Vireo Health International, Inc. (OTCQX: VREOF) reported that its revenue rose 67% to $11.9 million for its third quarter ended September 30, 2020 versus $7.1 million for the same time period in 2019. Net income in the third quarter was $122,252 versus a net loss of $14.6 million in the 2019 third quarter. Vireo said the favorable improvement in net income was primarily driven by the one-time gain of $16.4 million on the divestiture of the company’s former PAMS subsidiary.
Vireo reported that it generated revenue in seven states during the third quarter: Arizona, Maryland, Minnesota, New Mexico, New York, Ohio, and Pennsylvania. Total revenue, including contributions from discontinued operations, increased 68% year-over-year to $13.4 million. Retail revenue was approximately $9.9 million in the quarter, an increase of 61% versus $6.2 million in Q3 2019. The increase in retail revenue was principally due to greater patient enrollment and average revenue per patient in Minnesota and New Mexico, as well as contributions from retail dispensaries in Pennsylvania. Wholesale revenue of $2.0 million increased by $1.1 million as compared to $980,921 in Q3 2019, with the increase primarily driven by the growth of wholesale operations in Maryland.
“Our third-quarter results demonstrate the improving nature of our business and success of recent initiatives to improve operating and financial performance,” said Chairman and Chief Executive Officer, Kyle Kingsley, M.D. “For the past several quarters we’ve been focused on positioning our vertically-integrated portfolio of assets to produce sustained and profitable growth, and we believe today’s results are an encouraging indicator that we’re nearing a critical inflection point in cash flow generation from operations.”
EBITDA was $8.1 million during the quarter, compared to a loss of $15.9 million in 2019 for the same time period. Adjusted EBITDA was a loss of $675,808 in Q3 2020, as compared to a loss of $5.2 million in Q3 2019.
Dr. Kingsley added, “Thanks to the hard work of our teams improving costs and manufacturing efficiencies, Vireo is positioned to improve margins as we continue growing our Green Goods retail dispensary footprint and benefit from likely tailwinds of regulatory changes. Each of our current development projects remains on time and budget, and with seven new dispensaries expected to open before the end of Q1 2021 and the potential for a majority of our state-based markets to pass adult-use legislation within the next year, we believe Vireo is poised for strong improvements in revenue growth and profitability.”
Dr. Kingsley concluded, “As we exit fiscal year 2020, we’re focused on successfully completing our capacity expansion projects in Arizona, Maryland, and New Mexico, as well as our planned dispensary openings in Maryland, Minnesota, and New Mexico. However, cash inflows from the forced redemption of warrants and exercise of the PDS purchase option materialized sooner than we anticipated, and our improving liquidity position has enabled us to begin evaluating additional investment opportunities. We expect to provide the investment community with an update on development initiatives and their potential impacts to our long-term operating and financial outlook in the spring of next year.”