Executive Summary

Q2 2025 revenue was $86.35M, down 1% QoQ and 31% YoY; GAAP gross margin compressed to 19.9% on inventory obsolescence and deliberate inventory reduction, while adjusted EBITDA was $8.48M with margin up 30 bps QoQ to 9.8% .
Versus S&P Global consensus, revenue beat (actual $86.35M vs $80.10M estimate), but EPS and EBITDA missed (GAAP EPS -$0.16 vs -$0.03 estimate; EBITDA -$7.93M vs $8.40M estimate). Estimates marked with asterisks are from S&P Global and subject to their methodology. Values retrieved from S&P Global.*
Balance sheet and footprint actions advanced: senior note maturities extended to at least Dec 2028, Florida license sale closed ($5M), two California store sales closed, and a post-quarter agreement to sell three Pennsylvania dispensaries (~$10M) while pivoting to wholesale in that state .
Management highlighted ongoing SKU rationalization and pricing architecture work; wholesale revenue rose 16% QoQ to $18.39M (21% of total). Cash ended at $15.46M (from $18.94M in Q1). Capex was $2M; 2025 capex expected to average $2–3M per quarter .
Stock fell ~8.8% post-earnings; catalysts ahead include adult-use launches in Delaware (began Aug 1) and additional store openings in Ohio and Virginia .

What Went Well and What Went Wrong

What Went Well
- Adjusted EBITDA margin expanded 30 bps QoQ to 9.8% despite revenue down 1% QoQ, reflecting cost take-out and footprint simplification .
- Wholesale momentum: revenue up 16% QoQ to $18.39M, increasing mix to ~21% of total; management sees continued benefit from SKU rationalization and pricing work .
- Balance sheet progress: debt maturity extension to Dec 2028 (option to 2029) closed May 29; post-quarter, agreed sale of PA dispensaries (~$10M) with supply agreement to preserve optionality for adult-use .
What Went Wrong
- GAAP gross margin compressed sharply to 19.9% (vs 38.4% in Q2’24) on inventory obsolescence (primarily NY) and inventory reduction across eight markets; adjusted gross margin fell to 33% from 36% in Q1 .
- GAAP EBITDA was negative (-$7.93M) and GAAP EPS was -$0.16, reflecting elevated taxes (280E), interest expense, and losses on disposal groups amid restructuring .
- Liquidity declined: cash ended $15.46M (from $18.94M in Q1); retail count fell to 53 after two CA store sales, with ongoing divestitures still creating near-term disruption .

Management quote: “We made critical progress in managing the balance sheet…extending the maturity of all senior debt obligations to at least December 2028…[and] brought cash onto the balance sheet…closing on the sale of our remaining license in Florida and 2 retail locations in California.” — CEO David Hart .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($, Millions)	$96.138	$87.440	$86.350
GAAP Gross Profit ($, Millions)	$33.898	$29.285	$17.153
GAAP Gross Margin (%)	35.3%	—	19.9%
Adjusted Gross Margin (%)	—	35.7%	33%
Adjusted EBITDA ($, Millions)	$7.054	$8.293	$8.483
Adjusted EBITDA Margin (%)	—	9.5%	9.8%
GAAP EPS (Diluted)	$(0.12)	$(0.07)	$(0.16)
Cash & Equivalents ($, Millions)	$33.607	$18.936	$15.456
Capex ($, Millions)	$1.7	$2.0	$2.0

Notes: Q1 GAAP gross margin not explicitly disclosed in press materials; adjusted gross margin provided by company. Adjusted metrics per company definition .

Segment/Channel Revenue

Channel	Q2 2024	Q2 2025
Dispensary ($, Millions)	$106.093	$67.960
Cultivation & Wholesale ($, Millions)	$19.097	$18.390
Total ($, Millions)	$125.190	$86.350

Key KPIs

KPI	Q1 2025	Q2 2025
Wholesale Mix of Revenue	~18%	~21%
Active Retail Count (period-end)	55 (then 53 post-MSAs)	53
Top 5 Markets by Revenue	CO, MD, NJ, OH, VA	CO, MD, NJ, OH, VA
Cash ($, Millions)	$18.936	$15.456

Vs. Estimates (S&P Global)

Metric (Q2 2025)	Consensus*	Actual	Result
Revenue ($)	$80.10M*	$86.35M	Bold beat
Primary EPS	-$0.029*	-$0.16	Bold miss
EBITDA ($)	$8.40M*	-$7.93M	Bold miss

Values retrieved from S&P Global.*

Why the quarter looked this way: Management cited inventory obsolescence (primarily NY) and inventory reduction initiatives as drivers of gross margin pressure; adjusted EBITDA improved sequentially on cost reductions and footprint optimization .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Capital Expenditure	FY 2025 (per quarter)	$2–$3M per quarter (Q1 guide)	$2–$3M per quarter (Q2 reiterated)	Maintained
Store Openings	2025	1 Virginia, 3 Ohio (1 Ohio in Q3)	1 Virginia, 3 Ohio (1 Ohio in Q3)	Maintained
Balance Sheet—Senior Notes	N/A	Shareholder approval pending (Apr 29)	Maturities extended to Dec 2028 (option to 2029) closed May 29	Finalized/Executed
Pennsylvania Strategy	Post-Q2	N/A	Sell 3 PA dispensaries (~$10M) and pivot to wholesale; retain adult-use optionality	New disclosure
Revenue/Margins/EPS	2025	Not provided	Not provided	N/A

Company did not provide explicit revenue, margin or EPS guidance.

