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.
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.
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 1st, 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 additional $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.
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.
As a reminder, if you'd like to ask a question during the question- and- answer session, press star followed by one on your telephone keypad. We'll take a brief moment to compile a Q&A roster. The first question comes from the line of Pablo Zuanic from Zuanic & Associates. Your line is live.
Thank you, good morning, everyone. Look, the first question is, I guess, very, you know, a bit 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, you know, your capabilities, the ability to integrate what's a very quick pace of M&A expansion. That's the first question. 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. 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, you know, 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. Thank you for that. Let's start with that.
Thank you, Pablo. I'm gonna start from the second question. Florida is a massive undertaking, right? 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, you know, your first question, which is the noise around consolidation. In that sense, Florida is like, almost like a orphan asset for us, and that's gonna be our first meaningful integration. We think the footprint lends itself nicely. There's very little overlap, maybe five stores between the two companies. 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. We like the fact that, you know, the Green Dragon assets are growing meaningfully since last year. You can see that's a public number, so I'm not divulging any, you know, information that is not broadly available to the informed. In fact, Green Dragon, I believe, is almost high probably in the 60%-80% growth in Florida. We also have very good production capabilities there with the size of grow that we have in Florida. Florida is going to be a, you know, 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 sorry, I'm drawing a blank as to the third company that we're a leading operator. You will find out that we, our bench is extremely, you know, 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 you know, any of those individuals can really run the entire company. You'll be pleasantly surprised with how fast we've integrated those companies.
Of course, I don't want to, I don't want to discount the leadership in the states like Missouri, because they're doing an incredible job. As you can see, you know, they're growing double-digit. We're very exciting with the team that we have, and we have a very deep bench. Having said that, Florida will be, you know, a new undertaking. We have, you know, between the two companies, we have north of 70 stores, and that will require, you know, a leadership team that can execute on the levels of EBITDA that we expect to see in Florida. We are banking on Florida being on par with all the other competitors in the state.
That's good. Thank you. 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, I suppose Vireo was involved in that decision-making process. You know, 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? 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. Thank you.
I'll start from the second question. Every market we're in, we would like to scale to over $100 million. You can take that target and apply it to the New York question. 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, you know, cash-on-cash returned in one year, that's 100% cash-on-cash return. 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, you know, other people's mistakes, which is my preferred state of operating. You know, the CapEx at least, uncertainty.
Thank you. I wanna add one more, apologies if there's other people on the queue here, on the Q&A queue. In terms of Minnesota, you know, the market sequentially was up 15%. I think your retail sales were down slightly sequentially. I know there's more stores coming in, right? Maybe that explains the decline in retail sales in Minnesota for you. If you can give color on that. More important, talk about your, you know, where you are with your capacity expansion there, right? 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. Thank you.
Thank you, Pablo. 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, you know, we had really rough weather in Minnesota. We had to close a few times. I think that, you know, 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%. Again, we don't take margins to the bank, we take dollars, so we just wanna make sure that we're building a company that has non-volatile cashflow going forward. In terms of our capacity, our growth will be up online, in line, like it's imminent, so you can extrapolate from there when the first harvest will happen. We will have, you know, combined, I would say we would be the largest in the state by maybe a factor of 2.
Got it. Thank you.
Thank you.
The next question comes from the line of Tom Kerr from Zacks SCR. Your line is now live.
Good morning, guys. 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, you know, what has changed in terms of you guys being acquisitive?
Nothing has changed on our stock price or our multiples, so nothing is gonna change on our acquisition strategy. That's really what's driving it.
The opportunities are still there.
Multiple
A certain areas.
Too, too many.
Multiple. Too many. Okay. 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?
Thanks, Tom. 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, you know, we can perform if there is meaningful regulatory change or, you know, we can perform if there isn't. What I like about, you know, regulatory or what I call exogenous factors, is that they impact all the companies in the industry. You know, having said that, I think at the end, the best balance sheet and the best team creates the best income statement, so that's kinda how I see it.
It is, you know, we're probably just as plugged in to everything as everybody else, but I'll wait it for the announcements rather than speculate.
Got it. All right. I appreciate it. That's all I have for now. Thank you.
Thank you.
There are no further questions. I'll now turn the call back over to John Mazarakis for closing remarks.
I wanted to thank everyone that joined us today. Have a wonderful morning, and we'll see you on the next one.
That concludes today's meeting. You may now disconnect.