Goodness Growth Holdings Announces Third Quarter 2022 Results

 
 

Third quarter GAAP revenue of $18.9 million increased 41.0% YoY –

 

  – Excluding discontinued operations, third quarter revenue increased 59.6% YoY –  

 

  – Company will be seeking damages from Verano; focused on maximizing value for stakeholders –  

 

   MINNEAPOLIS   ,   Nov. 14, 2022   /PRNewswire/ -- Goodness Growth Holdings, Inc. ("Goodness Growth" or the "Company") (CSE: GDNS; OTCQX: GDNSF), a physician-led, science-focused cannabis company and IP incubator, today reported financial results for its third quarter ended September 30, 2022 . All currency figures referenced in this press release reflect U.S. dollar amounts.

 
 

  Goodness Growth Holdings (CSE: GDNS; OTCQX: GDNSF) is the new parent company of Vireo Health and Green Goods. (PRNewsfoto/Goodness Growth Holdings) 

 
 

"Our third quarter results reflect continued revenue growth across each of our operating markets in Maryland , Minnesota , New Mexico , and New York , as well as consistency of our gross margin performance as compared to the prior quarter," said Chairman and Chief Executive Officer, Kyle Kingsley , M.D. "Margin performance in our home market of Minnesota has been especially strong following the commencement of flower and edibles sales earlier this year, and we are also pleased with substantial increases in wholesale volumes in New York . We expect both of these positive trends to continue as we work toward the expected launch of adult-use sales in New York next year."

 

Kingsley continued, "While we are experiencing positive momentum in our business, we were extremely disappointed by Verano's decision to wrongfully repudiate our transaction, which we previously anticipated would close during the fourth quarter. We are unable to comment more on ongoing litigation beyond what has already been disclosed, but we reiterate that we believe this termination was unlawful and we will be seeking significant damages through the judicial process in British Columbia . We believe there is significant long-term value in our asset portfolio, and our management team and board of directors remains focused, as we always have been, on maximizing value for stakeholders."

 
 
                                                                                                                                                      
 

   Summary of Key Financial Metrics   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Three Months Ended  

 
 
 

  Nine Months Ended  

 
 

   US $ in millions   

 
 

  September 30,  

 
 
 

  September 30,  

 
 
 

  2022  

 
 
 

  2021  

 
 
 

  Variance  

 
 
 

  2022  

 
 
 

  2021  

 
 
 

  Variance  

 
 
 
 
 
 
 
 
 
 
 
 
 
 

  GAAP Revenue  

 
 

  $18.9  

 
 
 

  $13.4  

 
 
 

  41.0 %  

 
 
 

  $55.6  

 
 
 

  $40.8  

 
 
 

  36.3 %  

 
 

  Revenue (excluding Arizona and Ohio)  

 
 

  $18.9  

 
 
 

  $11.8  

 
 
 

  59.6 %  

 
 
 

  $53.2  

 
 
 

  $33.6  

 
 
 

  58.5 %  

 
 

  GAAP Gross Profit  

 
 

  $9.5  

 
 
 

  $5.1  

 
 
 

  86.3 %  

 
 
 

  $22.4  

 
 
 

  $17.6  

 
 
 

  27.3 %  

 
 

   Gross Profit Margin   

 
 

   50.6 %   

 
 
 

   38.3 %   

 
 
 

   1,230 bps   

 
 
 

   40.3 %   

 
 
 

   43.3 %   

 
 
 

   -300 bps   

 
 

  SG&A Expenses  

 
 

  $8.5  

 
 
 

  $8.1  

 
 
 

  4.9 %  

 
 
 

  $26.4  

 
 
 

  $24.4  

 
 
 

  8.2 %  

 
 

   SG&A Expenses (% of Sales)   

 
 

   45.0 %   

 
 
 

   60.4 %   

 
 
 

   -1,540 bps   

 
 
 

   47.5 %   

 
 
 

   59.8 %   

 
 
 

   -1,230 bps   

 
 

  Adjusted EBITDA (non-GAAP)  

 
 

  $1.9  

 
 
 

  ($1.9)  

 
 
 

  NM  

 
 
 

  $1.6  

 
 
 

  ($4.6)  

 
 
 

  NM  

 
 

   Adjusted EBITDA Margin (non-GAAP)   

 
 

   10.1 %   

 
 
 

   (14.0 %)   

 
 
 

   2,410 bps   

 
 
 

   2.9 %   

 
 
 

   (11.3 %)   

 
 
 

   1,420 bps   

 
 
 

  Third Quarter 2022 Financial Summary  

 

Total revenue in the third quarter was $18.9 million , an increase of 41.0 percent as compared to Q3 2021. Excluding contributions from discontinued operations in Arizona , total revenue increased 59.6 percent and reflected strong growth in each of the Company's operating markets. Retail revenue excluding Arizona increased 60.1 percent to $16.4 million in Q3 2022. Wholesale revenue excluding Arizona increased by 56.1 percent to $2.5 million , driven by increased sales in Maryland and New York .

 

Gross profit was $9.5 million , or 50.6 percent of revenue, as compared to gross profit of $5.1 million or 38.3 percent of revenue in Q3 last year. The improvement in gross margin was primarily driven by increased retail sales in Minnesota , as well as the discontinuation of operations in Arizona during the second quarter.

 

Total operating expenses in the third quarter were $9.7 million , an increase of $0.5 million as compared to $9.2 million in the third quarter of 2021. The increase in total expenses was primarily attributable to an increase in professional fees related to the former agreement to be acquired by Verano Holdings Corp.

 

Operating loss in the third quarter was $0.2 million , a decrease of $3.9 million compared to an operating loss of $4.1 million in Q3 last year. The improvement in operating performance was driven by increased revenue and gross profit dollars, partially offset by the increase in total operating expenses.

