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Hexo Stock Falls After Cannabis Company Posts Q4 Loss

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Hexo Stock Falls After Cannabis Company Posts Q4 Loss

Hexo Corp. (TSX: HEXO) (NYSE: HEXO) posted a fourth-quarter adjusted net loss of CA$43.73 million ($33.5 million) Tuesday, sending the cannabis company's stock lower. 

"The increase in net loss was primarily due to the significant scale of operations and increased stock-based compensation expense due to higher cannabis market value, increased R&D expenditures and an impairment loss on inventory," according to Hexo.

The company's net loss for 2019 as a whole was CA$67.6 million. 

Hexo previously warned investors in a preliminary fourth-quarter report that its net revenue was expected to miss analyst estimates and withdrew its 2020 outlook. 

Fourth-quarter net revenue amounted to CA$15.4 million. Earlier in the month, the company guided to a net revenue range of CA$14.5 million to CA$16.5 million. 

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Two weeks after the release of a preliminary report, HEXO postponed its fourth-quarter report, announced significant layoffs and a $70-million private placement.

Adult-use sales made for 91% of the total revenue in the fourth quarter, reaching CA$18.9 million in gross revenue, up from CA$14.6 in the previous quarter. 

“We are at the end of the first year of adult use legalization in Canada, which was an incredible year full of successes and challenges across the industry. We’ve gone from $4.9M to $59.3M in gross revenue in just one year. This type of revenue growth is a testament to the company’s resilience and capacity to pivot in the face of uncertainty,” Sebastien St-Louis, Hexo's CEO and co-founder, said in a statement. 

Hexo shares were down 4.3% at $2.22 at the time of publication. 

Photo courtesy of Hexo. 

 

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