Goodness Growth Archives - Green Market Report

StaffMay 11, 2022
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Goodness Growth Holdings, Inc. (CSE: GDNS) (OTCQX: GDNSF) reported financial results for its first quarter ended March 31, 2022. Goodness Growth had total revenue in the first quarter of $15.6 million, an increase of 18.2% as compared to the same time period in 2021. The net loss in the quarter was $14.6 million versus a net loss of $6.9 million in the first quarter of 2021. The variance compared to the prior year was driven by the write-down of Arizona inventory to realizable value, the impairment of long-lived assets, and increased interest expenses.

“Our first-quarter results reflected continued growth across all of our markets besides Arizona, where we have been working through the loss of biomass related to weather impacts we’ve discussed previously,” said Chairman and Chief Executive Officer, Kyle Kingsley, M.D. “The recent launch of flower sales in Minnesota’s medical market is going exceptionally well for our Green Goods retail stores in the state, and we also expect the recent transition to adult-use sales in New Mexico to contribute to stronger sales growth throughout the remainder of this year. Our business will continue to benefit from these recent regulatory transitions in our markets, and we also believe it’s possible that adult-use sales could begin in New York sometime during the second half of 2022.”

Excluding contributions from Ohio and Arizona retail, total revenue increased 34.5% and reflected growth in each of the company’s other markets. Retail revenue excluding Arizona increased 40.3% to $12.4 million in Q1 2022. Wholesale revenue, excluding Ohio increased by 17.3% to $3.2 million, reflecting strong growth in MarylandNew York, and Minnesota, partially offset by a decline in the Arizona market.

Verano Updates

In February, the company announced that it agreed to be acquired by Verano Holdings Corp. in a deal valued at approximately $413 million on a fully-diluted basis.

Kingsley continued, “First quarter results were also impacted by an inventory adjustment in Arizona and impairments of long-lived assets in Arizona and Maryland. Given our pending transaction with Verano Holdings Corp. and the license overlaps in these markets, we’ve revised our operating plans. We recently wound down operations at the outdoor farm in Amado, Arizona, and will no longer pursue the phase two expansion in Massey, Maryland. We are continuing to focus on our expansion in New York, and expect the pending transaction with Verano to close sometime during the fourth quarter.”


Debra BorchardtMarch 11, 2022
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Goodness Growth Holdings, Inc. (CSE: GDNS)(OTCQX: GDNSF) reported financial results for its fourth quarter and full-year ending December 31, 2021. Total revenue in the fourth quarter was $13.7 million, an increase of 10.5% versus the same time period in 2020. Excluding contributions from PennsylvaniaOhio, and Arizona retail, total revenue increased 23.8%. Retail revenue excluding Arizona and Pennsylvania increased 33.8 percent to $10.8 million in Q4 2021 and reflected growth in each of the Company’s other retail markets. Wholesale revenue, excluding Pennsylvania and Ohio, declined by 5.6% to $2.2 million, with the decline primarily driven by the continued impact of crop loss in Arizona which occurred during the third quarter, partially offset by growth in New York and Maryland.

Goodness Growth also reported a net loss in the quarter of $12.7 million, versus a loss of $2.3 million in 2020 for the same time period. The company attributed the increase to higher production costs, operating, and other expenses, offset partially by the gain on the disposition of the company’s former dispensary in Arizona during the quarter.

“Our fourth-quarter results reflected continued growth across most of our markets, but we continued to experience the negative impact of crop loss in Arizona we’ve previously discussed which occurred during the third quarter,” said Chairman and Chief Executive Officer, Kyle Kingsley, M.D. “Wholesale sales in Arizona increased sequentially as compared to Q3, but the loss of biomass continued to impact gross margin performance. Revenue increased across the rest of our operating markets in Q4, and we’re looking forward to contributions from flower sales beginning in Minnesota in Q1 and adult-use sales in New Mexico in Q2.”

2021 Full Year Results

Goodness Growth reported total revenues increased by 10.6% over last year to $54.4 million, including the company’s former subsidiaries in Pennsylvania and Ohio, and its former dispensary in Arizona. Excluding contributions from PennsylvaniaOhio, and Arizona retail, full-year revenue increased 30.8%. Retail revenue excluding Arizona and Pennsylvania increased 33.3% to $39.6 million in 2021 and reflected growth in each of the company’s retail markets. Wholesale revenue, excluding Pennsylvania and Ohio, increased by 21.3% to $9.7 million. The net loss in 2021 was $33.7 million, compared to a loss of $22.9 million in the fiscal year 2020. The variance compared to the prior year was driven by increased operating and other expenses and higher interest expenses, as well as the non-recurrence of the gain on disposition of assets in the prior year.