 

Total other expenses were $7.6 million during Q3 2022, compared to $2.2 million in Q3 2021. The variance in other expenses is primarily attributable to increased interest expense related to the Company's credit facility, and an impairment of long-lived assets of $2.1 million .

 

Net loss in Q3 2022 was $8.4 million , as compared a loss of $6.9 million in Q3 2021. The variance compared to the prior year was driven by the improvement in operating income, offset by increased interest expenses and an impairment of long-lived assets.

 

EBITDA, as described in accompanying non-GAAP reconciliation, was a loss of $1.2 million during Q3 2022, compared to a loss of $3.1 million in Q3 2021. Adjusted EBITDA was $1.9 million in Q3 2022, as compared to a loss of $1.9 million in Q3 2021. Please refer to the Supplemental Information and Reconciliation of Non-GAAP Financial Measures at the end of this press release for additional information.

 

  Other Events  

 

On August 25, 2022 , the Company announced the launch of its Boundary Waters line of premium cannabis pre-rolls focused on sustainability and environmental preservation. Inspired by Minnesota's Boundary Waters Canoe Area Wilderness, which exists within Superior National Forest, Boundary Waters pre-rolls are hand-rolled from premium whole flower and are available in Sativa, Indica and hybrid strains, and can be purchased in five-roll packs.

 

On October 13, 2022 , Goodness Growth received a notice (the "Notice") of purported termination of the agreement (the "Arrangement Agreement") with Verano Holdings Corp. ("Verano") pursuant to which Verano had agreed to purchase all of the Company's stock, subject to the satisfaction of certain conditions. The Notice asserted certain breaches of the Arrangement Agreement, including claims the Company's public filings and communications with respect to its business and ongoing operations were misleading and that the Company breached its representations to Verano under the Arrangement Agreement. Verano also claimed, as a result of such breaches, it is entitled to payment of the $14,875,000 termination fee and its transaction expenses. Goodness Growth denies all of Verano's allegations and affirmatively states that it has complied with its obligations under the Arrangement Agreement in all material respects at all times. Goodness Growth believes that Verano has no factual or legal basis to justify or support its purported grounds for termination of the Arrangement Agreement.

 

On October 21, 2022 , Goodness Growth commenced an action in the Supreme Court of British Columbia against Verano arising out of Verano wrongfully repudiating the Arrangement Agreement. The Company is seeking damages costs and interest, based on Verano's breach of contract and of its duty of good faith and honest performance. Due to uncertainties inherent in litigation, it is not possible for Goodness Growth to predict the timing or final outcome of the legal proceedings against Verano or to determine the amount of damages, if any, that may be awarded.

 

  Company Continues to Explore Strategic Alternatives  

 

As a result of the termination of the Arrangement Agreement with Verano Holdings Corp., the Goodness Growth Board of Directors and its Transaction Committee, which was formed to explore strategic alternatives for the Company in the third quarter of 2021, remain focused on maximizing value for stakeholders. The Committee, with the assistance of outside advisors, ran a thorough sale process and received multiple indications of interest prior to announcing the Arrangement Agreement with Verano on February 1, 2022 . The Board of Directors and Committee continue to evaluate strategic alternatives for the Company, which could include a disposition of a material business or assets of the Company, or a merger or sale of the Company. The Company has not set a timetable for the completion of this review process.

 

  Balance Sheet and Liquidity  

 

As of September 30, 2022 , the Company had 128,126,330 equity shares issued and outstanding on an as-converted basis, and 158,380,087 shares outstanding on an as-converted, fully diluted basis.

 

As of September 30, 2022 , total current assets were $53.9 million . The Company had cash on hand of $21.8 million , which included net proceeds received from an increase on its delayed draw loan of $8.5 million during the third quarter. Total current liabilities were $26.3 million .

 

  Conference Call and Webcast Information  

 

Goodness Growth management will host a conference call with research analysts tomorrow, Tuesday, November 15, 2022 at 8:30 a.m. ET ( 7:30 a.m. CT ) to discuss its financial results for its third quarter ended September 30, 2022 . Interested parties may attend the conference call by dialing 1-888-660-6217 (Toll-Free) (US and Canada ) or 1-929-203-1990 (Toll) (International) and referencing conference ID number 2214400. A live audio webcast of this event will also be available in the Events & Presentations section of the Company's Investor Relations website and via the following link:

 

  https://events.q4inc.com/attendee/270373966 .

 

  About Goodness Growth Holdings, Inc.  

 

Goodness Growth Holdings, Inc., is a physician-led, science-focused holding company whose mission is to bring the power of plants to the world. The Company's operations consist primarily of its multi-state cannabis company subsidiary, Vireo Health, Inc., and its science and intellectual property incubator, Resurgent Biosciences, Inc. The Company manufactures proprietary, branded cannabis products in environmentally friendly facilities and state-of-the-art cultivation sites, and distributes its products through its growing network of Green Goods ® and other retail locations and third-party dispensaries. Its team of more than 450 employees are focused on the development of differentiated products, driving scientific innovation of plant-based medicines and developing meaningful intellectual property. Today, the Company is licensed to grow, process, and/or distribute cannabis in five markets and operates 18 dispensaries across the United States . For more information about Goodness Growth Holdings, please visit www.goodnessgrowth.com .

 

  Additional Information  

 

Additional information relating to the Company's third quarter 2022 results will be available on EDGAR and SEDAR on November 14, 2022 . Goodness Growth refers to certain non-GAAP financial measures such as Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and adjusted EBITDA (defined as earnings before interest, taxes, depreciation, and amortization, less certain non-cash equity compensation expense, one-time transactions, and other non-recurring non-cash items. These measures do not have any standardized meaning and may not be comparable to similar measures presented by other issuers. Please see the Supplemental Information and Reconciliation of Non-GAAP Financial Measures at the end of this news release for more detailed information regarding non-GAAP financial measures.

