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OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS

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Chart of the Week

Chart of the Week

The Viridian Capital Chart of the Week highlights key investment, valuation and M&A trends taken from that week’s Deal Tracker that we believe are impactful for investors, companies and acquirers.

Week ended 07/25/2025

Viridian Capital Chart of the Week: Q2 Earnings Releases are a Week Away and the Picture Isn’t Pretty

  • Q2’25 Earnings releases are scheduled for the first week of August, and the picture isn’t pretty.
  • The chart shows the percentage change in EBITDA from actual Q2’24 to projected Q2’25, decomposed into the part attributable to changes in revenue (blue bars) and the part due to changes in margins (orange bars). The detailed analyst expectations are shown in the table.
  • Ten of the twelve companies on the graph show y/o/y EBITDA declines, and the aggregate decline for the group is 12.3%. The only two gainers were VIREO and MRMD. Vireo’s gain is largely the result of increased revenues from recently completed acquisitions.  MariMed’s gain is primarily due to increased margins.
  • The decline in EBITDA largely relates to lower projected EBITDA margins. This can be clearly seen on the graph by comparing the relative sizes of the orange and blue bars. Ascend and TerrAscend are the only two companies with higher projected EBITDA margins in Q2 2025 compared to Q2 2024.
  • The overall margin decline is driven by continued inflation in input costs, while revenues continue to shrink due to price compression and customers choosing lower-cost, lower-margin products.
  • Despite the dour expectations for the rest of 2025, analysts continue to expect approximately 6% revenue gains for 2026 and a nearly 10% increase in EBITDA.
  • The primary reason for this projected turnaround is the emergence of new adult states. Pennsylvania and Virginia are among the top candidates. Will these be enough to ratify the aggressive projections? We believe the likelihood is high that analysts will have to revise or walk back those forecasts.
  • The declines in EBITDA shown on the chart point to the importance of careful credit modeling and monitoring. Investors should hold most of their portfolio in credits ranked in the top 15 on the Viridian Credit Tracker model.