Executive Summary

Q1 2022 revenue was $15.64M, up 18.2% YoY and up sequentially vs. Q4 2021’s $13.7M, but gross margin compressed sharply to 15.9% due to Arizona inventory write-downs and impairments .
Adjusted EBITDA loss widened YoY to $(2.61)M, though improved sequentially vs. Q4 2021’s $(4.4)M; EPS was $(0.11) vs. $(0.06) a year ago .
Management highlighted strong traction from Minnesota flower (medical) and New Mexico adult-use launches; Arizona headwinds persisted following prior biomass loss and inventory valuation adjustments .
The company withdrew FY22 guidance in March (Q4 release) given the pending Verano acquisition process; no new guidance provided in Q1, which keeps estimate anchors limited for investors .
Consensus estimates via S&P Global were unavailable for GDNSF at this time; comparisons to Street were not possible (values unavailable from S&P Global).

What Went Well and What Went Wrong

What Went Well
- Minnesota flower launch “going exceptionally well,” supporting retail momentum; New Mexico adult-use expected to drive stronger sales through the year .
- Retail revenue excluding Arizona rose 40.3% to $12.4M; wholesale (ex-Ohio) up 17.3% to $3.2M, with strength in Maryland, New York, Minnesota .
- Sequential revenue growth vs. Q4 2021 (from $13.7M to $15.64M) despite market-level pressures in Arizona .
What Went Wrong
- Gross margin fell to 15.9% (vs. 42.6% in Q1 2021) primarily due to $3.47M inventory valuation adjustments related to Arizona write-downs; impairments of long-lived assets totaled $5.31M (AZ and MD) .
- Net loss increased to $(14.57)M vs. $(6.88)M in Q1 2021, driven by inventory write-downs, impairments, and higher interest expense ($4.60M) .
- Continued operational reset in Arizona (outdoor farm wound down; retail sold in prior quarter) constrained margins despite improving retail trends elsewhere .

Financial Results

Metric	Q3 2021	Q4 2021	Q1 2022
Revenue ($USD Millions)	$13.37	$13.7	$15.64
Gross Profit ($USD Millions)	$5.11	$2.2	$2.49
Gross Margin (%)	38.3%	15.8%	15.9%
Adjusted EBITDA ($USD Millions)	$(1.87)	$(4.4)	$(2.61)
Net Income ($USD Millions)	$(6.24)	$(12.7)	$(14.57)
EPS ($USD)	$(0.05)	N/A	$(0.11)

Segment/Channel mix (company-reported):

Metric	Q3 2021	Q4 2021	Q1 2022
Retail Revenue (ex specified states)	$11.6 (ex-PA)	$10.8 (ex-AZ, PA)	$12.4 (ex-AZ)
Wholesale Revenue (ex specified states)	$1.8 (ex-PA, OH)	$2.2 (ex-PA, OH)	$3.2 (ex-OH)
Total Revenue ($USD Millions)	$13.37	$13.7	$15.64

KPIs and notable items:

KPI	Q3 2021	Q4 2021	Q1 2022
Inventory Valuation Adjustments ($USD)	$0.351M	N/A	$3.467M
Impairment of Long-Lived Assets ($USD)	N/A	Impairments recorded in AZ/NV (amount discussed at FY level)	$5.313M
Interest Expense ($USD)	$2.255M	Higher LT debt interest noted	$4.602M
Cash And Equivalents ($USD)	$11.78M	$15.16M	$8.60M
Current Assets ($USD)	$44.75M	$41.64M	$38.75M
Current Liabilities ($USD)	$15.23M	$16.41M	$20.52M
Shares Outstanding (as-converted)	126.35M	128.11M	128.11M
Dispensaries Operated	18	18	18

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD)	FY 2022	$100–$120M (issued Q3 2021)	Withdrawn (Q4 release)	Lowered/Withdrawn
Adjusted EBITDA ($USD)	FY 2022	$20–$30M (issued Q3 2021)	Withdrawn (Q4 release)	Lowered/Withdrawn

Operational milestones (context to outlook, not formal guidance):

