Goodness Growth Holdings Reports Q4 2023 Revenue Growth, Gross Margin And Operating Profits

Goodness Growth Holdings, Inc.,GDNS GDNSF cannabis company reported its financial results Tuesday morning for the fourth quarter and the entire fiscal year of 2023. The Minneapolis-based firm reported Q4 2023 revenue of $24.2 million, a robust increase of 34.4% compared to the previous year, excluding discontinued operations.

Additionally, the operating income for the same quarter stood at $5.4 million, marking the second consecutive quarter the company's operating income surpassed the $5 million threshold.

Leadership Insights

Interim CEO Josh Rosen highlighted 2023 as a transformative year, emphasizing the successful execution of the CREAM & Fire strategy, which led to continuous improvements in revenue, gross margin, and operating profit.

Amber Shimpa, president and CEO of Vireo Health of Minnesota, a subsidiary, underscored the operational improvements and the anticipation for the launch of adult-use cannabis sales in Minnesota in 2025.

Fourth Quarter Surge

• GAAP Revenue: Reached $24.2 million, marking a 26.9% increase from $19.0 million in Q4 2022. When excluding discontinued operations, revenue rose by 34.4% from $18.0 million in the same quarter the previous year.
• Gross Profit: Grew to $12.1 million, up 41.6% from $8.5 million, with the gross profit margin expanding to 49.9% from 44.7%.
• Operating Income: Increased to $5.4 million from $0.7 million, a 666.9% rise, improving the operating income margin to 22.3% from 3.7%.
• EBITDA: Improved to $5.7 million from $0.8 million, showing a 586.7% increase, with the EBITDA margin reaching 23.7% from 4.4%.

Annual Performance Highlights

• Annual Revenue: Grew by 18.1% to $88.1 million from $74.6 million. Excluding discontinued operations, revenue increased by 30.1% to $86.1 million from $66.2 million in 2022.
• Gross Profit for the Year: Increased to $44.1 million, up 42.7% from $30.9 million, with a yearly gross profit margin of 50.0%, up from 41.4%.
• Operating Income: Turned positive to $10.6 million from a loss of $6.9 million in 2022, marking a significant turnaround.
• Annual EBITDA: Also turned positive to $17.0 million from a loss of $10.0 million.

Financial Health And Future Prospects

The company reported total current assets of $148.9 million as of December 31, 2023, with $16.0 million in cash.

Despite facing challenges, including a total of $179.5 million in current liabilities and ongoing discussions to remain compliant with credit agreements, Goodness Growth Holdings remains optimistic.

Vireo Health Acquisition 

Goodness Growth reported that the anticipated divestiture of its New York operations is a strategic move to de-risk its balance sheet. ACE Venture Enterprises, Inc., a minority-owned business, is set to acquire Vireo Health of New York, aiming to fast-track its entry into the New York market.

As part of the strategy to ensure the long-term success of both organizations, Ace plans to retain Goodness Growth through a collaborative advisory agreement. The deal's terms outline a purchase price ranging from $3 to $5 million, coupled with a significant investment of $20 million from Ace for the development of the Johnstown cultivation and manufacturing campus, alongside Ace’s assumption of the IIP lease.

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