Goodness Growth Reports Net Loss Of $6.3M, Revises Revenue Guidance To $100M-$120M For Fiscal Year

Science-concentrated cannabis company Goodness Growth Holdings, Inc. GDNS GDNSF, reported its third-quarter financial results Wednesday with total revenue of $13. 4 million, which is up by 7.2% from the same quarter of 2020.

Third Quarter Financial Summary

• Gross profit was $5.1 million, or 38.3% of revenue, as compared to gross profit of $5.0 million or 39.8% of revenue in Q3 last year;
• Net loss amounted to $6.2 million, versus net income of $3.0 million in the same period of 2020;
• Adjusted EBITDA was a loss of $1.9 million, as compared to a loss of $600,000 in the corresponding quarter of the prior year;
• Total operating expenses in the third quarter were $9.2 million, an increase of $2.0 million as compared to $7.2 million in the third quarter of 2020; The increase in total expenses was attributable to increased general and administrative expenses driven by operational buildouts in Arizona, Maryland, Minnesota and New Mexico where the Company has opened new retail dispensaries or has completed cultivation and manufacturing expansion projects;
• At the end of the reporting period on Sep. 30, Goodness Growth held $44.8 million in assets, including cash on hand of $11.8 million; Total current liabilities were $15.2 million, with $1.1 million in debt due within 12 months.

"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," chairman and CEO, Kyle Kingsley M.D. stated. "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."

Recent Milestones

• In August, the company opened two new Green Goods cannabis dispensaries in New Mexico.
• In September it closed on a sale leaseback transaction with Innovative Industrial Properties, Inc. (NYSE: IIPR) in New York, and obtained a notice of allowance from the U.S. Patent and Trademark Office for its subsidiary company Resurgent Biosciences, Inc.'s patent application titled, "Cannabis Based Moist Snuff."
• In October it received regulatory approval for its acquisition of a dispensary license in Baltimore, Maryland, and its wholly-owned subsidiary, Vireo Health of New York began selling whole flower cannabis products in the state.
• In November the company announced that it had entered into an agreement to sell its Arizona cannabis licenses, all remaining inventory and equipment at its Phoenix dispensary, the Phoenix dispensary property lease and all revenue producing dispensary contracts in an all-cash transaction valued at approximately $15.0 million.

Outlook Commentary

"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 fiscal year 2022. We now expect 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," Dr. Kingsley concluded.

Price Action

Goodness Growth’s shares closed Tuesday’s market session 0.71% higher at $1.41 per share.

Photo: Courtesy of Sasun Bughdaryan on Unsplash