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VH

Verano Holdings Corp. (VRNOF)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $209.8M, down 5% y/y and 4% q/q, with gross margin at 47% and adjusted EBITDA of $54.4M (26% margin); net loss was $(11.5)M as taxes and price compression weighed on results .
  • Versus S&P Global consensus, revenue modestly missed ($209.8M vs $212.8M*) and EPS was slightly better than expected (-$0.045 actual vs -$0.048*); adjusted EBITDA underperformed consensus ($54.4M reported vs $60.9M*), reflecting wholesale softness and promotional activity *.
  • Management emphasized innovation and automation to boost productivity and reduce costs, and highlighted retail strength in Florida and contributions from Ohio adult-use and newly acquired AZ/VA assets, offset by price compression and wholesale headwinds .
  • No formal revenue or margin guidance was issued; 2025 capex guidance of $25–$40M from Q4 was maintained implicitly with no update in Q1 materials .
  • Near-term catalysts include continued Florida retail expansion, Ohio adult-use momentum, and new product launches in large-format vapes and pre-rolls, alongside footprint optimization and AR discipline that may pressure wholesale in the short term but aim to improve mix and profitability longer term .

What Went Well and What Went Wrong

What Went Well

  • Retail resilience in core markets: Strong Florida performance and contributions from Ohio adult-use and AZ/VA acquisitions partially offset price compression elsewhere .
  • Operational efficiencies: CEO highlighted “cutting-edge automation technology” that increased productivity and reduced costs, crediting team operational excellence in executing strategic priorities .
  • Footprint expansion and product innovation: Opened MÜV New Smyrna Beach (Florida footprint to 81); launched Savvy Strut 2g AIO vapes and diamond-infused pre-rolls targeting fastest-growing categories .
    • “Implementing cutting-edge automation technology… increased productivity and reduced costs by streamlining operations” — George Archos, CEO .

What Went Wrong

  • Price compression and promotions: Revenue declined 5% y/y and 4% q/q due to increased promotional activity and price compression in key markets, compressing gross profit and margins .
  • Wholesale headwinds: Wholesale revenue impacted by pause in Massachusetts wholesale, increased competition in New Jersey, and AR strategy placing holds on certain customers (short-term revenue impact to improve long-term profitability) .
  • Higher tax burden and net loss: Net loss widened y/y to $(11.5)M primarily due to lower revenue/gross profit and higher income tax provision versus prior-year period; operating cash flow fell to $2M vs $31M in Q1 2024 .

Financial Results

P&L and Margins vs Prior Periods

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Thousands)$221,306 $218,206 $209,809
Gross Profit ($USD Thousands)$112,960 $107,534 $99,581
Gross Margin (%)51% 49% 47%
Net Loss ($USD Thousands)$(4,822) $(272,706) $(11,515)
Net Loss Margin (%)(2)% (125)% (5)%
Adjusted EBITDA ($USD Thousands)$66,547 $62,850 $54,398
Adjusted EBITDA Margin (%)30% 29% 26%

Versus S&P Global Consensus (Q1 2025)

MetricConsensusActualSurprise
Revenue ($USD)$212,826,030*$209,809,000 Miss (~$3.0M, ~1.4%)*
Primary EPS ($USD)-$0.0476*-$0.0453*Beat (by ~$0.0023)*
Adjusted EBITDA ($USD)$60,892,780*$54,398,000 Miss (~$6.5M, ~10.7%)*
# of Estimates (EPS/Revenue)5 / 9*——

Values with asterisks are retrieved from S&P Global.

KPIs and Balance Sheet Highlights

KPI / MetricQ4 2024Q1 2025
Cash & Cash Equivalents ($USD Thousands)$87,796 $84,220
Working Capital ($USD Thousands)$160,000 $193,000
Total Debt, net ($USD Thousands)$414,000 $421,000
Net Cash from Operations ($USD Thousands)$44,000 $2,000
Capital Expenditures ($USD Thousands)$14,000 $14,000
Dispensaries (States/Count)13 states / 153 dispensaries 13 states / 155 dispensaries
Production Facilities / Cultivation Capacity15 / >1.1M sq ft 15 / >1.1M sq ft
Class A Shares Outstanding358,747,290 359,718,318

Note: Adjusted EBITDA is a non-GAAP metric; see company reconciliations .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Capital Expenditures ($USD Millions)FY 2025$25–$40 No update provided in Q1 materialsMaintained (implicitly)
Revenue / Margins / OpEx / Tax RateFY/Q1 2025None providedNone providedMaintained (no formal guidance)

