Editor-in-Chief

Debra BorchardtDebra BorchardtNovember 19, 2019
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3min450

Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) released its financial results for the third quarter of 2019 ending September 30, 2019, with revenue of $70.7 million, an increase of 22% sequentially and an increase of 150% yearo-over-year. This beat analyst estimates by $5.09M.

The company also delivered a net income of $60.3 million for the quarter, which was higher than the second quarter’s net income of $57.5 million.

“Our third-quarter results reflect our continued customer loyalty, growth, and leadership position. Trulieve’s strong brand, wide-ranging access to stores, and authentic customer experience have resonated with our customers and patients,” stated Kim Rivers, Trulieve CEO. “The third quarter was also successful in further strengthening our position in our existing markets as well as preparing for new market entry. We continue to build operational efficiencies and financial discipline to ensure a solid foundation, cash reserves, and the right tools at our disposal to expand our footprint. Looking ahead, this is an exciting time as we execute on our strategic vision to be one of the top-performing cannabis companies in North America.”

Adjusted EBITDA increased from $31.6 million in Q2 2019 to $36.9 million at September 30, 2019.

The company also stated that gross profits after net gains on biological asset transformation for the quarter was $110.1 million, up $74.3 million or 208%, from $35.8 million for 2018 for the same time period. “This increase was driven by an increased gain on biological assets and increased retail sales. Additionally, because the corporation was growing more plants as of September 30, 2019 than it was as of September 30, 2018, there are more plants undergoing transformation and therefore more gain.”

Expenses Increase As More Locations Open

Total expenses for the three months ended September 30, 2019, was $20.6 million, an increase of $12.3 million or
147%, from $8.3 million for the three months ended September 30, 2018, which is mainly due to scaling of
the business.

Trulieve said the increase in total expenses was due to an increase of retail, sales and marketing expenses
which for the quarter which was $14.7 million, up to $8.2 million or 125%, from $6.5 million for 2018. Retail, sales and marketing expenses as a percentage of revenue were 21% for the quarter, as compared to 23% for the quarter 2018. “The overall increase in retail, sales and marketing expenses was due to the opening of additional dispensary locations and the associated costs including payroll and insurance.”

The stock was lately trading at $11.30, above its 52-week low of $6.68, but below its year high of $16.23.

 


Debra BorchardtDebra BorchardtNovember 18, 2019
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3min2690

Sunniva Inc. (OTC: SNNVF) stock plunged over 40%  to lately trade at 45 cents after the company announced that President Kevin Wilkerson would resign. This comes just one week after the company’s Chief Financial Officer also resigned.

Wilkerson also resigned from his position as President and Chief Executive Officer of Sun CA Holdings effective December 2. The company said the resignation was for personal reasons and a replacement has not been named. It follows last week’s announcement that CFO Dave Lyle was resigning, also for personal reasons, and David Weinmann has been appointed interim CFO. In addition to that, Michael Barker who was on the board of directors also resigned.

It was reported that the short interest in the company stock jumped 388% in November, This despite a glowing video on Midas Letter a few weeks ago and news that the company closed on a private placement for $7.5 million.

On November 4, Sunniva said released word that it still planned to work with CannaPharmRx with respect to the sale of Sunniva Medical Inc., yet gave no information as to the need for making such a pronouncement.
In October, Sunniva said it was amending the terms of the performance warrants that had been issued in conjunction with the acquisition of LTYR Logistics. The original milestone had been the opening of a distribution center in Long Beach, CA. That was changed to the opening of a distribution business in Coachella, CA. That meant the warrants would convert to shares immediately and Wilkerson’s 239,491 warrant shares would become performance shares.

Last quarter the company reported revenue of C$5.3 million, but net losses of C$14.9 million.

