mixed-use states that have both medical and adult-use operations. State operations serving medical and adult-use customers are part of Harvest. Following precedent and as part of the deconsolidation, 10% of the mixed-use business was sold to an independent third-party investor along with operational control. Truly retains 90% of the economic interest in Harvest and will have the option to reconsolidate the Harvest business pending broader rescheduling and NYSE permitting inclusion. Since listing on June 10th, we have conducted non-deal roadshows to meet investors in Chicago, Denver, New York, Montreal, and Toronto. We introduced Truly to a host of institutional investors who are new to the cannabis space. Over time, we expect to realize greater stability in our shareholder base, higher liquidity, We plan to commemorate our listing at a closing bell ceremony at the NYSE on August 18th, marking another milestone as the first U.S. cannabis company to ring the bell. We believe uplisting to the NYSE, re-domiciling in the U.S., and removal of the punitive 280e tax burden will lower our cost of capital. While the shift in federal policy is historic, I'm equally excited about three significant near-term growth opportunities. First, in Georgia, program changes have created an unlock for increased distribution that we are executing on now. Second, in Texas, where we are in the process of converting our conditional license to final, we have the opportunity to serve the biggest medical market since Florida. and third, across our markets, we have a targeted strategy to acquire new customers currently served by the intoxicating hemp market as the federal ban takes effect. Overall, Trulieve is ready to further solidify our leadership position during this incredibly exciting time for the industry. Our core business continues to outperform, generating industry-leading margins and strong cash flow, providing the flexibility to make strategic investments and growth initiatives. Turning now to our second quarter results. Please note, reported results for this quarter include the combined business until the deconsolidation transaction on June 3rd, and then the medical-only business for the remainder of June. Second quarter revenue of $271 million was in line with guidance. For the medical-only business, revenue increased 4% sequentially to $222 million. Second quarter gross margin of 60% reflects operational efficiencies, low production costs, and our disciplined approach to promotional activity. For the medical-only business, second quarter growth margin was 63%. Adjusted EBITDA of $98 million, or 36% margin, was driven by expense control in our core business. During the quarter, we generated $53 million in operating cash flow, which contributed to our quarter-end cash balance of $325 million. Second quarter retail results were in line with positive seasonal trends, including the 4-20 holiday. In medical-only markets, traffic increased 6%, pressured by a slight sequential decline in average basket. Units were up 8%, underscoring strong demand for cannabis. In Florida, we sold 56% more flour per store than the state average across 169 stores, totaling 680,000 ounces. We sold 1.5 billion milligrams of oil, more than two times the next highest competitor. Patient growth in Florida, Georgia, and Pennsylvania has accelerated recently, further highlighting cannabis demand. Customer preferences for value, mid, and premium tier units sold remain consistent from the first quarter. During the third quarter, we expect growth in Georgia and Pennsylvania to offset typical summer pressure in Florida. We expect momentum to fuel continued growth through year end. Our investment in Harvest performed well in the second quarter, with revenue growth and margin expansion compared to the first quarter, driven largely by growth in Ohio. Turning now to our strategic objectives for 2026. We have made meaningful progress in these four areas. One, expanding access to cannabis. Two, investing in growth initiatives. Three, growing our loyal customer base. And four, elevating our branded product portfolio. I'll begin with expanding access to cannabis, which is a critical part of our mission. State-licensed medical marijuana has been reclassified to Schedule 3, representing a major win for patients, caregivers, and physicians. Acknowledging the medical value of cannabis reduces stigma, eases barriers to research, and sets the stage for further reform. We remain supportive of broader rescheduling and expect a final order this year. We expect momentum to continue with safe banking, updated FinCEN guidance, and Treasury guidance on 280e tax treatment, including potential retroactive application for state-licensed medical marijuana operators. These measures can expand access to banking and service providers, reducing friction and costs in day-to-day operations. While cannabis reform continues to come to fruition, we are ramping investments in meaningful growth opportunities in both Georgia and Texas. Following recent program changes in Georgia and federal reclassification of state-licensed medical marijuana, Trulieve has significant growth potential in both the independent pharmacy channel and our own dispensaries. Independent pharmacies in Georgia are eligible to register with the state and with the DEA to dispense approved medical marijuana products to registered patients. In June, we began supplying licensed pharmacies with medical marijuana products and are now shipping to almost 20 pharmacies. We believe this market opportunity will expand over time as more than 125 independent pharmacies have previously expressed interest in carrying medical marijuana products. Our team is meeting with pharmacy owners across Georgia to discuss medical cannabis and share information on how to apply for state and DEA licenses. Alongside pharmacy distribution, the Georgia program has six licensed operators for cultivation and retail. As one of only two Tier 1 license holders, Trulieve opened the first medical dispensary in April 2023. At that time, the program was limited to low THC products for patients with severe and end-stage qualifying conditions. In May, the governor signed a new law that expands the program. As of July 1st, Georgia's medical marijuana program removes the THC cap, includes new qualifying conditions such as HIV, IBS, and lupus, and allows for new products such as vape and inhalable flower. In the first two weeks of July, traffic at our dispensaries tripled. Due to high demand, we sold out of flower. However, we expect to have flower back in stock in the coming weeks. Cultivation capacity is ongoing. and we'll ramp in stages throughout the end of the year and into 2027. While flower production is ramping, we have a variety of new concentrate and vape