Cannabis producer Hexo sales decline as net loss grows

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Federally licensed producer Hexo recorded net revenue from cannabis of 14.5 million Canadian dollars ($11 million) in its most recent quarter, down slightly from the previous quarter’s CA$15.4 million.

The Gatineau, Quebec-based company’s net loss widened to CA$62.4 million in the period ending Oct. 31 from CA$56.7 million in the last quarter.

About three-quarters of the 4,009 kilograms of adult-use cannabis shipped in the quarter went to Quebec’s monopoly cannabis retailer – Société québécoise du cannabis (SQDC) – the company said.

The Quebec company disclosed an error related to a deferred tax liability for the fiscal year ended July 31, 2019 – resulting in the net loss for the year ended July 31, 2019 was overstated by CA$14.3 million.

Hexo did not state when it plans to resume production at its Niagara facility, which it suspended in an effort to “rightsize its operations” and focus on profitability.

In a regulatory filing, Hexo’s management said its working capital (CA$150 million) along with a recently completed financing (CA$70 million private placement) “sufficiently provides the level of funding required for current expansion projects and meet contractual obligations for the next 12 months.”

The company trades as HEXO on the New York Stock Exchange and Toronto Stock Exchange.