In this market news, HEXO Corp. (TSX:HEXO), one of the Canadian marijuana stocks, saw it first-quarter revenue surge
SmallCapPower | December 19, 2018: HEXO Corp. (TSX:HEXO), one of the Canadian cannabis stocks, reported its financial results for Q1 2019 recently. Gross revenue for the quarter came in at $6.7 million, compared to $1.1 million in the same quarter last year. The increase is the result of the inclusion of $5.2 million in sales of adult-use cannabis in the first two weeks following legalization in Canada and a 30% YoY surge in sales from medical cannabis. The Company reported gross revenue per gram of $5.45 in the adult-use market and $9.12 in the medical market.
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Sales volume for adult-use cannabis was 952,223 gram equivalents sold in Q1 2019. Dried flowers represented 81% of gram equivalents sold during the period. Likewise, sales volumes for medical cannabis increased by 30% to 157,504 gram equivalents, compared to 120,844 in Q1 2018, attributed to an increase in oil-based products as the product mix purchased by customers shifted towards smoke-free alternatives. Total dried grams sold increased 10% when compared to the same period a year ago. Gross Profit came in at $7.2 million compared to $2.4 million in Q1 2018.
The Company reported a net loss for Q1 2019 of $12.8 million, compared to a loss of $0.4 million for the same period in FY 2018. The increased loss was due mainly to higher expenses (marketing & promotion and general & administration) in line with the expanding scale of operations in preparation for the legalization of the adult-use market, and the realization of stock-based compensation expenses in line with increased headcount and market capitalization.
HEXO Corp’s CEO and Co-founder Sebastien St-Louis said, “HEXO hit tremendous milestones in the weeks following the legalization of adult-use cannabis. The Company continues to honor its commitment to executing on its plans, which has led to a significant portion of our first quarter’s $6.7 million in revenue generated in just two weeks and represents more than a 500% increase over last quarter. HEXO’s first-quarter financials highlight the remarkable pace of its adult-use cannabis sales and puts HEXO on-track to generate significant revenue this year. Today, we are a world-class organization as our team continues to focus on our strategy, which includes partnering with Fortune 500 companies in various product categories and leverage their distribution platforms.”
On an operational front, HEXO Corp created Truss, a Joint Venture with Molson Coors, to introduce cannabis-infused beverages. The Company acquired a facility in Belleville, Ontario to establish a centre of excellence for cannabis-based consumer packaged products. Further, HEXO signed a partnership in Greece that will enable the Company to establish a Eurozone distribution center. HEXO Corp expects to achieve its run goal rate of 108,000 kg of annual dried flower production once the 1,000,000 sq. ft. facility becomes operational at the end of 2018.
Hexo Corp. stock trades at a market capitalization of C$980.9 million with a price-to-book multiple of 2.9x.
Disclosure: Neither the author nor his family own shares in the company mentioned above.
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