Shares of struggling Canadian cannabis grower Hexo (HEXO) plunged after the company reported its earnings results from the fiscal second quarter of 2022 today. After an initial drop of nearly 10% early Friday morning, the stock staged a bit of a recovery. Shares remained down by 3.6% as of 2:51 p.m. ET, however.
Hexo reported a net loss of the equivalent of about $550 million, compared to a loss of less than $20 million in the comparable year-ago quarter. Most of the recent losses came from impairment charges the company said were "eliminating past issues and enabling a clean slate for future growth." Those included losses on property, plant, and equipment, as well as on goodwill.
The company embarked on a new strategic transformation after the prior quarter, saying it expected to become cash flow positive within another four quarters. Today, the company reiterated that, effectively pushing its timetable back by three months.
Hexo's shares jumped earlier this month when it announced a new strategic partnership with Canadian peer Tilray. But including today's drop, the stock has plummeted more than 90% in the last 12 months.
There was some good news in the report, however. Net revenue jumped to a second consecutive quarterly record, rising 61% year over year. That included a more than 300% jump in international sales.
Investors likely won't have much more patience with the turnaround plan. But it seems like the company tried to flush all of its bad news out this quarter with its write-offs. As the new partnership with Tilray gets finalized and after another three months of business results, investors will want to hear that its plan for positive free cash flow is only nine months away. The stock may not have a catalyst to move up much before then.