$12.1M Revs;
$3.4M AEBITDA
$1.2m OPCF
Opens Sixth Ohio Dispensary.
Completes Arizona Cultivation Wind-Down.
Adjusted EBITDA Grows for Second Consecutive Quarter.
Revenue of $12.1M, level with Q1 2026.
^ Ohio growth offset the planned Arizona cultivation wind-down.
Adjusted EBITDA* of $3.4 million.
^ +22% from Q1 2026.
^ net loss narrowed 79% year-over-year to $(0.3)M.
Operating cash flow of $1.2 after a deliberate Ohio inventory build expected to support growth in the second half of the year.
Opened Fairfield, the sixth Ohio dispensary.
Completed the Arizona cultivation wind-down.
Eloy property now held for sale, with proceeds to reduce secured debt.
Management Commentary
“Q2 kept us on the course we set out in March. The last Eloy harvest came off in May, Fairfield opened in June, and the bottom line moved to essentially breakeven.
We took capital out of Arizona cultivation because the returns no longer cleared our hurdle, and we are redeploying it to Ohio retail, where incremental invested capital earns the highest return available to us.
Retail comes down to earning the customer’s loyalty, controlling the cost of what goes on the shelf and turning inventory into cash. When we sharpened prices in May, traffic followed; Central Phoenix had its best month for customer counts since Q423.
Our shelf cost keeps falling, with better yields at our Ohio cultivation and Arizona product now bought for less than it cost us to grow. Operating cash flow this quarter was timing, not trend, as we built inventory in Ohio to support growth in 2H26.
That growth will be driven by the contribution from Fairfield and continued momentum across our existing Ohio dispensary base. Additionally, proceeds from the sale of the Eloy facility are expected to be applied toward the debt on that property, further strengthening the balance sheet.” Eric Offenberger, CEO of Vext
Call Notes
Completed AZ cultivation wind down one scheduled.
Scaled OH footprint, Fairfield opened in June.
aEBITDA grew for a 2nd consecutive quarter.
Never done a sale leaseback, own assets outright.
Can sell asset on own timing, exactly what is being done w/ Eloy property in AZ.
Proceeds earmarked to reduce debt.
Commodity business, view the retail channel as the core.
OH model working hardest, remains growth engine.
OH state market growing, statewide sales up 28% in 1H.
OH growing more competitive as new doors come online.
Opened 6th OH dispensary in June, high volume location, ramping nicely.
OH yields ramping, benefit vertical model.
Built inventory during the quarter to supply growing retail.
Inventory process improved significantly, now selling through.
7th dispensary in Columbus being built in dual use license.
^ anticipate to open in Q1 ‘27
Made misstep in OH, state allowed change in product sizes.
VEXT priced higher than market would bear.
VEXT has now fixed pricing and customers have recovered.
Columbus retail door at strongest traffic level during the period.
AZ statewide sales down 6% in first 5 months..
AZ wholesale prices hit lowest level on record.
No reason to continue carrying cost of grow + operate cultivation facility in AZ, when can transition to third party wholesale purchasing model at lower prices.
2 dispensaries in AZ + light manu footprint.
Central Phoenix traffic strongest since Oct ’23.
^ that store continues to outperform state average
AZ cultivation capital comes out, gets redeployed.
Going forward priorities main unchanged.
^ grow OH, finish AZ repositioning, pay down debt.
Revenue flat QoQ, margins improved, aEBITDA improved, real progress on balance sheet.
Revenue of $12.1m, down 10% YoY, but flat QoQ.
Revenue decline from AZ, planned reduction in AZ wholesale due to cultivation winddown.
Gains in OH retail offset by AZ retail declines.
Top line declined but profitability improved across the board.
$6.7m gross profit, up from $4.9m in YoY period.
55% GM vs. 36% in YoY period.
Before FV adjustments, GM to 44% from 39% in YoY period.
