Hexo Shares Slide On Q1 EBITDA Loss Of CA$10.78M While Cannabis Company Remains #1 In The Beverages Category

Author: Nina Zdinjak | June 14, 2021 11:18am

HEXO Corp. (TSX:HEXO, NYSE:HEXO) posted its third-quarter earnings results on Monday with total net revenue amounting to CA$22.66 million ($18.66 million) down from CA$32.88 million in the previous quarter.

First-Quarter Financial Highlights

The Canadian cannabis company noted that the decline in total net revenue can be attributed to lower adult-use non-beverage sales of CA$5.1 million in Quebec related to strain cultivation decisions;
Its total net loss for the period was CA$20.71 million, which compares to a loss of CA$19.52 in the same period of 2020;
Hexo reported a negative adjusted EBITDA for the quarter of CA$10.78 million, versus a positive adjusted EBITDA of CA$200,000 in the second quarter of 2021;
First-quarter operating expenses were CA$24.91 million, compared to CA$26.78 million in the same period of the prior year;
Gross profits reached CA$8.82 million, versus CA$18.58 million in the previous quarter, and CA$5.73 million in the same period of 2020.

“At the advent of legalization, we articulated a plan to become a top-three cannabis player in the Canadian adult-use market,” Hexo CEO and co-founder Sebastien St-Louis stated. “With the acquisition of Zenabis and the announcements of intent to acquire 48North and Redecan, we are on the verge of surpassing that objective to become the no.1 licensed producer by recreational market share.”

Despite having a difficult period, Hexo kept the number one position in the beverage category, and “increased our net sales outside of Quebec by 169% over last year, including 14% sequential quarterly growth in Ontario, while continuing to maintain our number one position as the preferred supplier to Quebec,” St-Louis added. “Moving forward, we are committed to rebuilding our strain strategy and brand mix in the province of Quebec to ensure we meet consumer needs and maintain our dominant position in the province.”

Recent Business Milestones

In May, Hexo announced it had signed an agreement to buy 48North Cannabis Corp (OTC: NCNNF) in an all-stock $50 million deal;
Soon after, the cannabis company agreed to acquire the family-owned Canadian cannabis producer Redecan for $925 million in cash and stock;
On June 1st, Hexo closed the previously announced acquisition of Zenabis Global Inc. for $235 million in stock;
It also launched an at-the-market offering of CA$150 million, raising around CA$47.2 million of net proceeds to date;
Won dismissal of the securities class action pending in the Commercial Division of the Supreme Court of the State of New York, New York County;
The company also recently announced its commitment to offset its operational carbon emissions as well as those of its 1,200 employees in order to meet Hexo's goal of reaching 100% carbon neutrality by September 2021.