 

  Contact Information  

 

  Investor Inquiries:
  Sam Gibbons  
Vice President, Investor Relations
  samgibbons@goodnessgrowth.com  
(612) 314-8995

 

  Media Inquiries:
  Amanda Hutcheson  
Corporate Communications
  amandahutcheson@goodnessgrowth.com  
(919) 815-1476

 

  Forward-Looking Statement Disclosure  

 

This press release contains "forward-looking information" within the meaning of applicable United States and Canadian securities legislation. To the extent any forward-looking information in this press release constitutes "financial outlooks" within the meaning of applicable United States or Canadian securities laws, such information is being provided as preliminary financial results and the reader is cautioned that this information may not be appropriate for any other purpose and the reader should not place undue reliance on such financial outlooks. Forward-looking information contained in this press release may be identified by the use of words such as "should," "estimate," "would," "looking forward," "may," "continue," "expect," "expected," "will," "believe," "subject to," and "pending," or variations of such words and phrases. These statements should not be read as guarantees of future performance or results. Forward-looking information includes both known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the Company or its subsidiaries to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements or information contained in this press release. Financial outlooks, as with forward-looking information generally, are, without limitation, based on the assumptions and subject to various risks as set out herein and in our Annual Report on Form 10-K filed with the Securities Exchange Commission. Our actual financial position and results of operations may differ materially from management's current expectations and, as a result, our revenue, adjusted EBITDA, and cash on hand may differ materially from the values provided in this press release. Forward-looking information is based upon a number of estimates and assumptions of management, believed but not certain to be reasonable, in light of management's experience and perception of trends, current conditions, and expected developments, as well as other factors relevant in the circumstances, including assumptions in respect of current and future market conditions, the current and future regulatory environment, and the availability of licenses, approvals and permits.

 

Although the Company believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because the Company can give no assurance that they will prove to be correct. Actual results and developments may differ materially from those contemplated by these statements. Forward-looking information is subject to a variety of risks and uncertainties that could cause actual events or results to differ materially from those projected in the forward-looking information. Such risks and uncertainties include, but are not limited to, risks related to the timing of adult-use legislation in markets where the Company currently operates; current and future market conditions, including the market price of the subordinate voting shares of the Company; risks related to the COVID-19 pandemic; federal, state, local, and foreign government laws, rules, and regulations, including federal and state laws and regulations in the United States relating to cannabis operations in the United States and any changes to such laws or regulations; operational, regulatory and other risks; execution of business strategy; management of growth; difficulties inherent in forecasting future events; conflicts of interest; risks inherent in an agricultural business; risks inherent in a manufacturing business; liquidity and the ability of the Company to raise additional financing to continue as a going concern; the timing of adult-use sales in New York [and Maryland ]; the Company's ability to meet the demand for flower in Minnesota ; risk of failure in recovering damages sought from Verano; our ability to dispose of our assets held for sale at an acceptable price or at all; and risk factors set out in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 , which is available on EDGAR with the U.S. Securities and Exchange Commission and filed with the Canadian securities regulators and available under the Company's profile on SEDAR at www.sedar.com .

 

The statements in this press release are made as of the date of this release. Except as required by law, we undertake no obligation to update any forward-looking statements or forward-looking information to reflect events or circumstances after the date of such statements.

 

  Supplemental Information  

 

The financial information reported in this news release is based on unaudited financial statements for the fiscal quarters ended September 30, 2022 and September 30, 2021 . All financial information contained in this news release is qualified in its entirety with reference to such financial statements. To the extent that the financial information contained in this news release is inconsistent with the information contained in the Company's audited financial statements, the financial information contained in this news release shall be deemed to be modified or superseded by the Company's audited financial statements. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation for purposes of applicable securities laws.

 

 

 
 
                                                                                                                                                                                                                                                                            
 

   GOODNESS GROWTH HOLDINGS, INC.   

 
 
 
 
 
 
 
 

   CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2022 AND DECEMBER 31, 2021   

 
 
 
 
 
 
 

   (Amounts Expressed in United States Dollars, Unaudited and Condensed)   

 
 
 
 
 
 
 
 
 
 

   September 30,   

 
 
 

   December 31,   

 
 
 
 

   2022   

 
 
 

   2021   

 
 

   Assets   

 
 
 
 
 
 
 
 

  Current assets:  

 
 
 
 
 
 
 
 

  Cash  

 
 
 

  $  

 
 

  21,842,076  

 
 
 

  $  

 
 

  15,155,279  

 
 

  Accounts receivable, net of allowance for doubtful accounts of $480,979 and $572,080,
respectively
 

 
 
 
 

  5,911,049  

 
 
 
 

  4,502,469  

 
 

  Inventory  

 
 
 
 

  19,114,627  

 
 
 
 

  20,422,061  

 
 

  Prepayments and other current assets  

 
 
 
 

  3,161,855  

 
 
 
 

  1,560,113  

 
 

  Assets Held for Sale  

 
 
 
 

  3,834,850  

 
 
 
 

  

 
 

  Total current assets  

 
 
 
 

  53,864,457  

 
 
 
 

  41,639,922  

 
 

  Property and equipment, net  

 
 
 
 

  91,246,127  

 
 
 
 

  99,488,559  

 
 

  Operating lease, right-of-use asset  

 
 
 
 

  7,482,661  

 
 
 
 

  8,510,499  

 
 

  Notes receivable, long-term  

 
 