Minnesota medical flower sales began Mar 1, 2022; strong early traction .
New Mexico adult-use sales began Apr 1, 2022; expected to contribute to growth .
Management noted potential for New York adult-use beginning in 2H 2022 (contingent) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2021)	Previous Mentions (Q4 2021)	Current Period (Q1 2022)	Trend
Arizona weather/biomass loss	Unseasonal monsoon rains impacted outdoor crop; wholesale decline	Continued impact on Q4 gross margins despite sequential wholesale improvement	Inventory write-downs; impairments; operational wind-down of outdoor farm	Deteriorating then being exited/reset
Minnesota (medical) flower	Anticipated spring 2022 launch	Flower sales began Mar 1; strong early indications	“Going exceptionally well”; key driver of retail revenue	Improving
New Mexico adult-use	Adult-use expected to begin April 2022; new store openings	Adult-use to contribute in Q2	Adult-use started Apr 1; four dispensaries selling adult-use	Improving
New York adult-use preparations	Facility buildout; new retail locations identified	Selling whole flower (medical); construction/new dispensaries ahead of adult-use	Continued focus; potential adult-use in 2H 2022; pending Verano transaction	Improving medium term
Margins and cost structure	Gross margin ~38%; higher throughput aided margins	Gross margin fell to 15.8% on AZ crop loss and mix	Gross margin 15.9%; heavy AZ inventory adjustments	Pressured
Impairments/other expense	N/A	Impairments at AZ/NV; higher interest expense	$5.31M impairments (AZ/MD); interest expense $4.60M	Pressured
M&A/regulatory	N/A	Verano acquisition announced Feb 1, 2022	Pending Verano transaction; revised operating plans (AZ/MD)	Transitional

Management Commentary

“Our first quarter results reflected continued growth across all of our markets besides Arizona… The recent launch of flower sales in Minnesota’s medical market is going exceptionally well… and we also expect the recent transition to adult-use sales in New Mexico to contribute to stronger sales growth throughout the remainder of this year.” — Kyle Kingsley, M.D., Chairman & CEO .
“First quarter results were also impacted by an inventory adjustment in Arizona and impairments of long-lived assets in Arizona and Maryland… we’ve revised our operating plans in these states.” — Kyle Kingsley, M.D. .
“Smokeable flower sales began in Minnesota’s medical market on March 1… and [New Mexico] adult-use sales [began] April 1, 2022.” — Company release .
“Given [the] pending transaction to be acquired by Verano… we no longer intend to provide frequent updates of our future performance expectations, and as a result are withdrawing our previous outlook at this time.” — Q4 release .

Q&A Highlights

A public Q1 2022 earnings call transcript was not identified in the company’s filings and press releases accessible here; Q&A highlights are therefore unavailable for this quarter .

Estimates Context

Wall Street consensus via S&P Global for GDNSF was unavailable; comparisons to estimates are not provided (values unavailable from S&P Global).
Given the absence of consensus anchors and withdrawn FY22 guidance in March, near-term estimate recalibration likely depends on observed carry-through from Minnesota flower and New Mexico adult-use, and any pace of New York adult-use commencement .

Key Takeaways for Investors

Revenue inflected sequentially (Q1 > Q4), but margin compression from Arizona inventory write-downs and impairments weighed on profitability; near-term thesis leans on Minnesota and New Mexico scaling to offset Arizona reset .
Adjusted EBITDA improved vs. Q4 but remains negative; watch operating leverage as mix shifts toward higher-margin retail and as AZ impacts sunset .
Liquidity tightened (cash $8.6M; current liabilities $20.5M); monitor balance sheet trajectory and any transaction-related developments with Verano .
Regulatory catalysts are meaningful: Minnesota flower, New Mexico adult-use, potential New York adult-use in 2H 2022 — these can drive same-store sales and wholesale volumes .
With FY22 guidance withdrawn and Street consensus unavailable, trade the narrative: upside hinges on sustained Minnesota/NM momentum and evidence of margin stabilization; downside risk persists if impairments/valuation adjustments recur .
Operational decisions to wind down AZ outdoor farm and pause MD expansion phase suggest a tighter focus on core markets; monitor incremental disclosures on New York facility ramp and retail footprint .
Keep an eye on interest expense and other non-operating items, which materially impacted net loss in Q1; deleveraging or refinancing could be a secondary catalyst for improved net results .

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