In April, Sunniva said it planned to focus primarily on the ongoing development of our California assets and brands in California. In a statement, the company noted, “In Canada, we continue to expand our Natural Health Services operations with new leadership from Dr. Mark Kimmins. We have suspended operations on our Okanagan Falls property (the “Sunniva Canada Campus”) as we focus efforts on US operations, and we continue to review strategic initiatives in respect of our Canadian assets.”


Debra BorchardtDebra BorchardtNovember 18, 2019
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4min1900

Acreage Holdings, Inc. (“Acreage”) (CSE: ACRG.U) (OTC: ACRGF) is buying New Jersey’s  Compassionate Care Foundation, Inc. which is a vertically integrated cannabis nonprofit corporation. The deal is subject to state approval and the amount of the deal was not disclosed. However, the state of New Jersey did state that Compassionate Care reported $4.9 million in revenue in 2018, badly trailing Curaleaf’s $19 million in revenue for 2018.

“I’m thrilled to finally welcome CCF into the Acreage family,” said Kevin Murphy, Chairman and Chief Executive Officer of Acreage.  “This reorganization will result in increased access to affordable medical cannabis for New Jersey’s existing patients in short order.  Moreover, we have long believed that upon adult-use legalization, the New England and Mid-Atlantic regions will be the preeminent cannabis market in the U.S. and Acreage is best positioned of any U.S. cannabis company to benefit.”

New Jersey Needs More Dispensaries

The Biennial Report issued in April 2019 from the state of New Jersey said, “The Department estimates that in 3 years New Jersey will need between 440,000 and 1,000,000 square feet of licensed cultivation capacity to meet
growing demand – or between 25 and 50 cultivation sites, depending on average size of site.” It went on to say, ” In New Jersey, there are 1.5 million people per open dispensary, whereas the aggregate average of population per dispensary in other states was roughly 100,000 people per dispensary. If New Jersey was at the average, the state would have 90 medical dispensaries to serve our population. Conclusion: The analysis strongly supports the need for additional dispensary sites in New Jersey.”

The report also noted that in both 2017 and 2018, Compassionate Care Foundation had the highest medical cannabis discounts, with discounts averaging between 16% and 17% per ounce.

CCF Assets

According to the company statement, Compassionate Care has licenses for cultivation, manufacturing & processing, and three retail dispensaries.

Cultivation: CCF operates one of New Jersey’s largest indoor growing facilities, primarily for high end flower, in Egg Harbor, NJ.  Acreage and CCF are planning to expand this facility to serve the existing demand for medical cannabis and in anticipation of adult-use legalization, and to build out a robust wholesale business.

Retail Dispensary Operations: CCF has the potential to operate three retail dispensaries, one of which is currently in operation in Egg Harbor.  An additional dispensary is under construction in Atlantic City as The Botanist, and an letter of intent has been signed for another The Botanist dispensary in Williamstown, NJ.

CCF Trails Competition

The Biennial report also stated that when looking at total inventory, neither Greenleaf Compassion Center nor Compassionate Care Foundation eclipsed 200 lbs of total product from June to December of 2018. “During the study period, Compassionate Care Foundation had a range of between 12 and 102 lbs of product onhand and an average of 41 lbs, while Greenleaf had a range between 5 and 12 lbs of product on hand and an average of 8 lbs on-hand.
Every other ATC in New Jersey had an average inventory of close to or over 500 lbs during same time period.”

 


Debra BorchardtDebra BorchardtNovember 18, 2019
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5min2190

MedMen Enterprises Inc. (MMEN.CN) (MMNFF) claimed to be the unicorn of marijuana companies when the California-based business went public in May of 2018. Now just 18 months later, it has a market cap of $170 million, according to Yahoo Finance, and is being forced to dramatically curtail its plans.

On Friday, the company said it was taking several steps to achieve profitability including laying off of 190 employees or 20% of its workforce, cutting back on store openings and selling assets.