 
 

  3,750,000  

 
 
 
 

  3,750,000  

 
 

  Intangible assets, net  

 
 
 
 

  8,936,713  

 
 
 
 

  10,184,289  

 
 

  Goodwill  

 
 
 
 

  183,836  

 
 
 
 

  183,836  

 
 

  Deposits  

 
 
 
 

  2,178,445  

 
 
 
 

  1,718,206  

 
 

  Deferred tax assets  

 
 
 
 

  5,680,000  

 
 
 
 

  1,495,000  

 
 

  Total assets  

 
 
 

  $  

 
 

  173,322,239  

 
 
 

  $  

 
 

  166,970,311  

 
 

   Liabilities   

 
 
 
 
 
 
 
 

  Current liabilities  

 
 
 
 
 
 
 
 

  Accounts Payable and Accrued liabilities  

 
 
 

  $  

 
 

  17,243,353  

 
 
 

  $  

 
 

  14,805,473  

 
 

  Long-Term debt, current portion  

 
 
 
 

  6,013,875  

 
 
 
 

  

 
 

  Right of use liability  

 
 
 
 

  1,713,292  

 
 
 
 

  1,600,931  

 
 

  Liabilities held for sale  

 
 
 
 

  1,376,184  

 
 
 
 

  

 
 

  Total current liabilities  

 
 
 
 

  26,346,704  

 
 
 
 

  16,406,404  

 
 

  Right-of-use liability  

 
 
 
 

  80,884,574  

 
 
 
 

  80,228,097  

 
 

  Long-Term debt  

 
 
 
 

  49,614,909  

 
 
 
 

  27,329,907  

 
 

   Total liabilities   

 
 
 

  $  

 
 

  156,846,187  

 
 
 

  $  

 
 

  123,964,408  

 
 

  Stockholders' equity  

 
 
 
 
 
 
 
 

  Subordinate Voting Shares ($- par value, unlimited shares authorized; 86,046,830 shares
issued and outstanding)
 

 
 
 
 

  

 
 
 
 

  

 
 

  Multiple Voting Shares ($- par value, unlimited shares authorized; 355,384 shares issued and
outstanding)
 

 
 
 
 

  

 
 
 
 

  

 
 

  Super Voting Shares ($- par value; unlimited shares authorized; 65,411 shares issued and
outstanding, respectively)
 

 
 
 
 

  

 
 
 
 

  

 
 

  Additional Paid in Capital  

 
 
 
 

  181,073,217  

 
 
 
 

  178,429,422  

 
 

  Accumulated deficit  

 
 
 
 

  (164,597,165)  

 
 
 
 

  (135,423,519)  

 
 

  Total stockholders' equity  

 
 
 

  $  

 
 

  16,476,052  

 
 
 

  $  

 
 

  43,005,903  

 
 

   Total liabilities and stockholders' equity   

 
 
 

  $  

 
 

  173,322,239  

 
 
 

  $  

 
 

  166,970,311  

 
 
 

 

 
 
                                                                                                                                                                                                                                                                                                                                                                                                                                                       
 

   GOODNESS GROWTH HOLDINGS, INC.   

 
 
 
 
 
 
 
 
 
 
 
 
 
 

   CONSOLIDATED STATEMENTS OF OPERATIONS   

 
 
 
 
 
 
 
 
 
 
 

   THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021   

 
 
 
 
 
 
 
 
 
 
 

   (Amounts Expressed in United States Dollars, Unaudited and Condensed)   

 
 
 
 
 
 
 
 
 
 
 
 
 

   Three Months Ended   

 
 
 

   Nine Months Ended   

 
 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 
 

   2022   

 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2021   

 
 

   Revenue   

 
 
 

  $  

 
 

  18,854,101  

 
 
 

  $  

 
 

  13,369,432  

 
 
 

  $  

 
 

  55,582,821  

 
 
 

  $  

 
 

  40,790,221  

 
 

   Cost of sales   

 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Product costs  

 
 
 
 

  9,186,241  

 
 
 
 

  7,903,444  

 
 
 
 

  29,532,469  

 
 
 
 

  22,682,503  

 
 

  Inventory valuation adjustments  

 
 
 
 

  131,000  

 
 
 
 

  351,000  

 
 
 
 

  3,657,788  

 
 
 
 

  464,000  

 
 

  Gross profit  

 
 
 
 

  9,536,860  

 
 
 
 

  5,114,988  

 
 
 
 

  22,392,564  

 
 
 
 

  17,643,718  

 
 

   Operating expenses:   

 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Selling, general and administrative  

 
 
 
 

  8,489,728  

 
 
 
 

  8,106,187  

 
 
 
 

  26,393,136  

 
 
 
 

  24,441,860  

 
 

  Stock-based compensation expenses  

 
 
 
 

  896,081  

 
 
 
 

  835,122  

 
 
 
 

  2,636,594  

 
 
 
 

  4,289,820  

 
 

  Depreciation  

 
 
 
 

  167,940  

 
 
 
 

  98,098  

 
 
 
 

  487,164  

 
 
 
 

  515,907  

 
 

  Amortization  

 
 
 
 

  172,267  

 
 
 
 

  206,442  

 
 
 
 

  516,800  

 
 
 
 

  619,327  

 
 

  Total operating expenses  

 
 
 
 

  9,726,016  

 
 
 
 

  9,245,849  

 
 
 
 

  30,033,694  

 
 
 
 

  29,866,914  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   Gain (loss) from operations   

 
 
 
 

  (189,156)  

 
 
 
 

  (4,130,861)  

 
 
 
 

  (7,641,130)  

 
 
 
 

  (12,223,196)  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   Other income (expense):   

