HEXO shareholders (NASDAQ: HEXO, TSX: HEXO) had a difficult week of trading as the company modified an investment agreement, saw a subsidiary file for creditor protection and fired 450 employees.
Another Canadian cannabis retailer pointed to poor market conditions as the reason for its quarterly loss.
Read on for more highlights on cannabis for the past five days.
HEXO shareholders face a week of fighting
As part of its third fiscal quarter financial report, HEXO announced a net loss of C $ 146.6 million for the period. The loss came despite the fact that revenues almost doubled compared to the same period last year.
CEO Charlie Bowman said the company is “committed to streamlining” its operations in order to become a positive cash flow and drive growth. According to a report by BNN Bloomberg, the cannabis producer will save 30.6 million Canadian dollars by laying off 450 employees.
Given its recent performance, HEXO has chosen to regain its previous financial orientation for 2022 and 2023.
Also this week, HEXO revised its previously announced deal with Tilray Brands (NASDAQ: TLRY, TSX: TLRY). The deal, which will give Tilray a chance to acquire a stake in HEXO, will now allow Tilray to do so at a lower price.
“The partnership is the next essential step in improving our capital structure and we are confident that the synergies made will restore the industry,” Bowman said.
In addition to its own challenges this week, HEXO acknowledged the struggles its subsidiary Zenabis Global is currently experiencing. Zenabis has filed a petition in a Quebec court to protect himself under the Act in agreement with the creditors of the companies; its goal is to restructure its business and financial affairs.
In his presentation, Zenabis said the following about his current situation:
Due to, among other things, margin pressures caused by the fragmentation of the cannabis industry in general, widespread operating and financial performance, and financial pressures arising from obligations to creditors, the Zenabis Group has not been able to of generating positive cash flows and has been constant. incurred accumulated losses.
The news reflects the struggles that cannabis investment experts see in the Canadian space: market observers have long stressed that there is no more room for error for some players, suggesting that the way to change things is starting to disappear. Amid growing losses at home, Canadian cannabis companies are also not finding it easy to enter the U.S. market.
The Canadian retailer shares financial results
Cannabis retailer Fire & Flower Holdings (TSX: FAF, OTCQX: FFLWF) offered investors a more detailed view of its latest financial numbers as the company presented its first fiscal quarter results.
The company reported a net loss of C $ 9.9 million, which was a loss of C $ 0.27 per share during the period, due in part to a decrease in revenue. This quarter’s loss, however, was an improvement over the same period last year, when the company recorded a loss of C $ 16.5 million.
The company’s lowest revenue line, C $ 40.9 million for the quarter, was attributed to “growing competition from newly issued licenses and price pressures on the cannabis retail market.”
Stéphane Trudel, CEO of Fire & Flower, said the company aims to achieve a positive adjusted EBITDA and a free cash flow. In response to the growing challenges consumed by the company’s revenue, he said the company will seek to optimize its retail network.
“We remain focused on improving short-term financial performance and remain firmly focused on our ultimate goal of financial sustainability by driving towards a positive free cash flow,” the executive said.
Cannabis company news
- Ayr Wellness (CSE: AYR.A, OTCQX: AYRWF)began selling adult cannabis products through its three New Jersey dispensaries. Jonathan Sandelman, general manager of Ayr, said the state produced $ 24 million during its first month of adult sales and called the launch “monumental.”
- Delta 9 Cannabis (TSX: DN, OTCQX: DLTNF)closed its most recent public offering worth nearly C $ 2 million by selling shares at a price of C $ 0.22 each.
- The Valens Company (TSX: VLNS, NASDAQ: VLNS)confirmed that it does not meet the NASDAQ minimum bid price requirement. The company is now facing a deadline of December 12, 2022 to fall back within the pricing rule.
- RIV Capital (CSE: RIV, OTC Pink: CNPOF)shared the financial results of its fourth fiscal quarter of 2022 and the full year. Mark Sims, chairman and CEO, said the company will invest in four dispensaries and a facility in New York in order to target the state’s premium market. The company recorded a net loss on both a quarterly and annual basis.
Don’t forget to follow us @INN_Cannabis for real-time updates!
Securities Disclosure: I, Bryan Mc Government, have no direct investment interest in any of the companies mentioned in this article.
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