Executive Summary

Q1 2023 revenue was $19.1M, up 22.1% YoY and essentially flat QoQ versus Q4 2022 ($19.0M); gross margin expanded to 49.9% (44.7% in Q4 2022) on cost controls and stabilization after winding down Arizona operations .
Second consecutive quarter of positive operating income ($0.37M in Q1 vs $0.70M in Q4), with SG&A down versus Q4 (Q1: $7.16M vs Q4: $7.43M) as reorganization and decentralization efforts took hold .
Core-market retail strength (MN and MD) and improved cultivation mix (higher “A” flower) supported margins; core-market KPIs show higher harvest pounds and improved “A” flower mix YoY .
Liquidity actions: amended credit facility (maturity extension, amortization removed) and closed initial $2.0M tranche of a new $10M convertible loan (12% combined cash/PIK, $0.145 conversion), enhancing near-term flexibility ahead of adult-use transitions in key markets .

What Went Well and What Went Wrong

What Went Well

Positive operating income for the second straight quarter, driven by cost controls and operational improvements; gross margin stabilized post-Arizona wind-down: “second consecutive quarter of positive income from operations” .
Core-market execution: management emphasized a product-driven, decentralized culture; SG&A declined sequentially versus Q4; improved harvest yields and higher mix of premium “A” flower aided margins .
Balance sheet flexibility: amended senior credit facility to remove amortization and extend maturity to 4/30/2024 with performance-based extensions; accessed initial $2.0M on a new $10M convertible facility to support execution plans .

What Went Wrong

New York revenue softness persisted (retail -17% YoY) amid market/regulatory challenges; state-level retail revenue declined YoY despite wholesale growth .
Interest expense remained a significant drag (Q1 net loss -$8.41M; interest expense -$7.13M), limiting translation of operating improvements to bottom line .
No formal quantitative guidance issued; continued litigation over the terminated Verano transaction and financing constraints represent ongoing overhangs and execution risks .

Financial Results

Headline P&L vs prior two quarters (oldest → newest)

Metric	Q3 2022	Q4 2022	Q1 2023
Revenue ($M)	$18.85	$19.04	$19.09
Gross Profit ($M)	$9.54	$8.52	$9.52
Gross Margin %	50.6%	44.7%	49.9%
SG&A ($M)	$8.49	$7.43	$7.16
Operating Income ($M)	($0.19)	$0.70	$0.37
EBITDA (non-GAAP, $M)	($1.23)	$0.83	$1.44
Net Income ($M)	($8.42)	($13.28)	($8.41)
EPS ($)	($0.07)	($0.10)	($0.07)

Notes: EBITDA presented as disclosed non-GAAP reconciliations .

Segment/Geography Detail (state revenue – retail and wholesale)

State/Channel	Q1 2022	Q4 2022	Q1 2023
MN Retail ($)	$6,664,088	$10,622,384	$10,718,916
NY Retail ($)	$2,858,893	$2,482,884	$2,361,942
NM Retail ($)	$923,353	$1,055,902	$1,052,316
MD Retail ($)	$1,965,889	$2,124,796	$2,338,625
Total Retail ($)	$12,412,223	$16,285,966	$16,471,799
AZ Wholesale ($)	$1,011,063	$765,040	$—
MD Wholesale ($)	$1,262,588	$1,312,537	$1,563,875
NY Wholesale ($)	$509,238	$1,444,543	$1,052,749
MN Wholesale ($)	$443,460	$—	$—
Total Wholesale ($)	$3,226,349	$2,757,080	$2,616,624
Total Revenue ($)	$15,638,572	$19,043,046	$19,088,423
Total Revenue excl. AZ/NY/NM (as disclosed)	$14,627,509 (ex-AZ)	$12,225,906 (ex-AZ Retail)	$19,088,423 (AZ=0)

Core KPIs

KPI (Core Markets: MD, MN, NY)	Q4 2022	Q1 2023
Total Harvest Pounds (Biomass)	7,023	7,151
“A” Flower %	17%	19.2%
Total Retail Revenue ($M)	$15.2	$15.4
Same-Store Sales Growth	49.1%	34.0%
Stores in SSS Calc	13	14
Total Wholesale Revenue ($M)	$2.8	$2.6

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Company Guidance	FY/Quarter (not specified)	None	None issued in the Q1 2023 materials	Maintained “no formal guidance”

Note: No quantitative revenue/margin/OpEx guidance was provided in the Q1 2023 press release or accompanying 8-K disclosures .

Earnings Call Themes & Trends

Note: The Q1 2023 earnings call transcript could not be retrieved due to a document retrieval error; themes below reflect press-release commentary and prior quarters’ disclosures.