 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Impairment of long-lived assets  

 
 
 
 

  (2,108,703)  

 
 
 
 

  

 
 
 
 

  (7,476,618)  

 
 
 
 

  

 
 

  Loss on sale of property and equipment  

 
 
 
 

  7,583  

 
 
 
 

  

 
 
 
 

  (3,347)  

 
 
 
 

  

 
 

  Gain on disposal of assets  

 
 
 
 

  

 
 
 
 

  

 
 
 
 

  168,359  

 
 
 
 

  437,107  

 
 

  Interest expenses, net  

 
 
 
 

  (5,573,263)  

 
 
 
 

  (2,254,553)  

 
 
 
 

  (15,472,885)  

 
 
 
 

  (6,037,057)  

 
 

  Other income (expenses)  

 
 
 
 

  79,750  

 
 
 
 

  75,018  

 
 
 
 

  1,196,975  

 
 
 
 

  33,631  

 
 

  Other income (expenses), net  

 
 
 
 

  (7,594,633)  

 
 
 
 

  (2,179,535)  

 
 
 
 

  (21,587,516)  

 
 
 
 

  (5,566,319)  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Loss before income taxes  

 
 
 
 

  (7,783,789)  

 
 
 
 

  (6,310,396)  

 
 
 
 

  (29,228,646)  

 
 
 
 

  (17,789,515)  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Current income tax expenses  

 
 
 
 

  (1,790,000)  

 
 
 
 

  (530,000)  

 
 
 
 

  (4,130,000)  

 
 
 
 

  (3,150,000)  

 
 

  Deferred income tax recoveries  

 
 
 
 

  1,150,000  

 
 
 
 

  (30,000)  

 
 
 
 

  4,185,000  

 
 
 
 

  180,000  

 
 

  Net loss and comprehensive loss  

 
 
 
 

  (8,423,789)  

 
 
 
 

  (6,870,396)  

 
 
 
 

  (29,173,646)  

 
 
 
 

  (20,759,515)  

 
 

  Net loss per share - basic and diluted  

 
 
 

  $  

 
 

  (0.07)  

 
 
 

  $  

 
 

  (0.05)  

 
 
 

  $  

 
 

  (0.23)  

 
 
 

  $  

 
 

  (0.17)  

 
 

  Weighted average shares used in computation of net
loss per share - basic & diluted
 

 
 
 
 

  128,120,949  

 
 
 
 

  126,363,104  

 
 
 
 

  128,114,570  

 
 
 
 

  122,704,872  

 
 
 

 

 
 
                                                                                                                                                                                                                                                                                                                                                               
 

   GOODNESS GROWTH HOLDINGS, INC.   

 
 
 
 
 
 
 
 

   CONSOLIDATED STATEMENTS OF CASH FLOWS   

 
 
 
 
 
 
 
 

   NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021   

 
 
 
 
 
 
 
 

   (Amounts Expressed in United States Dollars, Unaudited and Condensed)   

 
 
 
 
 
 
 
 
 
 

   September 30,   

 
 
 
 

   2022   

 
 
 

   2021   

 
 

   CASH FLOWS FROM OPERATING ACTIVITIES   

 
 
 
 
 
 
 
 

  Net loss  

 
 
 

  $  

 
 

  (29,173,646)  

 
 
 

  $  

 
 

  (20,759,515)  

 
 

  Adjustments to reconcile net loss to net cash used in operating activities:  

 
 
 
 
 
 
 
 

  Inventory valuation adjustments  

 
 
 
 

  3,657,788  

 
 
 
 

  464,000  

 
 

  Depreciation  

 
 
 
 

  487,164  

 
 
 
 

  515,907  

 
 

  Depreciation capitalized into inventory  

 
 
 
 

  1,959,536  

 
 
 
 

  1,678,558  

 
 

  Non-cash operating lease expense  

 
 
 
 

  852,687  

 
 
 
 

  764,266  

 
 

  Amortization of intangible assets  

 
 
 
 

  516,800  

 
 
 
 

  619,327  

 
 

  Stock-based payments  

 
 
 
 

  2,636,594  

 
 
 
 

  4,289,820  

 
 

  Interest Expense  

 
 
 
 

  3,430,733  

 
 
 
 

  1,764,711  

 
 

  Impairment of long-lived assets  

 
 
 
 

  7,476,618  

 
 
 
 

  

 
 

  Deferred income tax  

 
 
 
 

  (4,185,000)  

 
 
 
 

  (180,000)  

 
 

  Accretion  

 
 
 
 

  3,407,030  

 
 
 
 

  310,704  

 
 

  Loss on Sale of Property and Equipment  

 
 
 
 

  3,347  

 
 
 
 

  

 
 

  Gain on disposal of OMS  

 
 
 
 

  

 
 
 
 

  (437,107)  

 
 

  Gain on disposal of royalty asset  

 
 
 
 

  (168,359)  

 
 
 
 

  

 
 

  Change in operating assets and liabilities:  

 
 
 
 
 
 
 
 

  Accounts Receivable  

 
 
 
 

  (1,408,580)  

 
 
 
 

  18,384  

 
 

  Prepaid expenses  

 
 
 
 

  (1,601,742)  

 
 
 
 

  (1,573,909)  

 
 

  Inventory  

 
 
 
 

  (2,205,236)  

 
 
 
 

  (7,765,288)  

 
 

  Accounts payable and accrued liabilities  

 
 
 
 

  2,360,044  

 
 
 
 

  (2,555,634)  

 
 

  Change in assets and liabilities held for sale  

 
 
 
 

  

 
 
 
 

  124,843  

 
 

  Net cash used in operating activities  

 
 
 

  $  

 
 

  (11,954,222)  

 
 
