Vireo Growth Inc. (OTC:VREOF) Q1 2026 Earnings Call Transcript

Vireo Growth Inc. (OTC:VREOF) Q1 2026 Earnings Call Transcript May 12, 2026

Vireo Growth Inc. misses on earnings expectations. Reported EPS is $-0.01306 EPS, expectations were $0.01.

Operator: Good morning, and welcome to Vireo Growth, Inc.’s Q1 2026 Results Call. The company would like to remind everyone that today’s conference call may contain forward-looking statements within the meaning of U.S. and Canadian securities laws. These statements are based on management’s current expectations and involve risks and uncertainties that could differ materially from actual events and those described in such forward-looking statements. For more information on forward-looking statements, please refer to forward-looking statement disclosure in the company’s earnings release. This call may also contain non-GAAP financial measures. Please see our earnings release for reconciliations to GAAP measures. I’ll now hand the call over to Chief Executive Officer, John Mazarakis.

John Mazarakis: Thank you. Good morning, everyone. Over the past several months, we’ve closed Schwazze, Eaze, Hawthorne, and the PharmaCann MSA, adding over $100 million of quarterly revenue to our top line. The results are transformative as we’re now the fourth largest cannabis company by revenue on a pro forma basis. We now operate in 10 states with over 160 dispensaries and hold leading positions as the largest operator in Colorado, Utah and Nevada, along with meaningful market share in Minnesota and Missouri. We also announced two additional transactions, FLUENT and Glass House. The Glass House partnership brings together Vireo’s retail and delivery Eaze infrastructure with Glass House’s large-scale, low-cost production.

This creates a scaled retail platform designed to improve operating efficiency and expand consumer access in the world’s largest legal cannabis market, California. The FLUENT opportunity expands our presence in one of the most important cannabis markets in the country. Florida’s limited license structure, rewards scale and combines two complementary networks with minimal overlap, creating a top three platform. We closed the first quarter with over $135 million in cash on the balance sheet. The strong financial position, along with rescheduling tailwinds and our disciplined approach to growth through accretive M&A and organic investment, positions us to deliver a strong 2026. That concludes my prepared remarks. I’ll now hand over the call to Tyson.

Tyson Macdonald: Thank you, John, and thanks to everyone for joining us. I’ll run through a quick summary of key income statement line items and then review our balance sheet in more detail. First quarter GAAP revenue of $106.2 million increased 333% year-over-year on a reported basis. Giving effect to the acquisitions of Deep Roots, Proper, Wholesome, Eaze, Schwazze, Hawthorne and the PharmaCann MSA as if they were completed on January 1, 2026. First quarter pro forma revenue increased 5% relative to the prior year quarter to $210.2 million, making us the fourth largest cannabis company by revenue. This increase highlights continued organic growth, particularly in markets where post-merger integration activities are substantially complete.

For a complete review of our revenue performance by state and sales channel for the first quarter, please refer to the accompanying market sales tables in today’s earnings release, which will also be filed with our 10-Q later today. Excluding the impact of non-cash inventory valuation adjustments primarily related to the required GAAP fair value step-up associated with our closed transactions, gross margin was 56.3%, reflected in an improvement of 280 basis points compared to the prior year quarter. Adjusted EBITDA was approximately $32.7 million or 30.8% of sales, reflecting an improvement of approximately $26.1 million and 390 basis points as compared to the first quarter of last year. On a pro forma basis, to again include all recently closed transactions, adjusted EBITDA increased 29.8% to $42.2 million or 20.1% of sales compared to $32.5 million or 16.2% of sales in the first quarter of last year.

Moving to the balance sheet, we ended the quarter with $137.8 million of cash and an ad ditional $1 million of marketable liquid securities. Total current assets, excluding tax receivables and assets for sale were $240 million compared to current liabilities, excluding uncertain tax liabilities of $82 million. The company currently has approximately 1.6 billion shares outstanding on a treasury stock method basis using a share price of $0.50. We remain in a very healthy financial position and are focused on driving returns for shareholders through prudent capital deployment against our highest growth opportunities. That concludes my prepared remarks. I’ll now hand the call back to John for some closing comments.

John Mazarakis: Thank you, Tyson. In summary, we believe the performance we’re seeing across the portfolio, combined with a disciplined execution and accretive M&A, positions us to drive durable long-term value for our stakeholders. Thank you for joining us today. Operator?

Operator: [Operator Instructions] Your first question comes from the line of Pablo Zuanic from Zuanic & Associates.

Q&A Session

Pablo Zuanic: Look, the first question is, I guess, very philosophical and broad. Obviously, congratulations on all the deals you’re doing, but you’re integrating a lot of assets across several states. Talk about your management team depths, your capabilities, the ability to integrate what’s a very quick pace of M&A expansion. That’s the first question. And the second one, more on Florida, if you can talk about — give more color about the combined footprint of Green Dragon and FLUENT in terms of stores and cultivation. But more important than that, because I think those numbers have been given in the press releases, talk about the upside in terms of sales per store, cultivation yields, EBITDA. It seems to me that, that operation has a lot of room to expand in sales and EBITDA based on where it is today. But thank you for that. Let’s start with that.

John Mazarakis: Thank you, Pablo. I’m going to start from the second question. Florida is a massive undertaking, right? And if you think about what we’re doing, we’re partnering with great companies that are really good operators at the local level to minimize your first question, which is the noise around consolidation. In that sense, Florida is like, almost like an orphan asset for us, and that’s going to be our first meaningful integration. We think the footprint lends itself nicely. There’s very little overlap, maybe five stores between the two companies. And we are in the process of identifying a leader for the entire state. We like our entry point. We like the basis of what we got Florida for. We like the fact that we’re unlevered.

