Vext to discontinue operations at Arizona facility

Executive Summary

• Vext Science Inc. plans to discontinue operations and sell its cultivation facility in Eloy, Arizona, to optimize its Arizona footprint for profitability and return on capital.
• The company intends to seek regulatory approval to expand its Jackson, Ohio, cultivation facility to support a growing retail footprint, with key equipment from Eloy being redeployed to Ohio to save approximately $2 million in capital expenditures.
• Net proceeds from the Eloy sale will be used to reduce outstanding mortgage debt, while the company shifts its Arizona supply model to wholesale procurement to improve cash flow and margins.

Key Details

• Arizona Operations Optimization:
  • Closure and planned sale of the Eloy cultivation facility.
  • Decommissioning of the Eloy facility expected by the end of Q2 2026.
  • Shift from internal cultivation to a wholesale procurement model in Arizona to address market oversupply and pricing pressure.
  • Phoenix facility retains manufacturing, processing, and cultivation infrastructure to allow for resumption of internal production if market conditions change.
  • Expected improvements include higher adjusted EBITDA margins, elimination of high fixed-cost indoor cultivation, and a significantly improved cash conversion cycle (transitioning from ~100-day seed-to-sale to a streamlined procurement model).
  • Elimination of continuing fixed labor, overhead, and facility operating costs associated with Eloy.
• Ohio Cultivation Expansion:
  • Vext plans to seek approval from the State of Ohio to expand its Jackson cultivation facility.
  • Ohio is a key growth market following the transition to adult-use sales, with statewide sales surpassing $1 billion in the first full year.
  • Current footprint: 5 consolidated dispensaries, 8 retail licenses (state ownership cap).
  • 6th location expected to open in Q2 2026.
  • 7th location currently under construction.
  • 8th and final location construction anticipated to begin in Q3 2026.
  • Expansion intended to support new dispensaries coming online in 2026 and 2027.
• Financial Impact and Capital Allocation:
  • Proceeds from the Eloy sale will be applied directly to reduce outstanding mortgage debt, lowering interest costs.
  • Redeployment of key equipment from Eloy to Ohio is expected to save approximately $2 million in capital expenditures for the Ohio buildout.
  • Divestiture eliminates future maintenance capital expenditure requirements for the Eloy facility (HVAC, lighting, irrigation, growing infrastructure).
• Upcoming Events:
  • Financial results for Q4 and fiscal 2025 (period ended Dec. 31, 2025) to be released before market open on April 23, 2026.
  • Conference call and webcast scheduled for April 23, 2026, at 8 a.m. ET.

Notable Quotes

• "The planned closure of our Eloy facility and its subsequent potential sale reflects our commitment to disciplined capital allocation while prioritizing high-growth opportunities," said Eric Offenberger, chief executive officer of Vext.
• "Arizona remains an important market for Vext, but persistent statewide oversupply and recent market contraction necessitate a leaner, more efficient footprint to maintain and grow profitability. By transitioning away from internal cultivation at Eloy, we can take advantage of favourable wholesale market conditions while maintaining a reliable supply of high-quality product for our retail network. This shift will enable us to pro-actively address market headwinds, reduce debt and improve profitability without compromising the customer experience. At the same time, we are redeploying capital and assets to Ohio, where the market continues to demonstrate strong growth following the transition to adult-use sales."