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VG

Vireo Growth Inc. (VREOF)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 revenue was $24.54M (+1.9% YoY), Adjusted EBITDA was $6.59M (+8.5% YoY) with a 26.8% margin; operating income fell to $2.0M and operating margin compressed to 8.1% due to $1.24M transaction-related expenses and higher stock-based compensation. Net loss was $6.51M and diluted EPS was $(0.02) .
  • State trends: Maryland continued to grow, Minnesota was stable, New York medical sales declined, and adult-use sales commenced from the NY indoor facility, with wholesale strength in Maryland (+22% YoY) .
  • Liquidity remained strong: cash was $86.3M; net long-term and convertible debt ~$72.5M; uncertain tax liability $35.0M; interest expense was $7.60M, contributing to the quarterly net loss .
  • Guidance: No formal numerical guidance; management reiterated that pending merger transactions are expected to begin closing in Q2 2025 (Utah, Missouri, Nevada) and will provide platform updates post-close .
  • Near-term stock catalysts: closing the Utah/Missouri/Nevada acquisitions and further adult-use rollouts; updates on New York disposition progress and uncertain tax liabilities could move sentiment .

What Went Well and What Went Wrong

What Went Well

  • Adjusted EBITDA margin expanded 160 bps YoY to 26.8%, with Adjusted EBITDA up 8.5% YoY to $6.59M .
  • Wholesale growth, particularly in Maryland (MD wholesale +22% YoY; total wholesale +18% YoY), supported overall mix despite NY pressure .
  • Management highlighted performance “in line with expectations,” citing continued growth in Maryland and the commencement of New York adult-use sales; quote: “First quarter results were in line with our expectations… continued growth in Maryland, stable performance in Minnesota, medical sales declines in New York, and the commencement of New York adult use sales…” — CEO John Mazarakis .

What Went Wrong

  • Operating income declined to $2.0M (vs. $4.8M YoY) and operating margin fell to 8.1% (−1,170 bps YoY), driven by $1.24M transaction expenses and a rise in stock-based compensation to $1.46M .
  • New York retail revenue fell 34% YoY; NY wholesale declined 17% YoY; sequential declines persisted across NY .
  • Net loss remained elevated at $6.51M; cash from operations was negative $(3.32)M for the quarter, with $7.60M interest expense and $1.68M current income tax expense weighing on results .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
GAAP Revenue ($USD Millions)$24.09 $25.02 $24.54
Gross Profit ($USD Millions)$12.24 $12.65 $12.41
Gross Profit Margin %50.8% 50.6% 50.6%
SG&A ($USD Millions)$7.05 $6.81 $7.47
SG&A as % of Sales29.3% 27.2% 30.5%
Operating Income ($USD Millions)$4.76 $(0.84) $1.98
Operating Margin %19.8% (3.4)% 8.1%
Net Loss ($USD Millions)$(6.71) $(15.70) $(6.51)
Diluted EPS ($USD)$(0.05) $(0.07) $(0.02)
Adjusted EBITDA ($USD Millions)$6.07 $6.59 $6.59
Adjusted EBITDA Margin %25.2% 26.4% 26.8%

Segment/state revenue breakdown:

Segment / StateQ1 2024 ($)Q4 2024 ($)Q1 2025 ($)
Retail – MN$10,977,089 $11,221,254 $11,209,204
Retail – MD$6,801,082 $6,846,072 $6,819,392
Retail – NY$1,821,269 $1,307,983 $1,205,045
Total Retail$19,599,440 $19,375,309 $19,233,641
Wholesale – MN— $133,606 $281,411
Wholesale – MD$3,353,661 $4,014,754 $4,089,238
Wholesale – NY$1,134,214 $1,499,647 $936,351
Total Wholesale$4,487,875 $5,648,007 $5,307,000
Total Revenue$24,087,315 $25,023,316 $24,540,641

Key KPIs and balance sheet:

KPIQ4 2024Q1 2025
Cash and Equivalents ($USD Millions)$91.60 $86.26
Net Long-Term & Convertible Debt ($USD Millions)$71.30 (LT debt net $61.44; conv. debt net $9.86) ~$72.48 (LT debt net $62.60; conv. debt net $9.87)
Lease Liabilities ($USD Millions)$17.89 (ROU liabilities current+LT) $17.59 (ROU liabilities current+LT)
Income Tax Receivable ($USD Millions)$12.03 $11.37
Uncertain Tax Liability ($USD Millions)$33.32 $34.96
Interest Expense (quarter, $USD Millions)$7.58 $7.60
Cash from Operations (quarter, $USD Millions)N/A (annual: $(10.23) in FY24) $(3.32)
PP&E Additions (quarter, $USD Millions)N/A (annual: $(11.69) in FY24) $(1.15)
Weighted Avg Shares (quarter)232,645,863 366,800,177