Management did not issue formal revenue, margin, or tax guide in Q1; capex range from Q4 remains the only numeric guide on record .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Automation/TechnologyEmphasis on manufacturing innovation in pre-rolls; process/tech enhancements noted in FY overview “Cutting-edge automation technology” increased productivity and reduced costs; focus on innovation and differentiation Increasing focus, deeper execution
Price Compression/PromotionsNoted declines in IL/NJ and temporary FL output effects; promotions impacting gross profit Revenue down due to promotions and price compression in key markets Continuing headwind
Wholesale Strategy/AR Discipline—Pause in MA wholesale; AR holds on certain customers to improve LT profitability despite ST revenue impact Strategic repositioning
Regulatory/MacroRescheduling proceedings and federal reform optimism (SAFER banking) References to navigating industry dynamics; no new numeric guidance Neutral to positive sentiment
Product PerformanceLaunch of new formats, strong category growth (vapes/pre-rolls) Launch of Savvy Strut 2g AIO; 100 Proof pre-rolls; targeting fastest-growing categories Positive innovation momentum
Regional TrendsIL/NJ increased retail competition; FL temporary cultivation shift; OH adult-use began Strong FL; OH adult-use supportive; AZ/VA contributions from cannabist acquisitions Mixed: strength FL/OH vs compression IL/NJ

Management Commentary

  • “Throughout the first quarter, we strengthened our core business by optimizing our footprint, implementing cutting-edge automation technology… and generated savings while still expanding our product portfolio and retail footprint” — George Archos, CEO .
  • “As we continue navigating industry dynamics, I am confident in our ability to advance the strategic priorities… that aim to strengthen our foundation and core business” — George Archos, CEO .
  • CFO transition: Richard Tarapchak appointed CFO effective April 11, 2025, bringing 30+ years of finance experience; management expressed confidence in his leadership to enhance financial strength .

Q&A Highlights

  • Wholesale customer base refinement: Management indicated they are progressing on refining third-party retailers, placing AR holds on certain wholesale customers to improve long-term profitability, recognizing short-term top-line impacts .
  • Wholesale/market dynamics: Headwinds from increased competition in New Jersey and a pause in Massachusetts wholesale cited as drivers of quarterly revenue pressure .
  • Mix and operational priorities: Continued emphasis on retail productivity, automation, and differentiated product launches, with an eye on improving margins over time as strategic initiatives scale .

Estimates Context

  • Revenue: Reported $209.8M vs consensus $212.8M* — modest miss; suggests continued price pressure and promotional activity weighed on top-line *.
  • EPS: Reported -$0.045 vs consensus -$0.048* — slight beat; indicates cost actions and mix helped offset top-line pressure*.
  • Adjusted EBITDA: Reported $54.4M vs consensus $60.9M* — miss reflecting wholesale softness and competitive dynamics; note consensus typically tracks EBITDA definitions that may differ from company’s non-GAAP adjusted EBITDA *.

Values with asterisks are retrieved from S&P Global.

Key Takeaways for Investors

  • Expect continued mix shift toward retail strength (Florida, Ohio) and differentiated products; wholesale may remain soft near term given MA pause and NJ competition .
  • Near-term trading: Modest revenue/EBITDA miss vs consensus with small EPS beat likely keeps shares sensitive to signs of margin stabilization and wholesale recovery; watch next quarter commentary on AR strategy and wholesale restarts* *.
  • Medium-term thesis: Automation and innovation initiatives can structurally lower costs and enhance productivity, supporting margin recovery as new product categories scale .
  • Balance sheet/LIQ: Working capital improved to $193M; liquidity adequate with $84M cash, though operating cash flow dipped to $2M amid higher tax payments; capex steady at $14M in Q1 .
  • Footprint and catalysts: Ongoing Florida expansion (81 MÜV locations), CT and broader retail footprint growth, and targeted product launches in fastest-growing categories provide catalysts for same-store and category growth .
  • Guidance watch: No formal revenue/margin guide; capex range $25–$40M remains; investors should monitor for any update on margin outlook and wholesale normalization in Q2 .
  • Strategic discipline: AR holds and wholesale optimization may pressure revenue short term but aim to improve profitability and risk-adjusted returns; monitor mix and inventory health .