Cowen & Co senior analyst Vivien Azer wrote, “While MMEN has established leading brand equity in California, it has come at a significant cost. The announced changes are clearly necessary if MMEN aims to remain a going concern, in particular in a capital constrained environment. That said, the magnitude of the change, for an organization that has experienced an unusually high amount of turnover in senior leadership, will present challenges from an execution standpoint. Maintain Underperform.”

Layoffs

“We have a clear plan to increase our market share, while at the same time enhancing our margins and reducing our corporate overhead,” said Adam Bierman, MedMen co-founder, and chief executive officer. “We must unlock our operating leverage and bring the company to positive EBITDA. Given market conditions, capital allocation is more critical than ever. As such, we announced a layoff of over 190 MedMen employees.”

Market watchers may recall that when the company went public, Bierman and his partner Andrew Modlin were criticized for the amount of money they were paying themselves. In subsequent quarters, analysts pointed to the company’s extremely high expenses, but Bierman would explain it away as the cost of building a new company.

Bierman added, “This layoff includes many hard-working, mission-based people whose presence will be sorely missed. While it is never easy to let employees go from the MedMen Family, we believe this decision is in the best interest of our company as we position ourselves for growth in the years ahead.” No doubt those laid off employees will be thinking about the mansion Modlin just acquired for $11 million in July.

The company also said it was consolidating its offices, which would foster team building as well as saving money. The remaining employees will have a share-based reward program based on the company meeting certain targets. MedMen also noted that it will trim too many layers of overlapping jobs.

In addition to the employee layoffs, which the company said would save $10 million, MedMen is also selling its interest in Treehouse REIT for net proceeds of $14 million. So far, its gotten $7 million and has agreements to sell the remainder. Treehouse was buying the MedMen properties and then MedMen was leasing them back, an option that has increased within the industry as cannabis companies monetize their properties as financing has gotten more expensive.

MedMen had been on an aggressive expansion plan as it spent millions on dispensaries and licenses in a quest to be one of the largest multi-state operators. Now the company is saying it will cut back on store openings in 2020 and only open a dispensary that will make over $10 million in the first 12 months. It will delay further spending in New York in Arizona.

Selling Assets

The company has hired Canaccord Genuity to “explore strategic alternatives for certain operations and licenses in states that are currently deemed not critical to the Company’s retail footprint.” It has also sold other investments in various brands and has netted $8 million so far.

Cutting Expenses

Not only is the company laying off employees, but it is also cutting back on its marketing and technology budgets in order to save $20 million. In other words, don’t expect any more Spike Jonze videos. MedMen said it thinks it can save $2 million by renegotiating insurance policies and outsourcing human resources.

The stock was lately trading at 98 cents, down from its 52-week high of $4.19. Cowen & Co. has a target price of 85 cents.

 


Debra BorchardtDebra BorchardtNovember 15, 2019
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3min1990

The Green Organic Dutchman (OTCQX: TGODF)saw its shares plunge by over 9% to lately trade at 63 cents after the company reported its third-quarter earnings following the market close on Thursday. The company delivered revenue of C$2.53 million, which missed estimates by C$1.77M. TGOD also delivered a net loss of $20.1 million for the quarter, of which $4.3 million was related to non-cash stock-based compensation, depreciation and amortization.

The company said it has “reorganized to reduce general and administrative expenses by approximately $3 million per quarter starting in Q1-2020 on a path towards positive operating cash flow by the end of Q2 2020.”

“Q3 marked TGOD’s entry into the recreational cannabis market with a small pilot in Ontario. We were thrilled to witness such positive feedback on product quality and packaging from retailers and consumers across the province.  Based on the initial response, demand for high-quality flower is strong and TGOD is well-positioned to capture the premium organic segment which is significantly underserved,” commented Brian Athaide, CEO of TGOD. “Despite the challenging market conditions in Canada, TGOD has an opportunity to be one of the first cash flow positive cannabis companies as early as Q2 2020. We rightsized our production and our first hybrid greenhouse is being commissioned, allowing us to produce at optimal levels while avoiding excess inventory or incurring unnecessarily high operating expenses.  Our first harvest from the Ancaster hybrid greenhouse is expected in December, which will enhance our current product line and enable TGOD’s first material revenues in Canada in Q1 2020 which is very exciting,” continued Athaide.