GM improvement from higher vertical mix, improved cultivation yields, favorable bio asset adjustment from higher OH market pricing.
$3.4m aEBITDA.
^ +22% from Q1
aEBITDA margins to 28% from 23% in YoY period
After reported Q1, fixed aEBITDA reconciliation for FV of debt.
Q1 aEBITDA now $2.8m vs. $3.5m originally reported, non-cash adjustment.
($0.3m) net income vs. ($1.5m) in YoY period.
Stronger GM and lower tax expense drove net income improvement.
$1.2m OPCF, 10% OPCF margin.
aEBITDA and OPCF gap is timing, not trend.
2 items drove difference.
^ deliberate $2m inventory build in OH from improved cultivation yields, already converting to cash
^ $1m payable due to acquisition
Adjusting for 2 items, OPCF margin would have been in upper 20%.
^ in-line w/ aEBITDA margin
OH wholesale setting new monthly record in July.
Eloy held for sale at $7.8m.
Net working capital improved from ($11.7m) at YE to ($0.9m) in Q2.
UTP of $11.7m, up from $8.1m at YE.
Haven’t adjusted Q2 financial statements for rescheduling.
^ will reflect once reliable and measurable
$4.5m cash..
In compliance w/ debt covenants
Extended maturity of EastWest bank note to Jan ‘28.
^ Proceeds from Eloy sale will go towards paying this down.
$17m credit agreement w/ Credit Union.
^ used for $10.5m refinancing debt, acquire Jackson OH facility for $6m, fund continued development and expansion of OH operations.
Expect improved performance in 2H.
Think OH pricing moved and it had to do w/ states change for packaging and lacking authorized product on the shelf.
OH had a tremendous backlog of packaging approvals, starting to move those through, seeing pricing soften as that moves into the market.
Expect more stores in OH to come online.
Fairfield store sitting in Jungle Jim’s property, tremendous traffic, but traffic flow isn’t where it should be yet.
^ Thought Fairfield would ramp much harder, much faster.
Jackson retail is performing.
Jeffersonville retail is performing well.
Columbus store performing well post-pricing adjustment.
OH has anonymous purchasing, so tracking/data is much harder there.
Still don’t see normalization on supply side in AZ.
^ wont be a major cost advantage to producing vs. purchasing.
Seeing news of cultivation shuttering and moving into data centers.
Have seen some private deals where people are consolidating, putting assets together, but hard to know the structure on that.
^ Expect a lot of vendor carryback, earn-outs, etc. don’t know how that will play out.
On a cash basis, decision in AZ was whether to continue making investments (like in OH) to push yield up further ; would be sub-$300/lb cash costs in AZ, but fully absorbed would be above $700/lb..
If can source product < $400/lb. in AZ, or in some distressed cases as $250/lb. or less
Surprised how well executed in OH.
Haven’t had high turnover in AZ or OH, a pleasant surprise.
Yield per plant up 68% in OH over last 2.5 years, not even on most recent data.
^ which Vext is excited to share in Q3.
Feel good about selling into OH market today at current prices.
$2m excess inventory level at Q2, already converted to cash in Q3.
AZ inventory turning over fast.
On OH, short of another jump into yield, would look to convert that into cash in ‘26.
Want inventory about 45 days for wholesale channel, trouble beyond that.
OH yield improvement allows supplying vertical channel beyond thought possible.
Actively under construction for 7th location.
Last sell through of Eloy harvest sold in Q3, a little bit of tail off.
Expecting AZ to no longer be an AZ on CF or aEBITDA margin, as its been in last 6-18 months, wont be as good as OH, but more in-line w/ capital light retail model.
Opportunity in OH pre-roll category, have additional capacity, yields are doing well, flower yields give opportunity to service larger category..
Invested into automation for pre-roll
Focused on cost control.
See OH cultivation expansion as an opportunity for ’27 vs. a necessity for ‘26.
/end
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