products rolling out in August and September. Today, we have six open dispensaries and are on track to open our seventh store in Dunwoody this fall. The program allows us to open additional dispensaries as the patient count increases. Patient enrollment in Georgia is accelerating with growth up 38% this year and surpassed 45,000 this week. Triggering eligibility for an eighth dispensary, which could open as soon as early 2027. While Georgia presents a meaningful growth opportunity, Texas has tremendous near-term growth potential. We believe Texas represents the largest medical cannabis opportunity in the U.S. Historically, the Texas Compassionate Youth Program, or TCUP Medical Marijuana Program, was limited in scope and size. The program had only three licensed operators and strict rules that made it very difficult for any of the three operators to achieve scale, such as requiring all products to be removed from each dispensary and warehoused every night. Last September, a new law passed that revamped the program, making several critical improvements. Qualifying conditions were expanded to include chronic pain, Crohn's disease, traumatic brain injuries, and terminal illnesses. Initial patient consultations with physicians can be conducted via telehealth, providing a convenient way for patients to speak with a physician to determine which products and dosing may be appropriate. In addition, rules were updated to allow products to remain in dispensaries without warehousing overnight. Permissible products were expanded to include new form factors such as vapes, lotions, and patches. Finally, the number of operators is increasing from 3 to 15 with the award of 12 new licenses. In December, Trulieve was awarded a conditional license for the Teacup Medical Marijuana Program. We are working to convert the conditional award to a final license. The TCUT program allows each license holder to build vertically integrated operations with unlimited production capacity on a continuous site to support unlimited retail as long as the operator has one retail location in each of the 11 regions across Texas. Construction of initial production capacity is complete and we have a robust retail pipeline of stores covering all regions. We plan to scale our production capacity and retail network modularly as the patient count increases over time. This year, the program has grown by 16% to over 157,000 patients, representing less than 0.5% of the population in Texas. For context, established medical programs in Florida and Pennsylvania have 4% population penetration, which for Texas would be about 1.3 million patients or 8.5 times the current market size. The setup in Texas strongly favors to lead the approach to market penetration through scaled operations to sell branded products through branded retail. Our proven track record of developing vertically integrated medical markets, such as Florida, combined with our strong balance sheet provide us with meaningful competitive advantages in Texas. We believe the Texas market can grow more quickly than Florida did, and we look forward to contributing to the success of the TCAP program. Alongside expansion in Georgia and Texas, we are investing in our retail network with both new locations and store refresh or remodels to support patient growth while maintaining brand standards. Year-to-date, we have opened eight new dispensaries in Florida and refreshed or remodeled 24 locations across our markets. On top of investments in organic growth, we are actively evaluating acquisition opportunities in new and existing markets, ranging from tuck-in assets to large single and multi-state operations. We evaluate potential targets using stringent criteria, including price, strategic fit, quality of assets, and market framework. In addition, we are investing in technology. Earlier this year, we launched Project Hyper, an initiative focused on hyper-personalization of customer messaging. Through generative AI, we are automating creative production at scale, enhancing how we personalize and orchestrate customer communications, and modernizing our digital commerce platforms to deliver a more seamless experience across web and mobile. Project Hyper remains on track, and we expect to begin realizing efficiency and speed to market benefits by year end. with additional capabilities rolling out ahead of our targeted completion date of March 2027. As the cannabis industry continues to evolve, creating deeper and lasting connections with our customers is critical to long-term success. Customer engagement through digital and real-life interaction are at the core of our strategy to grow our loyal customer base. Local community events, physician engagement, and paid media help Trulieve establish and maintain reciprocal relationships with patients, caregivers, and physicians. Across our branded retail network, we conduct over 100 community and visitor engagement events per month, partnering with a wide variety of nonprofit organizations to raise awareness for cannabis. Last year, we launched our Florida mobile app, giving patients a more convenient way to browse products, access deals and rewards, and place orders. Adoption continues to exceed expectations, with more than 200,000 downloads since launch. In the second quarter alone, the app drove 30% of all online orders, with increased average basket size and order frequency. Given the success we've seen in Florida, we plan to launch the app in Georgia later this year with additional markets expected to follow in 2027. Across our branded retail platform, our rewards program added 80,000 members in the second quarter, surpassing 1.1 million members. Rewards members continue to spend on average 2.2 times more than non-reward members, comprising 80% of second quarter transactions. In May, we introduced program tiers in Florida, enabling greater rewards for customers who spend more, including exclusive offers, products, and events. We plan to add reward tiers in additional markets this year. Customer retention is one of the key metrics we use to measure the depth and quality of our customer connections. For medical-only markets, customer retention held steady at 78%. We sold almost 14 million branded product units, with Modern Flower and Roll1 comprising almost half of branded units sold. The Roll1 clutch all-in-one base continues to gain momentum with over 35% growth in units sold. We will continue to identify white space in our branded product portfolio and the markets we serve as we develop and launch innovative new products. Overall, we have made tremendous progress on all of our objectives. Our team is highly engaged in carrying the momentum forward into the back half of the year. With that, I'd like to turn the call over to our CFO, Jan Reese. Please go ahead.