The Greenrose Holding Company Inc.

Revenue in Q2 2022 increased 40% year over year to $9.2 million from $6.6 million. Gross profit was $2.9 million versus $4.4 million a year ago, and gross margin was 31.5% compared with 67.6% in Q2 2021. Net loss was $10.3 million versus net income of $3.3 million in the year-ago quarter; adjusted EBITDA was $3.1 million versus $4.6 million last year. Capex was $0.9 million, cash and restricted cash were $2.7 million at June 30, 2022 versus $9.1 million at December 31, 2021. Management suspended full-year 2022 guidance, which previously called for revenue of $100 million to $120 million, net income from approximately a $5 million loss to approximately $1 million of income, and adjusted EBITDA of $65 million to $75 million, pending better visibility on Connecticut recreational sales timing.

Mickey Harley said the company is focused on strengthening its foundation as an early-stage multi-state operator by ramping capacity in Arizona and Connecticut and preparing for Connecticut adult-use legalization. He emphasized debottlenecking progress at True Harvest, the successful first harvest from new Theraplant grow rooms, and inventory build ahead of rec sales. His tone was constructive but cautious, noting Arizona wholesale price pressure and softer-than-expected Connecticut medical demand.

Bernard Wang introduced himself as the new CFO, highlighting 25 years of finance and accounting experience, including public-company and cannabis roles. On the numbers, Paul Wimer, in the financial review, said the quarter was affected by $6.3 million of cost of goods sold, including a $1.2 million Theraplant inventory step-up and a $2.9 million True Harvest contribution, plus $3.3 million of G&A driven by True Harvest and public company costs. He also pointed to $6.9 million of interest expense and $4 million of intangible amortization contributing to the net loss, and said capex should trend closer to maintenance level as the buildout at True Harvest progresses. Cash and restricted cash ended at $2.7 million, down from $9.1 million at year-end, mainly because of acquisition-related expenses and debt obligations.

The main analyst question focused on when Connecticut adult-use sales would open and whether Greenrose could serve the retail base and handle conversion fees. Mickey Harley said the company had originally assumed an October 1 start, now thinks the date will slip, but still expects the recreational market to open sometime this year and expects to sell to all stores as they receive licenses. He also said Greenrose is building inventory and believes it has the largest cannabis capacity in the market, adding that the company expects to pay the conversion fee soon.