 

  $  

 
 

  (22,720,933)  

 
 
 
 
 
 
 
 
 

   CASH FLOWS FROM INVESTING ACTIVITIES:   

 
 
 
 
 
 
 
 

  PP&E Additions  

 
 
 

  $  

 
 

  (4,938,587)  

 
 
 

  $  

 
 

  (14,637,331)  

 
 

  Proceeds from sale of property, plant, and equipment  

 
 
 
 

  387,512  

 
 
 
 

  

 
 

  Proceeds from sale of royalty asset  

 
 
 
 

  236,635  

 
 
 
 

  

 
 

  Acquisition of MJ Distributing  

 
 
 
 

  

 
 
 
 

  (1,592,500)  

 
 

  Proceeds from sale of OMS net of cash  

 
 
 
 

  

 
 
 
 

  1,150,000  

 
 

  Deposits  

 
 
 
 

  (482,539)  

 
 
 
 

  67,841  

 
 

  Net cash provided by (used in) investing activities  

 
 
 

  $  

 
 

  (4,796,979)  

 
 
 

  $  

 
 

  (15,011,990)  

 
 
 
 
 
 
 
 
 

   CASH FLOWS FROM FINANCING ACTIVITIES   

 
 
 
 
 
 
 
 

  Proceeds from long-term debt, net of issuance costs  

 
 
 

  $  

 
 

  24,868,143  

 
 
 

  $  

 
 

  23,162,526  

 
 

  Convertible debt payment  

 
 
 
 

  

 
 
 
 

  (900,000)  

 
 

  Proceeds from option exercises  

 
 
 
 

  7,201  

 
 
 
 

  1,152,596  

 
 

  Lease principal payments  

 
 
 
 

  (1,437,346)  

 
 
 
 

  (1,008,584)  

 
 

  Net cash provided by financing activities  

 
 
 

  $  

 
 

  23,437,998  

 
 
 

  $  

 
 

  22,406,538  

 
 
 
 
 
 
 
 
 

  Net change in cash and restricted cash  

 
 
 

  $  

 
 

  6,686,797  

 
 
 

  $  

 
 

  (15,326,385)  

 
 
 
 
 
 
 
 
 

  Cash and restricted cash, beginning of period  

 
 
 

  $  

 
 

  15,155,279  

 
 
 

  $  

 
 

  27,105,680  

 
 
 
 
 
 
 
 
 

  Cash and restricted cash, end of period  

 
 
 

  $  

 
 

  21,842,076  

 
 
 

  $  

 
 

  11,779,295  

 
 
 

 

 

  Reconciliation of Non-GAAP Financial Measures  

 

EBITDA and Adjusted EBITDA are non-GAAP measures and do not have standardized definitions under GAAP. The following information provides reconciliations of the supplemental non-GAAP financial measures, presented herein to the most directly comparable financial measures calculated and presented in accordance with GAAP. The Company has provided the non-GAAP financial measures, which are not calculated or presented in accordance with GAAP, as supplemental information and in addition to the financial measures that are calculated and presented in accordance with GAAP. These supplemental non- GAAP financial measures are presented because management has evaluated the financial results both including and excluding the adjusted items and believe that the supplemental non-GAAP financial measures presented provide additional perspective and insights when analyzing the core operating performance of the business. These supplemental non-GAAP financial measures should not be considered superior to, as a substitute for or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented.

 
 
                                                                                                                                                                                                   
 

   Reconciliation of Net Loss to EBITDA and Adjusted EBITDA   

 
 
 
 
 
 
 
 
 
 
 

   (Amounts Expressed in United States Dollars, Unaudited and Condensed)   

 
 
 
 
 
 
 
 
 
 
 
 
 

   Three Months Ended   

 
 
 

   Nine Months Ended   

 
 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 
 

   2022   

 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2021   

 
 

   Net income (loss)   

 
 
 

  $  

 
 

  (8,423,789)  

 
 
 

  $  

 
 

  (6,870,396)  

 
 
 

  $  

 
 

  (29,173,646)  

 
 
 

  $  

 
 

  (20,759,515)  

 
 

  Interest expense, net  

 
 
 
 

  5,573,263  

 
 
 
 

  2,254,553  

 
 
 
 

  15,472,885  

 
 
 
 

  6,037,057  

 
 

  Income taxes  

 
 
 
 

  640,000  

 
 
 
 

  560,000  

 
 
 
 

  (55,000)  

 
 
 
 

  2,970,000  

 
 

  Depreciation & Amortization  

 
 
 
 

  340,207  

 
 
 
 

  304,540  

 
 
 
 

  1,003,964  

 
 
 
 

  1,135,234  

 
 

  Depreciation included in cost of goods sold  

 
 
 
 

  645,480  

 
 
 
 

  691,662  

 
 
 
 

  1,959,536  

 
 
 
 

  1,678,558  

 
 

   EBITDA (non-GAAP)   

 
 
 

  $  

 
 

  (1,224,839)  

 
 
 

  $  

 
 

  (3,059,641)  

 
 
 

  $  

 
 

  (10,792,261)  

 
 
 

  $  

 
 

  (8,938,666)  

 
 

  Inventory adjustment  

 
 
 
 

  131,000  

 
 
 
 

  351,000  

 
 
 
 

  3,657,788  

 
 
 
 

  464,000  

 
 

  Loss on impairment of long-lived assets  

 
 
 
 

  2,108,703  

 
 
 
 

  

 
 
 
 

  7,476,618  

 
 
 
 

  

 
 

  Stock-based compensation  

 
 
 
 

  896,081  

 
 
 
 

  835,122  

 
 
 
 

  2,636,594  

 
 
 
 

  4,289,820  

 
 

