Goodness Growth Holdings, Inc. (OTCQX: GDNSF) reported financial results for its third quarter ending September 30, 2021, with total revenue increasing 7.2% over last year’s third quarter to $13.4 million including the company’s former subsidiaries in Pennsylvania and Ohio. However, this was sequentially lower than the second quarter’s revenue of $14.2 million.
Excluding contributions from Pennsylvania and Ohio, Goodness Growth said revenue increased 27.6%. Goodness Growth reported a net loss of $6.2 million, worse than last year’s net income of $3.0 million for the same time period. The company attributed the loss to increased operating and other expenses, higher interest expenses, and the non-recurrence of the gain on disposition of assets in the prior-year quarter. Goodness Growth also dialed down expectations for 2022 revenues and EBITDA.
Retail revenue excluding Pennsylvania increased 34.7% to $11.6 million in the quarter and reflected growth in each of the company’s retail markets. Wholesale revenue, excluding Pennsylvania and Ohio, declined by 5.0% to $1.8 million, driven by the loss of biomass due to atypical weather in the Arizona market, which resulted in a sales decline during the quarter.
“Our third-quarter results were negatively impacted by unseasonal weather in the State of Arizona, where monsoonal rains wiped out a substantial portion of our outdoor crop at Elephant Head Farm,” said Chairman and Chief Executive Officer, Kyle Kingsley, M.D. “That loss of biomass severely impacted revenue and gross margin performance compared to our expectations, and results were also impacted sequentially by the non-recurrence of a high-margin wholesale order in New York that occurred in the second quarter. While we’re disappointed with these results, crop yields in Arizona this fall may help our performance in the wholesale channel over the next two quarters.”
Dr. Kingsley commented, “Given our recent decision to focus solely on the wholesale market in Arizona, as well as uncertainty surrounding the start date of adult-use sales in the state of New York, we’ve revised our previous outlook ranges for financial performance in the fiscal year 2022. We now expect the fiscal year 2022 revenues to be in the range of $100 to $120 million, and adjusted EBITDA in the range of $20 to $30 million.” This is lower than the company’s previous forecast for adjusted EBITDA in the range of $35 million to $55 million.
Dr. Kingsley continued, “As we close out the fourth quarter and look to next year, we’re looking forward to launching new edibles products and concentrates in the Maryland market, as well as the commencement of adult-use sales in New Mexico and beginning of flower sales in the Minnesota medical market this coming spring. Our operating teams also continue to make a lot of exciting progress in New York. We anticipate our new indoor cultivation and processing facility will be complete in the second quarter of 2022, and we’ve identified several promising incremental retail locations that will help us ensure a successful rollout under the adult-use program in 2023.”