Total operating expenses were $40.3 million, or roughly flat compared to $40.2 million in the fiscal year 2020. Increases in salaries and wages, professional fees, general and administrative expenses, and amortization and depreciation expenses were offset by a reduction in share-based compensation as compared to the prior year. The increase in salaries and wages, and general and administrative expenses were driven by significant operational buildout across the Company’s various operating markets, and the reduction in share-based compensation was driven by the non-recurrence of warrant vesting which occurred in the fiscal year 2020.

“Smokeable flower sales began in Minnesota’s medical market on March 1, and early indications suggest Minnesota flower sales will be our strongest driver of revenue growth until adult-use sales commence in the State of New York. We continue to focus on the development of our new dispensaries in New York, as well as the construction of our new indoor cultivation facility, and expect these activities to continue through the closing of the previously-announced, pending transaction to be acquired by Verano Holdings Corp. Finally, given this pending transaction, we no longer intend to provide frequent updates of our future performance expectations, and as a result, are withdrawing our previous outlook at this time.”

On February 1, 2022, goodness Growth announced that it has entered into a deal to be acquired by Verano Holdings Corp. in an all-share transaction valued at the time of announcement of approximately $413 million on a fully-diluted basis.


Debra BorchardtNovember 10, 2021
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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 Breakdown

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.”

Outlook

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.”


StaffSeptember 28, 2021
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Goodness Growth Holdings, Inc.  (CSE: GDNS)(OTCQX: GDNSF) closed on a sale/leaseback deal with Innovative Industrial Properties, Inc. (IIP) (NYSE: IIPR) in New York. Goodness Growth reported that it sold IIP approximately 92.3 acres of land for $1.2 million. The site is next to Goodness Growth’s existing cannabis cultivation and processing facility in Johnstown, New York, which was formerly the site of a juvenile detention center. IIP said it plans to provide a tenant improvement reimbursement to Goodness Growth of roughly $55 million for the construction of a new 324,000 square foot cannabis cultivation, processing, and research and development facility.

“We are looking forward to beginning construction on this state-of-the-art facility in New York, which will immediately become the flagship cultivation and processing facility in our Company’s portfolio,” said Goodness Growth Chairman and Chief Executive Officer, Kyle Kingsley, M.D. “This facility will produce the highest-quality indoor flower we’ve ever produced and help prepare our business for the massive spike in demand expected when New York’s adult-use cannabis program goes online next year. This facility will also support the expansion of our retail network in New York as we look to open up to four new dispensaries next year, which would bring our total number of stores in New York to eight.”

Goodness Growth and IIP isad they will partner on the development of the project and will amend the terms of their existing lease agreement to incorporate the new facility. The initial annualized base rent will be 10.5% of the tenant improvement budget plus the purchase price, for a term of twenty years. The lease amendment contains a rent escalation clause that is triggered in the event that Goodness Growth doesn’t satisfy certain strategic benchmarks, which would increase the rent by 1.5%.

Goodness Growth is one of ten licensed operators in New York’s medical cannabis program. It was previously known as Vireo Health, but the company changed its name this past summer.  It currently operates four dispensaries in QueensWhite PlainsAlbany and Binghamton under the Vireo Health name, as well as its home delivery business which serves the New York City metro area. The company said it plans to rebrand all its dispensaries in New York to its Green Goods national dispensary brand after the onset of the adult-use program next year.

Goodness Growth also forecasts that it expects to generate total revenue in the range of $140 to $180 million in its fiscal year 2022 and that it expects to generate adjusted EBITDA in the range of $35 to $55 million in the fiscal year 2022.


StaffAugust 13, 2021
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Goodness Growth Holdings, Inc.  (OTCQX: GDNSF) reported financial results for its second quarter ended June 30, 2021, as revenue jumped 16.5% to $14.2 million over last year. The net loss for the quarter was $5.5 million, down from last year’s net loss of $16.1 million for the same time period. Goodness Growth said the improvement was driven by the increase in gross profit margin and lower operating and other expenses, partially offset by increased income tax expense.

Goodness Growth stated that excluding results from its former subsidiaries in Pennsylvania, revenue increased 44.5 % versus the 2020 second quarter.