Topic	Q3 2022 (Prior-2)	Q4 2022 (Prior-1)	Q1 2023 (Current)	Trend
Cost controls and margin stabilization	Margin improvement on MN retail momentum; discontinuation of AZ outdoor reduced drag	Improved margins, strong retail SSS; transparency on core-market KPIs	Cost controls and ops improvements; second straight positive operating income; gross margin stabilized post-AZ wind down	Improving cost discipline and margins
Cultivation quality and yields (“A” flower)	Not explicitly quantified	Emphasis on driving “A” flower over coming quarters	“A” flower % increased; yields improved sequentially and YoY	Better product mix supports margins
Decentralization/product-driven culture	—	Reorg underway; new talent/resources; decentralized approach	State-level empowerment evident in margin and SG&A trends	Operating model shift continuing
Liquidity and financing	Exploring strategic alternatives, litigation with Verano	Amended credit facility: maturity to 4/30/24; eliminates amortization; requires new convertible facility	Closed initial $2.0M of $10M convertible (12% combined), added warrants; enhanced flexibility	Balance sheet actions ongoing
Regulatory catalysts (adult-use)	Anticipated NY adult-use; MN flower and edibles drove growth	Expect positive state-regulatory catalysts; MN flower a driver	Preparing for adult-use transitions in core markets (MD, MN, NY)	Building toward adult-use inflections

Management Commentary

“Our first quarter results demonstrate...gross margin performance that has stabilized since the wind down of our former outdoor operations in Arizona… strategy aims to produce better and more affordable products... in Maryland, Minnesota, and New York… new $10 million convertible loan facility… provides us flexibility to execute our plans” — Interim CEO Josh Rosen .
“Our recent efforts to empower our state-level teams with a more product-driven, decentralized culture were evident in our gross margin performance… SG&A expenses also declined sequentially… progress in improving our harvest yields with more premium ‘A’ flower…” — Amber Shimpa (President & CEO, Vireo Health of Minnesota) .
Credit facility amended: maturity extended to April 30, 2024; amortization removed; requirement to enter $10M convertible; potential performance-based extensions and issuance of up to 15M shares to lenders .
Convertible financing: $2.0M initial tranche closed April 28, 2023 (3-year term; 12% total interest split 6% cash/6% PIK; conversion at $0.145; 6.25M warrants at $0.145; 5-year term) .

Q&A Highlights

The Q1 2023 earnings call transcript was not retrievable due to a database inconsistency; therefore, specific Q&A highlights and any verbal guidance clarifications are unavailable.

Estimates Context

Wall Street consensus (S&P Global) for Q1 2023 revenue/EPS/EBITDA was unavailable for GDNSF at the time of analysis (missing Capital IQ mapping), so vs-consensus comparisons cannot be provided. Where estimates are needed for future updates, S&P Global will be the default source.

Key Takeaways for Investors

Sequential operating momentum continued: second consecutive positive operating income, with gross margin recovery and lower SG&A vs Q4 supporting improved EBITDA (to $1.44M) despite elevated interest expense .
Core-market execution is the story: MN and MD retail strength and improving cultivation mix (“A” flower) underpin margin stability; NY remains mixed with retail softness offset by wholesale improvements over selected periods .
Balance sheet/financing actions reduce near-term liquidity risk: credit facility amendment and convertible notes add flexibility as the company prepares for adult-use transitions in core markets (notably MD in 2023 and anticipated developments in MN/NY) .
YoY revenue growth (+22%) with materially higher gross profit and margin exhibits operating leverage from reorganization and cost discipline; continued focus on state-level empowerment should support further efficiency gains .
Risks: high interest burden and ongoing litigation remain headwinds to net income; lack of formal guidance adds uncertainty; execution on adult-use transitions and market pricing dynamics will be key determinants of trajectory .
Near-term trading implications: watch for regulatory catalysts (adult-use timing/updates) and further financing or asset actions; sustained operating income and margin improvements could be incremental stock catalysts even absent formal guidance .

Appendix: Additional Financial Detail and Liquidity

Balance sheet snapshot at 3/31/2023: current assets $115.6M (cash $10.35M), current liabilities $95.2M; total liabilities $160.7M; stockholders’ equity $(2.07)M .
Cash flow Q1 2023: cash used in operations $(3.80)M; capex $(0.20)M .
Shares outstanding (as of 5/1/2023): 141.14M as-converted; 196.04M as-converted, fully diluted; 154.77M fully diluted (treasury method) .

Vireo Growth Inc. (GDNSF)·Q1 2023 Earnings Summary