Executive Summary

Q1 FY2022 revenue was $39.8M (+13.4% YoY) with retail gross margin rate of 52%; however, consolidated gross margin fell to 43.9% and net loss widened to $55.3M as SG&A and 280E taxes weighed on results .
Retail Adjusted EBITDA remained positive for a fifth straight quarter at a 17% margin, but declined sequentially (17% vs 22% in Q4) due to promotions and a ~$0.9M inventory write-down .
Balance sheet flexibility improved via $100M equity raise led by Serruya and the Tilray-led recap of the senior secured convertible facility (maturity to Aug-2028; PIK interest), ending cash $78.2M; working capital deficit narrowed to $179.7M .
Post-quarter governance change: Board added David Hsu and Ed Record; subsequently, Tom Lynch departed and Michael Serruya became interim CEO/Chairman—framing a “MedMen 2.0” growth focus into FY2022 .

What Went Well and What Went Wrong

What Went Well
- Positive retail four-wall performance: Retail Adjusted EBITDA Margin (continuing ops) 17% and fifth consecutive quarter of positive retail Adjusted EBITDA .
- State-level outperformance: California revenue $24.6M (+18.8% YoY); Nevada $4.0M (+16.6% YoY); Florida $3.1M (+40.7% YoY); Arizona retail $2.5M (+130.1% YoY) .
- Balance sheet actions: $100M equity raise and Tilray/Serruya recap extended debt maturities, eliminated cash interest (PIK), loosened covenants; cash ended $78.2M providing growth optionality .
- Quote: “We…generated positive retail adjusted EBITDA for the fifth consecutive quarter…shoring up our balance sheet…allows us to focus on executing our growth plan” – Tom Lynch, CEO .
What Went Wrong
- Sequential topline softness: Consolidated revenue fell vs Q4 ($39.8M vs $42.0M), with retail revenue from continuing ops down $2.2M QoQ amid promotions and Delta-variant headwinds .
- Margin compression: Gross margin rate decreased YoY (46.9% to 43.9%) driven by promos and a ~$0.9M inventory write-down; Retail Gross Margin Rate slid to 52% (55% prior quarter) .
- Elevated SG&A and taxes: Corporate SG&A rose to $14.6M (litigation/professional fees +$3.9M YoY) and income tax expense was $19.7M despite a pre-tax loss due to 280E limitations .

Financial Results

Metric	Q3 2021	Q4 2021	Q1 2022
Revenue ($M)	$32.0	$42.0	$39.8
Gross Margin Rate (%)	42% (company-wide)	47% (gross margin $19.7/$42.0)	43.9%
Net Loss ($M)	$(9.7)	$(46.2)	$(60.6)
Net Loss – Continuing Ops ($M)	$(17.3)	n/a	$(54.2)
Diluted EPS – Continuing Ops ($)	$(0.04)	n/a	$(0.05)
Retail Adj. EBITDA ($M) – Cont. Ops	$7.4	$8.9	$6.7
Retail Adj. EBITDA Margin Rate (%) – Cont. Ops	23%	22%	17%
Corporate SG&A ($M)	$11.0	$16.8 (Adj. EBITDA component)	$18.9 (Adj. EBITDA component)

Segment/state highlights – Q1 FY2022 (revenue):

California: $24.6M (+18.8% YoY)
Nevada: $4.0M (+16.6% YoY)
Florida: $3.1M (+40.7% YoY)
Illinois: $4.3M at Oak Park (–10.8% YoY)
Arizona: $2.5M retail (+130.1% YoY) and $1.2M wholesale

Selected KPIs and balance sheet – Q1 FY2022:

Retail Gross Margin Rate: 52% (continuing ops)
Cash & Equivalents: $78.2M
Working Capital Deficit: $(179.7)M
Senior Secured Convertible Facility (net): $113.5M; Notes Payable (net): $196.2M
Weighted-average shares: 942.7M

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY2022	None provided	None provided	Maintained – no formal guidance
Margins / EBITDA	FY2022	None provided	Narrative: plan to “accelerate growth and improve EBITDA profitability”	Directional only
Store Openings	FY2022	Fenway (Q2 timing), Newton TBD	Maintain plans to open MA stores; expand FL/CA/AZ/IL footprints	Narrative reaffirmation

No numeric guidance ranges were provided; commentary emphasized store expansion and EBITDA improvement ambitions .

