Please ensure Javascript is enabled for purposes of website accessibility

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

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

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

HEXO Stock Quote
$0.28 (6.87%) $0.02
Zenabis Global Inc. Stock Quote
Zenabis Global Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.