  Other income  

 
 
 
 

  

 
 
 
 

  

 
 
 
 

  (1,190,863)  

 
 
 
 

  

 
 

  Gain (loss) on disposal of assets  

 
 
 
 

  (7,583)  

 
 
 
 

  

 
 
 
 

  (165,012)  

 
 
 
 

  (437,107)  

 
 

   Adjusted EBITDA (non-GAAP)   

 
 
 

  $  

 
 

  1,903,362  

 
 
 

  $  

 
 

  (1,873,519)  

 
 
 

  $  

 
 

  1,622,864  

 
 
 

  $  

 
 

  (4,621,953)  

 
 
 

 

 
 
 

 Cision View original content to download multimedia: https://www.prnewswire.com/news-releases/goodness-growth-holdings-announces-third-quarter-2022-results-301677475.html  

 

SOURCE Goodness Growth Holdings, Inc.

 
 

News Provided by PR Newswire via QuoteMedia

CNX:GDNS,GDNSF
The Conversation (0)
Closeup of lush green cannabis leaves.

Thailand Reverses Course on Cannabis, Moves to Recriminalize Amid Political Fallout

Thailand’s groundbreaking experiment with cannabis decriminalization is rapidly unraveling, with the government formally moving to reclassify the plant as a narcotic and ban recreational sales.

The decision has sent shockwaves through an industry once projected to be worth over US$1 billion.

The country’s Ministry of Public Health issued an order this week stating that cannabis only be sold with a medical prescription, effectively ending a short-lived era of liberal recreational access.

Keep reading...Show less
Cannabis leaf over map of Australia.

A State-by-State Guide to Cannabis in Australia

Australia federally legalised medicinal cannabis in 2016, and Australia's cannabis market has seen major growth since then.

Medical cannabis approvals were up by 120 percent in the first half of 2023 compared to the same period in 2022. Statista forecasts that Australian cannabis revenue will reach AU$3.73 billion in 2024 and grow at an annual rate of 3.22 percent, culminating in market volume worth AU$4.53 billion by 2029.

However, Australia’s cannabis industry is still young. Despite there being a strong case for a regulated market, which was outlined in a July 2024 report by the Penington Institute, recreational use is not legal and medical access remains limited and regulated.

Keep reading...Show less
Cannabis leaf on road marked with "2025," with sunlight in the background.

New Cannabis Consumption Trends, Regulatory Shifts Seen Driving Market in 2025

Understanding trends in the cannabis industry is paramount for investors eyeing a market with steady growth potential, but the landscape is complex as products and regulations continue to evolve.

Consumption habits are changing as edibles, vaping and THC beverages gain traction, especially among younger users, and cannabis companies are adapting their offerings to meet shifting demand.

Meanwhile, regulatory uncertainty, particularly surrounding the future of the US Farm Bill and state-level restrictions on hemp-derived cannabinoids, continues to challenge the market.

Despite these headwinds, production data and long-term growth forecasts suggest the cannabis industry remains on a promising — albeit turbulent — path. Read on for more on key trends to watch in 2025.

Consumption methods evolving post-legalization

Shifts in consumer behavior are reshaping markets across the board, and the cannabis industry is no exception.

While smoking remains the dominant method of cannabis consumption, a recent report from the Centers for Disease Control and Prevention highlights the growing popularity of edibles, vaping and dabbing.

The report notes that vaping and dabbing are particularly pronounced among younger adults.

A separate study published by the American Medical Association and funded in part by the Canadian Institutes of Health Research also points to how product preferences have changed among Canadian users since legalization in 2018.


The study indicates that while the use of flower, cannabis concentrates, oil, tinctures and topicals has decreased during that time, the use of vape cartridges, edibles and beverages has increased.

Edibles and beverages were legalized in Canada in late 2019, and Truss Beverage was one of the first players to introduce cannabis-infused drinks. Truss was a joint venture formed by Molson Coors Canada (TSX:TPX.A,TSX:TPX.B) and HEXO, a cannabis company that has since been acquired by Tilray Brands (TSX:TLRY,NASDAQ:TLRY).

In early 2020, Tilray launched a lineup of confectionery, wellness products and beverages through its subsidiary, High Park; Canopy Growth (TSX:WEED,NASDAQ:CGC) made a similar move. These companies gradually brought their products to the US as more states legalized cannabis for medical and/or recreational use.

Today, established cannabis brands typically offer edibles and beverages alongside their other products. Organigram Global (TSX:OGI,NASDAQ:OGI) is one of the newest US entrants, with its April acquisition of Collective Project providing immediate access to the US hemp-derived THC beverage market.

Growing awareness of health and wellness, potentially amplified by the pandemic-led adoption of health trackers, appears to be making an impact on the alcoholic beverage market.

A 2023 Gallup poll reveals a two decade decline in alcohol consumption, particularly among younger adults, suggesting a shift towards more health-conscious lifestyles within this demographic.

Craft beer production declined by 4 percent year-on-year in 2024, according to data collected by the Brewers Association. This marked the largest drop in the industry's history, excluding the pandemic. For small, independent craft breweries, 2024 marked the third consecutive year of declining production. A drop in the number of operating small breweries last year provides further evidence of this trend, with 501 closures in 2024 versus 434 openings.

Challenges in the alcohol market extend beyond the brewing industry, with the New York Times recently reporting the closure of a handful of nightclubs facing decreased alcohol sales alongside rising insurance and rent costs.

Meanwhile, cannabis lounges have been popping up across the US for the last several years. As of early 2025, several states had legalized or were in the process of implementing regulations for cannabis consumption lounges.

Hemp market growth despite regulatory uncertainty

The burgeoning hemp industry is another segment of the expanding cannabis market.

