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HEXO Nearly Doubles Its Revenue in Q2, but Leaves Investors Disappointed

By Eric Volkman - Mar 19, 2021 at 11:18AM

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The company posted a nearly $17 million net loss for the period.

HEXO (HEXO 6.87%) wasn't exactly a marijuana stock favorite Thursday after releasing its fiscal 2021 second-quarter results -- despite some good numbers and positive developments.

For the period, which ended Jan. 31, the Canadian company's net revenue zoomed 94% higher on a year-over-year basis to 32.8 million Canadian dollars ($26.4 million). That tally was 12% higher than its fiscal Q1 result. Net loss narrowed considerably from the year-ago figure, slimming to CA$20.8 million ($16.7 million)  from the Q2 2020 shortfall of CA$298.2 million ($239.8 million). However, the Q2 2021 net loss was significantly deeper than Q1's net loss of CA$4.2 million ($3.4 million).

Marijuana flower on Canadian currency.

Image source: Getty Images.

According to Zack's Investment Research, the company's top-line result slightly exceeded the average analyst estimate, but the net loss of $0.13 per share was substantially worse than the expected deficit of $0.03 per share. 

Typically for a marijuana company, HEXO likes to put a spotlight on its adjusted EBITDA as a gauge of its profitability. On that basis, the company was barely in the black for the quarter, at roughly CA$202,000 ($162,442). Yet that was a marked improvement over both the preceding quarter's approximately CA$419,000 ($336,946) loss, and Q2 2020's shortfall of CA$10.9 million ($8.8 million).

The company's revenue growth was fueled by improvements in both the ever-important recreational-use marijuana category and cannabis-infused beverages, a relatively new product segment in Canada. Sales in each of those segments rose by 11% on a quarter-over-quarter basis.

Many HEXO observers will be keeping an eye on Zenabis Global, the peer it is acquiring for CA$235 million ($189 million). Adding Zenabis Global's assets to its own will vault HEXO onto the list of top three Canadian producers in terms of recreational-use cannabis sales; it will also provide the company with important cultivation properties and a license to export medical marijuana to the countries of the European Union.

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HEXO Stock Quote
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HEXO
$0.28 (6.87%) $0.02
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