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Vireo Growth Inc. (GDNSF)·Q2 2022 Earnings Summary

Executive Summary

  • Q2 2022 delivered sharp sequential and YoY growth: revenue $21.1M (+34.9% q/q, +48.2% y/y), gross margin 49.2% (vs. 15.9% in Q1), and adjusted EBITDA $2.3M (vs. -$2.6M in Q1), driven by Minnesota, New Mexico, and Maryland and the wind-down of Arizona operations .
  • Retail strength and new product introductions (Minnesota gummies; HiColor chews in New York) support near‑term momentum; management sees regulatory catalysts persisting and continues preparing for New York adult‑use .
  • No formal guidance provided; prior outlook was withdrawn with the Verano transaction pending. Company reiterated expectation the Verano acquisition would close in Q4 2022, a key stock narrative catalyst .
  • Interest expense remains a headwind (other expenses $5.4M in Q2 vs. $2.9M in Q2’21), keeping bottom‑line negative despite operating improvements .

What Went Well and What Went Wrong

What Went Well

  • Margin recovery: gross margin improved to 49.2% (from 15.9% in Q1), with management noting pro forma gross margins would have been ~55% excluding Arizona wind‑down activities .
  • Strong retail growth ex‑Arizona: retail revenue rose to $17.0M (+74.5% y/y), with wholesale ex‑Arizona at $2.7M (+14.2% y/y), reflecting momentum in Maryland and Minnesota .
  • New product launches and regulatory tailwinds: “Strong sales growth catalysts resulting from the recent regulatory changes in Minnesota and New Mexico are expected to persist into next year,” and Minnesota edibles launched in August; HiColor chews launched in New York in June .

What Went Wrong

  • Elevated financing costs: total other expenses were $5.4M in Q2, primarily from increased interest on the credit facility; net loss remained $6.2M despite operating income turning positive .
  • Prior impairments and inventory adjustments weighed earlier in the year: Q1 included a $5.3M impairment and $3.5M inventory adjustment, compressing margins and EBITDA .
  • Guidance visibility remains limited: management withdrew its prior outlook in March and did not issue quantitative guidance in Q2, maintaining reliance on qualitative catalysts (Minnesota, New Mexico, New York, and M&A) .

Financial Results

MetricQ4 2021Q1 2022Q2 2022
Revenue ($USD Millions)$13.7 $15.64 $21.09
Gross Profit ($USD Millions)N/A$2.49 $10.37
Gross Profit Margin %15.8% 15.9% 49.2%
SG&A Expenses ($USD Millions)N/A$9.28 $8.63
SG&A Expenses (% of Sales)N/A59.6% 40.9%
Total Operating Expenses ($USD Millions)$10.1 $10.25 $10.06
Operating Income ($USD Millions)N/A-$7.76 $0.31
Other Income (Expenses), net ($USD Millions)-$5.8 -$8.55 -$5.45
Net Income (Loss) ($USD Millions)-$12.7 -$14.57 -$6.18
EPS ($USD)N/A-$0.11 -$0.05
EBITDA (non‑GAAP) ($USD Millions)-$8.3 -$10.68 $1.11
Adjusted EBITDA (non‑GAAP) ($USD Millions)-$4.4 -$2.61 $2.33
Adjusted EBITDA Margin %N/A-16.7% 11.1%

Segment/channel breakdown (definitions vary by period; see notes):

MetricQ4 2021Q1 2022Q2 2022
Retail Revenue (ex‑AZ/PA for Q4; ex‑AZ for Q1/Q2) ($USD Millions)$10.8 $12.4 $17.0
Wholesale Revenue (ex‑PA/OH for Q4; ex‑OH for Q1; ex‑AZ for Q2) ($USD Millions)$2.2 $3.2 $2.7

KPIs and liquidity:

MetricQ4 2021Q1 2022Q2 2022
Cash And Equivalents ($USD Millions)$15.2 $8.60 $17.0
Current Assets ($USD Millions)$41.6 $38.75 $46.39
Current Liabilities ($USD Millions)$16.4 $20.52 $18.53
Equity Shares Outstanding (as‑converted) (Millions)128.11 128.11 128.11
Licensed Markets (#)8 7 5
Operating Dispensaries (#)18 18 18