Earnings Call Themes & Trends

Topic	Q4 2024 (prior 2)	Q1 2025 (prior 1)	Q2 2025 (current)	Trend
Balance Sheet/Debt	Announced agreement to extend maturities; 70% noteholder support	Noteholders approved arrangement; court approval pending	Extension closed May 29; maturities to Dec 2028/option 2029	Positive completion
Footprint Optimization	Divested FL, VA (East), AZ; retail count fell to 59	Exited DC, sold 1 CA, closed 3 CO stores; retail 55	Sold 2 CA stores; PA dispo sale announced; pivot to wholesale	Continued rationalization
Wholesale Growth	FY24 wholesale +11% YoY; Q4 mix 16%	Q1 wholesale +3.5% QoQ; mix 18%	Q2 wholesale +16% QoQ; mix 21%	Improving mix
Pricing/SKU Rationalization	Identified supply chain/pricing actions	SKU and pricing architecture in focus; retail GM up QoQ	Continued SKU rationalization; adjusted GM down on obsolescence	Mixed (margin pressure)
Adult-Use Catalysts	Anticipated OH/DE catalysts in 2025	Prepared for DE adult-use; OH/VA openings planned	DE adult-use launched Aug 1; OH/VA openings upcoming	Executing
Regulatory/280E	—	—	Elevated tax expense; 280E headwind reflected in results (MD&A)	Continuing headwind

Call references: management reiterated 10-market focus post divestitures and highlighted 30 bps adjusted EBITDA margin improvement; Delaware AU launch cited as a win .

Management Commentary

Strategic focus: “We will continue to take costs out of the business and right-size operations, while we enhance our product offering and improve pricing architecture…We are thrilled to have launched adult use at all three of our locations in Delaware on August 1…” — CEO David Hart .
Footprint pivot: Announced sale of 3 PA dispensaries (~$10M) with shift to wholesale and retained exposure for adult-use transition .
Liquidity/capex discipline: Ended Q2 with $15.5M cash; capex $2M in Q2 with $2–$3M per quarter expected for 2025 .

Q&A Highlights

Portfolio focus: “Once we complete the Florida, California and Illinois market exits, as well as the wholesale shift in Pennsylvania, [we] will be active in 10 markets…” — Management on footprint simplification .
Profitability levers: Management emphasized a ~30 bps sequential uptick in adjusted EBITDA margin and reiterated cost actions and pricing/SKU work as the core drivers .
Near-term catalysts: Team highlighted Delaware adult-use launch, plus planned Ohio and Virginia store openings in 2H’25 .

Estimates Context

Q2 2025 revenue beat S&P Global consensus ($86.35M actual vs $80.10M estimate). Values retrieved from S&P Global.*
EPS missed consensus (-$0.16 actual vs -$0.029 estimate) amid lower GAAP gross margin and higher taxes/interest during restructuring. Values retrieved from S&P Global.*
EBITDA missed consensus (GAAP EBITDA -$7.93M actual vs $8.40M estimate) while adjusted EBITDA was positive ($8.48M), underscoring definition differences between GAAP EBITDA and company-adjusted EBITDA. Values retrieved from S&P Global.*

Where estimates may adjust: Street models likely lift revenue (on the beat) but trim GAAP profitability to reflect lower gross margin (obsolescence) and tax/interest burden; adjusted EBITDA trajectory remains modestly positive given cost controls .

Key Takeaways for Investors

Mix shift and cost actions are working (sequential adjusted EBITDA margin expansion), but GAAP profitability remains pressured by inventory clean-up, interest expense, and 280E taxes; watch margin normalization as inventory right-sizing completes .
Wholesale is emerging as a growth/mix lever (21% mix; +16% QoQ), with PA pivot to wholesale and DE adult-use launch as incremental catalysts .
Balance sheet risk moderated with debt maturity extension to 2028/29; continued asset sales (PA) provide liquidity but reduce retail scale near term .
Liquidity is tight (cash $15.46M); execution on divestitures and restrained capex ($2–$3M/quarter) are critical to bridge to catalysts (OH/VA openings, DE AU scale-up) .
Trading setup: Revenue beat vs. consensus but EPS/EBITDA misses and margin compression drove negative stock reaction (~-8.8%); catalysts in 2H’25 (DE AU ramp, OH/VA openings) could support sentiment if gross margin stabilizes and adjusted EBITDA continues to expand .

References

Q2 2025 8-K 2.02 and press release:
Q2 2025 10-Q: statements and MD&A:
Q1 2025 8-K 2.02 and press release:
Q4 2024 8-K and press release:
Other relevant press releases during Q2: debt arrangement update (court approval):
Earnings call/transcript links: Investing.com and Seeking Alpha (content/gist):

S&P Global estimates disclaimer: Consensus figures in the Estimates sections are sourced from S&P Global and marked with asterisks; definitions/methodologies may differ from company-reported non-GAAP metrics.

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