And we like the fact that the Green Dragon assets are growing meaningfully since last year. And you can see that’s a public number. So I’m not divulging any information that is not broadly available to be informed. In fact, Green Dragon, I believe, is almost high — probably in the 60% to 80% growth in Florida. We also have very, very good production capabilities there with the size of grow that we have in Florida. So Florida is going to be the first test case for us as to how we’re going to turn around an asset that we again bought very reasonably. In terms of broader integration, I think if someone was to discuss local economics with each one of our market leaders in Nevada, Utah and — Nevada, Utah and — sorry, I’m drawing a blank as to the third company that we’re a leading operator.

You will find out that our bench is extremely healthy. In fact, I joke all the time that any one of those operators can really run the entire company — sorry, Colorado is the third state. I don’t know how I can forget Colorado. But any of those individuals can really run the entire company. So you’ll be pleasantly surprised with how fast we’ve integrated those companies. And then, of course, I don’t want to discount the leadership in the states like Missouri because they’re doing an incredible job. As you can see, they’re growing double-digit. So we’re very excited with the team that we have, and we have a very deep bench. Having said that, Florida will be a new undertaking. We have — between the two companies, we have north of 70 stores, and that will require a leadership team that can execute on the levels of EBITDA that we expect to see in Florida.

But we are banking on Florida being on par with all the other competitors in the state.

Pablo Zuanic: That’s good. Look, just a quick follow-up. If you can talk about the decision to sell the Texas license. I know that was done by FLUENT, but I suppose Vireo was involved in that decision-making process. With the potential delays on the new licenses being awarded by the TCUP program, you would think that the incumbents will have a leg up over the new entrants, right? So maybe talk about the decision to sell that license. And then separately, if you can give more color in terms of your new New York JV, the potential upside for that business?

John Mazarakis: So again, I’ll start from the second question. Every market we’re in, we would like to scale to over $100 million. So you can take that target and apply it to the New York question. Obviously, we partnered with this group because we think they’re capable, especially on the sales side, and we do have the assets to get there. In terms of Texas, — those of you that know me probably know that I despise CapEx, especially when there’s meaningful regulatory uncertainty. I like to invest in projects where the CapEx investment will be, cash-on-cash return in one year. So that’s 100% cash-on-cash return. I don’t think Texas — I think Texas is a very large state. It requires a huge commitment that I’m not really ready to make right now, and I feel there will be other opportunities in the future to go back to Texas and capitalize on other people’s mistakes, which is my preferred state of operating the CapEx at least uncertainty.

Pablo Zuanic: I want to add one more, and apologies if there’s other people in the queue here on the Q&A queue. In terms of Minnesota, the market sequentially was up 15%. I think your retail sales were down slightly sequentially. I know there’s more stores coming in, right? So maybe that explains the decline in retail sales in Minnesota for you. If you can give color on that. But then more important, talk about your — where you are with your capacity expansion there, right? And are you already at your cap? Or is there room for you to feed more biomass to your own stores in the future or to even tap the wholesale market? That’s all for me.

John Mazarakis: Thank you, Pablo. So I wouldn’t worry about Minnesota. I think our Minnesota plan is to be the market leader by virtue of being the largest producer in the state. We think that what you witnessed in Q1 is related to weather, and we had really rough weather in Minnesota. We had to close a few times. I think that if you focus on the EBITDA margins, that’s really what we’re focused on two numbers and margin is actually not my first priority in Minnesota. My first priority is the EBITDA amount and the gross profit. I’m laser focused on that. So I expect sales to increase in the next 12 months, and I also expect at least the EBITDA to remain the same or grow from where it is today, which is a high bar given that our EBITDA margin is north of 60%.

But again, we don’t take margins to the bank, we take dollars, so we just want to make sure that we’re building a company that has non-volatile cash flow going forward. In terms of our capacity, our growth will be online, in line — like it’s imminent. So you can extrapolate from there when the first harvest will happen. But we will have — combined, I would say we would be the largest in the state, but maybe a factor of two.

Operator: Your next question comes from the line of Tom Kerr from Zacks SCR.

Thomas Kerr: A big picture question on the acquisition market. Are you seeing any changes over the last three months in terms of opportunities, valuations, various states? Or what has changed in terms of you guys being acquisitive?

John Mazarakis: Nothing has changed on our stock price or our multiples, so nothing is going to change on our acquisition strategy. That’s really what’s driving it.

Thomas Kerr: But the opportunities are still there, at least multiple

John Mazarakis: Too many.

Thomas Kerr: Okay. And then one more big picture question on the rescheduling. Any early comments or thoughts on that? I know it wasn’t what everybody was expecting, but any early thoughts on the rescheduling issue?

John Mazarakis: Thanks, Tom. So in general, you probably heard me say this, if you heard me speak in public or in previous earnings calls. I try to remove the noise of things that I cannot control. I don’t have a crystal ball. What I’m trying to create is I’m trying to build a company that we can perform if there is meaningful regulatory change or we can perform if there isn’t. And what I like about regulatory or what I call exogenous factors is that they impact all the companies in the industry. And having said that, I think at the end, the best balance sheet and the best team creates the best income statement. So that’s kind of how I see it. It is — we’re probably just as plugged into everything as everybody else, but I’ll wait it for the announcements rather than speculate.

Operator: There are no further questions. I’ll now turn the call back over to John Mazarakis for closing remarks.

John Mazarakis: I wanted to thank everyone that joined us today. Have a wonderful morning, and we’ll see you on the next one.

Operator: That concludes today’s meeting. You may now disconnect.