Non-GAAP reconciliation drivers (Q1 2025):

  • Adjusted EBITDA adds back inventory adjustment $0.433M, Grown Rogue termination fee $0.267M, stock-based comp $1.461M, transaction expenses $1.245M, severance $0.380M, and subtracts other income $(0.790)M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Merger Transactions (closing timeline)CY2025“Expected to close sometime in 2025, pending approvals” “Expected to begin closing in Q2 2025; platform updates post-close” Clarified timing (raised specificity)
Revenue, Margins, OpEx, Tax, Segment guidanceQ2–FY25None provided None provided Maintained (no formal guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
M&A / platform consolidationPending transactions and capital raises; credit facility amendments; expected closings in CY2025 “Merger Transactions expected to begin closing in Q2” Improving visibility
State trends (MD, MN, NY)MD adult-use ramp benefiting revenue mix; MN pricing compression; NY pressures; retail/wholesale mix shift MD growth, MN stable, NY medical declines; adult-use NY begins from indoor facility Mixed (strength MD; pressure NY)
Liquidity and balance sheetCash $91.6M at FY-end; strong liquidity to support investment; extended credit facility Cash $86.3M; strong cash balance reiterated; uncertain tax liability elevated Stable
Non-GAAP focus (Adjusted EBITDA)FY24 Adjusted EBITDA margin 25.3% (+310 bps YoY) Adjusted EBITDA margin >25% (26.8%); emphasis on addbacks Stable/slightly improving
Regulatory/legal (NY disposition; Verano litigation)NY disposition timeline extended to 7/31/2025 per credit amendment; Verano litigation ongoing Adult-use NY begins; disposition remains a focus; litigation risks acknowledged in forward-looking statements Ongoing risks

Management Commentary

  • CEO John Mazarakis: “First quarter results were in line with our expectations for Vireo’s established markets… continued growth in Maryland, stable performance in Minnesota, medical sales declines in New York, and the commencement of New York adult use sales…” .
  • Conference call framing (slides): “Adjusted EBITDA margins continue to exceed 25%; Company ended Q1 with $86.3 million in cash; Merger Transactions expected to begin closing in Q2” .
  • FY24 CFO perspective for context: “We are pleased to close the year in a strong financial position and confident in our ability to drive strong returns… liquidity position will help support improved access to capital…” — CFO Tyson Macdonald .

Q&A Highlights

  • No earnings call transcript was available; Q&A detail not furnished in documents. Management scheduled the call and webcast with dial-in details but did not publish a transcript in the filings reviewed .

Estimates Context

  • S&P Global consensus coverage appears limited; no Q1 2025 Wall Street consensus values were returned for EPS or revenue. Therefore, beat/miss versus consensus cannot be determined. Values retrieved from S&P Global.*
    | Metric | Q1 2025 Consensus | Q1 2025 Actual | |--------|--------------------|----------------| | Primary EPS Consensus Mean | Unavailable* | $(0.02) | | Revenue Consensus Mean | Unavailable* | $24.54M | | EBITDA (non-GAAP) Consensus Mean | Unavailable* | $3.59M |

Key Takeaways for Investors

  • Mix resilience: modest revenue growth (+1.9% YoY) with strong Maryland wholesale and stable Minnesota offsetting New York declines; adult-use NY commencement provides a new growth lever .
  • Margin dynamics: gross margin held at ~50.6%, but operating margin compressed (8.1%) due to transaction costs and higher stock comp; Adjusted EBITDA margin expanded to 26.8% .
  • Liquidity strength: $86.3M cash supports M&A and growth while interest expense ($7.60M) and uncertain tax liability ($34.96M) remain key overhangs to earnings quality .
  • Catalysts: closing of Utah/Missouri/Nevada deals and post-close platform updates in Q2, plus adult-use rollouts; monitor progress on NY disposition per amended credit agreement .
  • Risk watch: continued NY pressures and tax/interest burdens drive net loss; watch litigation outcomes (Verano) and 280E/tax developments that could alter cash/tax profiles .
  • Operating cash burn: negative operating cash flow ($(3.32)M) in Q1 suggests ongoing investment and transaction-related outlays; sustainment depends on margin discipline and M&A integration .
  • Estimate implications: limited analyst coverage makes consensus comparisons unavailable; near-term models should incorporate transaction expenses, adult-use ramp effects, and post-merger synergies/charges once deals close. Values retrieved from S&P Global.*