The legalization of industrial hemp — defined as cannabis with a THC concentration of 0.3 percent or less — through the 2018 Farm Bill led to initial investment and optimistic projections for CBD wellness products and various industrial applications. The sector’s rapid evolution also brought the rise of hemp-derived intoxicating cannabinoids, creating a market that presented both opportunities and complexities for participants.

However, after an initial boom, a lack of infrastructure and clearly defined regulations for CBD, as well as state-level variations and market oversupply, ultimately contributed to a quick retraction.

2024 was a pivotal year for the US hemp industry, as the hemp-related provisions of the 2018 Farm Bill — originally set to expire in September 2023, but extended to December 31, 2024 — created an urgent need to address critical issues like THC limits and the regulation of novel hemp-derived cannabinoids. A major point of contention was the proposed shift from defining hemp based on Delta-9 THC concentration (0.3 percent or less) to “total THC,” which includes THCA.

This change had the potential to significantly impact farmers and processors, as many hemp varieties that are compliant under the Delta-9 THC rule could exceed the 0.3 percent limit when THCA is included.

Various bills and amendments were proposed in 2024 as part of the Farm Bill discussions, each with different approaches to regulating hemp. Separate regulatory frameworks for industrial hemp and hemp grown for cannabinoids were suggested, and many states took their own action, leading to a patchwork of regulations and even outright bans.

Despite challenges, data from the US Department of Agriculture suggests signs of recovery.

The department's annual National Hemp Report from 2024 points to an 18 percent increase in industrial hemp production value between 2022 and 2023, with output growth seen in specific sectors like floral (18 percent), fiber (133 percent) and seed hemp (414 percent). The 2025 report from the Department of Agriculture indicates further expansion, with notable increases observed in both acreage (up 64 percent from 2023) and value (46 percent).

The 2024 Farm Bill ultimately did not pass, and right now the hemp industry is operating under a temporary extension of the 2018 Farm Bill under the American Relief Act of 2025, signed into law on December 21, 2024.

The 2018 Farm Bill is now set to expire on September 30, 2025.

While analysts for Markets and Markets project that the North American hemp industry will grow at a CAGR of 22.4 percent and ultimately reach a valuation of US$30.24 billion by 2029, the future of the industry will be heavily influenced by the outcome of the ongoing Farm Bill discussions.

US cannabis legalization remains stalled

Although there is clear demand for cannabis products, the now-defunct rescheduling process in the US is likely to continue casting a shadow of uncertainty over the industry's long-term trajectory.

Legal and procedural delays, including allegations of improper conduct and bias within the US Drug Enforcement Administration (DEA), led to hearing cancellations, and the new administration of US President Donald Trump has brought leadership changes to key agencies like the DEA and the Department of Justice.

Terry Cole, who Trump nominated to be DEA administrator on February 11, has a history of opposing cannabis legalization in the country. Similarly, Pam Bondi, Trump’s pick to lead the justice department, staunchly opposed a movement to legalize medical cannabis during her tenure as Florida’s attorney general.

While there have been bipartisan efforts in Congress to end federal cannabis prohibition and establish regulations for eventual legalization, the DEA’s actions and statements indicate a potential stall or reversal of progress.

In addition to that, new research is adding complexity to the debate.

A study published in the American Journal of Psychiatry this past March highlights an association between the use of high-potency cannabis strains and increased risks of psychosis, a factor that may not have been fully considered by the Department of Health and Human Services. As stronger cannabis strains become more widely available, a reassessment of their potential health risks may be required.

Investor takeaway

While the cannabis industry holds promise for growth and innovation, investors must remain acutely aware of the regulatory uncertainties and market volatility that will undoubtedly shape its trajectory in the years to come.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.

Person touching a cannabis plant; Australia map in flag colours.

ASX Cannabis Stocks: 10 Biggest Companies

While Australia has yet to legalise all forms of cannabis, the country is a growing medical cannabis and hemp market, with many companies manufacturing, researching and exporting the plant-based product.

Medical cannabis was federally legalised in 2016, and the export of cannabis from Australia was legalised in 2018. As for recreational use, the only state to legalise recreational use and possession so far is the Australian Capital Territory, which did so in 2020, but it did not establish a regulated recreational cannabis market.

The country's medical cannabis market has been steadily expanding in size and scope. A Penington Institute report shows that Australians spent approximately AU$400 million on medicinal cannabis in the first half of 2024, 72 percent higher than the AU$234 million they spent over the entirety of 2022.

Keep reading...Show less
Cannabis leaves, gavel.

Cannabis Round-Up: Rescheduling Faces New Roadblocks, SAFER Banking Act Gets Another Look

February 2025 was characterized by an evolving legislative landscape and important financial updates from major players.

These developments underscore the complex and dynamic nature of the sector as it continues to navigate legal, financial, and regulatory challenges while experiencing ongoing growth and evolution.

Discussions around cannabis rescheduling, changes in federal agency leadership, state-level legalization efforts, and financial reports from key companies all contributed to a month of notable activity in the cannabis space.

Keep reading...Show less
Cannabis leaves, US flag.

Cannabis Round-Up: Banking Reform and Rescheduling De-Prioritized as Trump Takes Office

As a new year began, the cannabis industry saw a range of impactful events in January.

Legal obstacles continued to impede progress on a once-promising attempt to reschedule cannabis in the US, and President Donald Trump's leadership choices for key agencies are diminishing hopes it can be accomplished.

Meanwhile, cannabis banking reform won't be discussed at Wednesday's (February 5) meeting of the Standing Senate Committee on Banking, Commerce and the Economy, and Congress seems in no rush to address it.

Keep reading...Show less

Latest Press Releases

Related News

×