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HEXO Delays Release of Quarterly Report... Again

By Eric Volkman - Mar 18, 2020 at 10:49AM

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The cannabis company knows it has to take a writedown, but precisely how big that writedown will be is not clear.

Investors will have to wait longer than anticipated for HEXO's (HEXO -3.73%) latest quarterly results. The cannabis company announced Tuesday that it failed to file crucial components of its fiscal 2020 second-quarter and first-half documentation by the March 16 deadline.

HEXO said its failure to submit the documents relating to those periods, which ended Jan. 31, was "due to certain exceptional circumstances." One of these relates to a substantial impairment to the value of its assets that the company will have to book in Q2. This writedown will be between 265 million Canadian dollars and 280 million Canadian dollars ($188 million to $199 million). But management has not yet determined the exact figure, which is a key reason for its filing delays.

Marijuana in a corporate grow space.

Image source: Getty Images

Nevertheless, the marijuana company did reveal its top-line numbers for the fiscal second quarter. Net revenue came in at CA$17 million ($12 million) for the quarter, 17% higher than the Q1 result, and a pleasant contrast to Q1's net revenue drop. But Hexo did not provide any figures regarding its profitability, nor did it disseminate volume sales.

HEXO also said that a "strategic review of its cultivation assets" had revealed that there is too much capacity in this segment. In light of that, the company has decided to sell its growth facility in Niagara, Ontario. Such a sale would include the cultivation and production permits attached to the facility, plus equipment for these activities.

This was not the first time HEXO has delayed reporting its results. Late last year, it did so for its fiscal Q4 and 2019 results, citing the timing of a CA$70 million ($50 million) debenture issue it was floating. That delay was brief; the company published those figures less than a week after they were scheduled to.

Investors might be getting weary of these postponements, however. On Tuesday, HEXO's stock fell by nearly 42%. 

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