The company said that retail revenue excluding Pennsylvania increased 35.7 % to $11.3 million in the quarter and reflected growth in each of its retail markets. Wholesale revenue, excluding Pennsylvania and Ohio, increased by 92.1% to $2.9 million, driven by strong growth in Arizona and New York.

“Our second quarter performance was in line with our expectations, and we were pleased to see increased scale and efficiency of operations contribute to record gross margin performance during the quarter,” said Chairman and Chief Executive Officer, Kyle Kingsley, M.D. “As we discussed on last quarter’s call, our wholesale performance in Maryland was temporarily impacted by the move to our recently completed state-of-the-art manufacturing facility, and we expect to see that facility reach normalized production levels during the third quarter of this year. Additionally, our expansion projects in New Mexico and Arizona will help strengthen revenue and profitability in the second half of this year, especially in the fourth quarter when the expansion projects are operating at full capacity.”

The company was able to reduce the total operating expenses in the second quarter to $10.2 million, a drop of $5.5 million as compared to $15.6 million in the second quarter of 2020. The decrease in total expenses was attributable to a decrease in stock- based compensation expenses, partially offset by increased general and administrative expenses which was driven by operational buildouts in Arizona and Maryland, where the Company is in the process of completing large cultivation and manufacturing expansion projects.

Dr. Kingsley continued, “Our operating teams are focused on flower production, strain variety and quality in all of our markets, and we’re continuing to make progress on our expansion plans in New York and we will share updates on these plans throughout the year. As a reminder, the recent passage of adult-use legislation in New York and New Mexico and the inclusion of flower to Minnesota’s medical program have substantially improved our long-term outlook in each of these markets.”

The company said it expects to open an additional 6-10 Green Goods retail dispensaries, and a majority of the Company’s markets are expected to begin to generate more substantial revenue growth as pending changes to regulatory regimes take effect.

Goodness Growth also appointed Josh Rosen to its Board of Directors, expanding its number of board seats to seven. Josh Rosen is Managing Partner at Bengal Capital, and former Chief Executive Officer and Chairman of 4Front Ventures, a multi-state U.S. cannabis operator.


Debra BorchardtJune 9, 2021
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Vireo Health International, Inc.  (CSE: VREO; OTCQX: VREOF) announced at this week’s investor day event that it is changing its name to Goodness Growth Holdings, Inc. The company is also changing its ticker symbol to “GDNS” on the Canadian Securities Exchange (CSE: GDNS) and on the OTCQX Market in the United States the ticker symbol will be “GDNSF” (OTCQX: GDNSF).

“Our evolution to Goodness Growth reflects the progression of our business from a predominantly early-stage, medical-market operator to one of the strongest organic growth generators across recreational-use and medical cannabis markets in the United States,” said Chairman and Chief Executive Officer, Kyle Kingsley, M.D. “Vireo always has been and will continue to be a flagship brand of medical products, but this holding company model reflects a much more expansive view of our future and clearly differentiates our plant-touching assets from our science and IP incubator, Resurgent Biosciences.”

2022 Strategy

Goodness Growth unveiled a Horizon strategy, which is its plan for growth through the fiscal year 2022. Over this timeframe, the company said it expects to open an additional 6-10 Green Goods retail dispensaries. The company also provided several additional outlook which are dependent on the on-time completion of various development projects, plus the beginning of adult-use cannabis sales in New Mexico beginning in Q1 of 2022, the start of adult-use sales in New York in the summer of 2022, and the launch of flower sales in the Minnesota medical market in the spring of 2022. The estimates are as follows:

  • The company expects to generate total revenue in the range of $140 to $180 million in FY22
  • The company expects to generate adjusted EBITDA in the range of $35 to $55 million in FY22
  • Management reminds investors that the company had approximately $40 million in cash on its balance sheet as of March 31, 2021
  • Management expects net capex, excluding financing from real estate partners, to be in the range of approximately $15 to $20 million over this planning horizon
  • The company expects to begin generating positive cash flow from operations during 1H22

Dr. Kingsley continued, “We expect that recent growth investments we’ve made, combined with the expansion projects we have planned, and growth catalysts driven by changing regulatory frameworks will result in substantial improvements in revenue growth and profitability over the next 18 months. We expect to support this more than tripling of our revenue through an increase of more than 300 percent in biomass production capacity as we execute the Horizon strategy and are pleased to be showcasing the potential of our asset portfolio to investors at our investor day events later tonight and tomorrow morning.”

 


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