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company Outlook (Revenue/Adj. EBITDA/Cash)FY 2022Guidance withdrawn on Mar 11, 2022 No quantitative guidance provided in Q2 2022 Maintained “no guidance” posture
Verano Acquisition Close ExpectationFY 2022Pending transaction announced Feb 1, 2022 Expected to close in Q4 2022 Maintained expected Q4 close
DividendsFY 2022None disclosed None disclosed Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2021 and Q1 2022)Current Period (Q2 2022)Trend
Regulatory/legalMN smokeable flower began Mar 1; NM adult‑use targeted for Q2; focus on NY adult‑use preparation Launch of gummies in MN (Aug 1); HiColor chews in NY (Jun 23); catalysts expected to persist Strengthening regulatory tailwinds
Product performanceMN flower cited as key growth driver; building NY product mix MN gummies, NY HiColor edibles expanding portfolio Broadening assortment
Regional trendsGrowth across most markets; AZ crop loss pressured margins Growth in MN, NM, MD; AZ wind‑down benefits margins Mix shift to core markets
M&A / CorporateVerano deal announced; outlook withdrawn due to pending transaction Expect Q4 close; continued prep in NY Deal timeline reiterated
Supply chain / tariffs / macroNot specifically discussed in these releasesNot specifically discussed in Q2 releaseNeutral/Not highlighted
R&D / IPReferences to science/IP incubator (Resurgent Biosciences) Continued physician‑led, science‑focused positioning Consistent messaging

Note: No earnings call transcript was available for Q2 2022; themes reflect management commentary in the earnings releases .

Management Commentary

  • “Our second quarter results reflect improved margin performance driven by continued growth in our Minnesota, New Mexico, and Maryland markets, as well as benefits from the recent wind down of operations in Arizona…” (Kyle Kingsley, M.D., CEO) .
  • “Strong sales growth catalysts resulting from the recent regulatory changes in Minnesota and New Mexico are expected to persist into next year… our expansion project in New York is progressing ahead of the launch of adult‑use sales…” (Kyle Kingsley, M.D., CEO) .
  • Prior quarter context: “The recent launch of flower sales in Minnesota’s medical market is going exceptionally well… adult‑use sales in New Mexico to contribute to stronger sales growth throughout the remainder of this year.” (Q1 2022) .

Q&A Highlights

  • No Q2 2022 earnings call transcript was published; thus no Q&A themes to report [earnings‑call‑transcript not available in 2022 listings for GDNSF].

Estimates Context

  • Wall Street consensus (S&P Global) for GDNSF Q2 2022 was unavailable due to missing CIQ mapping; therefore, we cannot provide a formal beat/miss comparison to Street estimates at this time.
  • Given the absence of consensus, investors should focus on company‑reported operating metrics and margin trajectory to gauge revisions risk .

Key Takeaways for Investors

  • Operating turn: Q2 delivered positive operating income ($0.3M) and strong gross margins (49.2%), with adjusted EBITDA turning positive ($2.3M); margin recovery reflects AZ wind‑down and core market strength .
  • Retail‑led growth: Retail revenue ex‑AZ reached $17.0M with supportive product launches (MN gummies) and NY edibles (HiColor), underpinning near‑term sales momentum .
  • Interest expense headwind: Other expenses of $5.4M (largely interest) keep net losses elevated; monitor debt costs and balance sheet (cash $17.0M; current assets $46.4M vs. current liabilities $18.5M) .
  • Catalysts into 2023: Regulatory changes in MN/NM and NY adult‑use ramp offer structural growth drivers; management expects these to persist .
  • M&A overhang: Verano acquisition expected to close in Q4 2022; deal outcome and timing remain central to the stock narrative .
  • Guidance posture: Withdrew prior outlook and provided no quantitative guidance in Q2; trade the reported momentum and regulatory milestones rather than Street beats/misses .
  • Watch mix and margin durability: Sustained margin levels post‑AZ exit, pricing in MD, and execution in NY will be key to medium‑term thesis strength .