Earnings Call Themes & Trends

Note: The internal transcript file could not be retrieved. Themes synthesized from Q1 FY2022 press release and 10-Q, and prior-quarter releases.

Topic	Previous Mentions (Q3 FY2021, Q4 FY2021)	Current Period (Q1 FY2022)	Trend
Capital structure / liquidity	Raised $18.9M equity; tapped facilities; NY transaction to delever	$100M equity (Serruya-led); Tilray-led recap extending maturity to 2028, PIK interest; cash $78.2M	Improving flexibility
Retail four-wall profitability	Retail Adj. EBITDA margin 23% (Q3)	Retail Adj. EBITDA margin 17%; promotions and inventory write-down	Still positive; lower QoQ
COVID/macro	Capacity restrictions easing, traffic improvement (Q3)	Delta-variant headwinds cited; increased competition	Mixed macro
State-level performance	CA rebound; AZ adult-use ramp (Q3)	CA/NV/FL grow YoY; AZ strong YoY; IL Oak Park down YoY	Mixed by state
Regulatory / portfolio	NY: divestiture to Ascend pending	NY continuing as discontinued ops; MA stores expected to open	Portfolio reshaping
Opex / litigation	SG&A cuts YoY in FY21; legal costs elevated	Corporate SG&A elevated on litigation/pro fees	Persistent pressure

Management Commentary

“We…outperformed Headset industry data in the majority of our markets, and we generated positive retail adjusted EBITDA for the fifth consecutive quarter. Additionally, shoring up our balance sheet…allows us to focus on executing our growth plan” – Tom Lynch, CEO (Q1 FY2022 PR) .
“Our focus now is taking this Company to the next level as we seek to leverage the strength of the MedMen brand…to expand it across the United States, Canada and internationally.” – Michael Serruya, Interim CEO/Chairman (Nov 22, 2021 PR) .

Q&A Highlights

The internal Q1 FY2022 call transcript could not be retrieved due to a document inconsistency. Based on the company’s PR/10-Q and historical focus, investor Q&A likely centered on:

Liquidity and debt recap impacts (maturity extension, PIK, covenants) .
Retail gross margin and promo strategy; inventory write-down drivers .
State-level performance cadence (CA, AZ adult-use, MA openings) .
Corporate SG&A/litigation trajectory and 280E tax expense .
A public transcript is available via MarketScreener for reference (external) .

Estimates Context

S&P Global consensus estimates were unavailable in our SPGI feed for MMNFF this quarter; therefore, “vs. estimates” comparisons are not shown.
Third-party aggregator indicates revenue consensus ~$41.05M vs actual $39.8M (≈$1.25M below), but treat cautiously as we could not validate via S&P Global directly .

Key Takeaways for Investors

Positive retail unit economics persisted (5th consecutive quarter of positive retail Adjusted EBITDA), but promotional intensity and an inventory write-down pressured margins and sequential revenue—watch for pricing normalization and inventory discipline to re-expand margins .
Balance sheet actions (Tilray/Serruya) materially extend runway (2028 maturity; PIK interest) and add cash, enabling selective store growth (MA, FL) and targeted market investments; monitor covenant headroom and cash burn (~$23.0M cash used in ops this quarter) .
State mix remains key: strength in CA/NV/FL/AZ offsets IL softness at Oak Park; new MA openings are catalysts; track Florida cultivation ramp and Arizona wholesale scale-up .
280E remains a structural headwind (tax expense $19.7M despite pre-tax loss); any regulatory changes would be a major lever on profitability .
Governance refresh and CEO transition to Serruya signal “MedMen 2.0” focus—execution on store openings, SG&A control (litigation costs), and four-wall efficiency will drive estimate revisions and sentiment .
Near-term trading set-up: sensitivity to retail margin updates and MA launch timing; medium-term thesis hinges on sustained four-wall profitability translating to consolidated EBITDA as corporate costs and 280E burden are managed .

Sources: Q1 FY2022 8‑K and Exhibits (press release, non‑GAAP recs) ; Q1 FY2022 10‑Q (financials, MD&A) ; Prior Q3 FY2021 8‑K/PR ; Board/CEO changes (8‑K press releases) .

MedMen Enterprises, Inc. (MMNFF)·Q1 2022 Earnings Summary