The long, slow creep toward profitability that many Canadian-based marijuana companies are increasingly moving towards is starting to gain momentum as cannabis-infused adult beverages begin to pave the way.
The latest example came yesterday, when Hexo (NYSE :), (TSX 🙂 revealed its most recent earnings results. The Quebec-based marijuana grower posted net sales of C $ 29.5 (US $ 23.1) million for fiscal year 2021, an increase of 9% from the previous quarter.
The increase in revenues was achieved with an 8% increase in recreational cannabis sales and an impressive 54% jump in the adult beverage category.
But despite the significant gains that contributed to Hexo achieving gross sales of C $ 41.3 (US $ 32.4) million for the three-month period, which is an increase of 14% – the highest total the company has posted in its history – the company still ended the quarter with an adjusted EBITDA loss of C $ 420,000 (US $ 330,000).
But when it comes to adjusted quarterly losses, Hexo has gone in the right direction. The last three-month period was the sixth consecutive quarter of improved losses for the company.
Hexo CEO Sebastien St. Louis said:
“This was the sixth consecutive quarter of improved EBITDA as we move towards positive adjusted EBITDA. We believe the strength of our balance sheet, along with our low depreciable capital base, has put us on a path where we look beyond positive adjusted EBITDA and strive for positive earnings per share. "
This was also the second quarter of the company's introduction of adult beverages as part of its partnership with Molson Coors (NYSE 🙂 of Denver, Colorado. The company only markets non-alcoholic cannabis-infused drinks in the Canadian market.
The Hexo-Molson Coors brand of Truss cannabis drinks is the market leader in Canada. Last month, according to the latest data, it dropped the Canopy Growth brand (NASDAQ :), (TSX 🙂 Tweed brand, to become the best-selling cannabis drink in Canada.
Hexo's shares gained about 10% in Early Trading yesterday on the news of the latest earnings results, but by the close they had reversed most of those gains. They finished 1% in New York on Monday, closing at $ 1.01, while in Toronto they finished at $ 1.32, a 3.13% jump on the day. The company's stock has lost just over 33% since the beginning of the year.
Not Everyone Roasts Beverage Sales Yet
On the heels of slipping into second place in the cannabis beverage industry, Canopy announced that the head of global The company's beverage division is leaving. Andrew Rapsey is leaving the company he joined in August.
According to reports of cannabis sales data provided by HyFyre, approximately $ 23 million worth of cannabis-infused beverages has been sold in Canada since early 2020. Hexo & # 39; s Truss brand is now the most popular. Defending a position in the new cannabis beverage market is considered critical. Canopy has made a strong commitment to the industry by signing a licensing agreement with US-based Acreage Holdings (OTC :), (CSE 🙂 to market its beverage brands in the United States as soon as federal regulations allow.
In addition, American beer maker Constellation Brands (NYSE 🙂 has invested heavily in Canopy's beverage segment.
More Bad News for Canopy
The marijuana giant is cutting its Canadian cultivation activities and laying off 220 employees, a move that the company takes C $ 200 (US $ 157) million per year, the company said in a statement last week.
Canopy Growth will close indoor growing facilities in Newfoundland, New Brunswick, Albert and Ontario, in addition to outdoor growing operations in Saskatchewan. The move reduces the company's Canadian indoor cultivation activities by 17% and eliminates all outdoor activities.
