HEXO’s quarterly loss reaches C$146.6 million

HEXO (NASDAQ:HEXO,TSX:HEXO) shareholders had a tough week of trading as the company amended an investment agreement, saw a subsidiary file for creditor protection and laid off 450 employees.

Another Canadian cannabis retailer cited poor market conditions as the reason for its quarterly loss.

Keep reading to learn more about cannabis from the past five days.


HEXO shareholders face a week of struggles

As part of the financial report for its third fiscal quarter, HEXO reported a net loss of C$146.6 million for the period. The loss came despite nearly doubling revenue from the same period last year.

CEO Charlie Bowman said the company was “committed to streamlining” its operations to generate positive cash flow and drive growth. According to a BNN Bloomberg reportthe cannabis producer will save C$30.6 million by laying off 450 employees.

Given its recent performance, HEXO has elected to resume its previous financial guidance for 2022 and 2023.

Also this week, HEXO revised its previously announced agreement with Tilray Brands (NASDAQ: TLRY, TSX: TLRY). The deal, which will give Tilray the option to acquire a stake in HEXO, will now allow Tilray to do so at a lower price.

“The partnership is an essential next step in improving our capital structure, and we are confident that the synergies achieved will reset the industry,” Bowman said.

In addition to its own challenges this week, HEXO acknowledged the difficulties its subsidiary Zenabis Global is currently going through. Zenabis has filed a petition in a Quebec court for protection under the Companies’ Creditors Arrangement Act; its objective is to restructure its commercial and financial activities.

In his fileZenabis said the following about his current situation:

Due to, among other things, margin pressures caused by the fragmentation of the entire cannabis industry, general operational and financial underperformance, and financial pressures resulting from obligations owed to creditors, Zenabis Group n has not been able to generate positive cash flow and has consistently incurred cumulative losses.

The news reflects the difficulties cannabis investment experts are seeing in the Canadian space – for some time market watchers have been pointing out that there is no longer room for error for some players, suggesting that the way to change things starts to disappear. Amid mounting losses at home, Canadian cannabis companies are also not finding it easy to access the US market.

A Canadian retailer shares its financial results

Cannabis retailer Fire & Flower Holdings (TSX:FAF,OTCQX:FFLWF) has offered investors a closer look at its latest financial numbers as the company results presented for its first fiscal quarter.

The company reported a net loss of C$9.9 million, resulting in a loss per share of C$0.27 for the period, partly due to lower revenue. The loss this quarter, however, was an improvement over the same period last year, when the company recorded a loss of C$16.5 million.

The company’s decline in revenue, C$40.9 million for the quarter, was blamed on “increasing competition from newly issued licenses and pricing pressures in the cannabis retail market.”

Stéphane Trudel, CEO of Fire & Flower, said the company aims to achieve positive adjusted EBITDA and free cash flow. In response to the growing challenges eating away at the company’s revenue, he said the company would seek to optimize its retail network.

“We remain focused on improving near-term financial performance and remain firmly focused on our ultimate goal of financial sustainability by driving positive free cash flow,” the executive said.

Cannabis Business News

  • Ayr Wellness (CSE: AYR.A, OTCQX: AYRWF)began selling adult-use cannabis products at its three New Jersey dispensaries. Jonathan Sandelman, CEO of Ayr, said the state produced $24 million in its first month of adult sales and called the launch “monumental”.
  • Delta 9 Cannabis (TSX:DN,OTCQX:DLTNF)firm its most recent public offering worth nearly C$2 million by selling shares at a price of $0.22 each.
  • The Valens Company (TSX: VLNS, NASDAQ: VLNS)confirmed it does not comply with NASDAQ’s minimum bid price requirement. The company now faces a deadline of December 12, 2022 to fall back into the pricing rule.
  • RIV Capital (CSE: RIV, OTC Pink: CNPOF)share financial results for its fourth fiscal quarter of 2022 and for the full year. Mark Sims, president and CEO, said the company would invest in four dispensaries as well as a facility in New York to target the state’s high-end market. The company reported a net loss on both a quarterly and annual scale.

Don’t forget to follow us @INN_Cannabis for real-time updates!

Securities Disclosure: I, Bryan McGovern, have no direct investment interests in any of the companies mentioned in this article.

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