HemPoland,  the company’s wholly-owned subsidiary, saw a decrease in revenues in the third quarter to $2 million from $2.9 million in the second quarter due to fewer low margin bulk CBD extract sales. However, TGOD did see an increase in the number of sales of its high margin branded CannabiGold and private label products, resulting in gross margin of 80%, up from 69%.

TGOD said that it signed arrangements for up to $103 million in funding to be used mainly as bridge financing until TGOD becomes cash flow positive which is expected by the end of Q2 2020. According to the filing, “As of September 30, 2019, the company had working capital of $24 million and an accumulated deficit of $109 million.” The company came under fire for saying it needed more money to complete its facility projects after having said in investment presentations that all projects were fully funded.

The company has a conference call scheduled for Friday morning.


Debra BorchardtDebra BorchardtNovember 15, 2019
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6min2400

Aurora Cannabis Inc.  (NYSE: ACB) stock was selling off by over 8% in pre-market trading after the Canadian cannabis company reported its earnings following the market close on Thursday. Aurora delivered total revenue for its first fiscal quarter in Canadian dollars of $75.6 million which missed analyst estimates by $17 million. The first quarter GAAP EPS of C$0.01 did beat estimates by C$0.06.

The company said its consumer cannabis revenues were $30 million in the quarter, a 33% sequential drop and contributed 40% to total consolidated net revenue. The decline in cannabis net revenues was attributed ordering that slowed considerably during the summer as distributors worked through inventories and as the industry was impacted by the slow pace of retail store licensing.

“Over the past several years, Aurora has earned its place as a global leader in the cannabis industry. Despite short term distribution and regulatory headwinds in Canada that have temporarily impacted the industry, the long-term opportunity for Aurora in the global cannabis and cannabinoids market is immense,” said Terry Booth, CEO, Aurora Cannabis. “Aurora has and will continue to focus on everything in our control. Our success in doing this was demonstrated again this quarter by continued strong improvement in our core KPIs. We delivered solid operating results this quarter, exemplified by our industry-leading cash cost to produce which declined another 25% to $0.85 per gram this quarter, as well as by our industry-leading gross margins and market share.”

Scaling Back

Aurora said it decided to stop construction activity at its Aurora Nordic 2 facility in Denmark, which is expected to save approximately $80 million over the next 12 months. Aurora Nordic 1 is fully completed and has received a production license, and the company expects to receive a license to sell shortly. Aurora also decided to defer the majority of the final construction and commissioning activities at its Aurora Sun facility for the foreseeable future which is expected to conserve approximately $110 million of cash. The company said that as global demand develops, or as Aurora’s market share in the global cannabis market increases, it will reactivate these projects.

Medical Is Strong

The company’s medical cannabis net revenue increased 3% quarter-over-quarter to over $30 million. On the company’s earnings call, CFO Glen Ibbott said the increase was “driven by our continued success in growing our patient base, which currently stands at just over 91,000 clients. Our revenue was affected by a slight decrease in the average net selling price of medical cannabis of 6%, but more than offset by patient growth. The decline in selling price was the result of temporary pricing incentives designed to support the move of valuable long-term medical patients to Aurora, and away from LPs that we’re not servicing them well.”

Cost To Produce Drops

Aurora has always had a goal to be a low-cost producer and that mission seems to be fulfilled. Booth said, “I’m also proud to report that our high-tech cultivation facilities delivered on our promise to provide industry-leading indoor cash cost to produce below $1 a gram. And in fact, this quarter we came in well ahead of our expectations at $0.85 a gram.”

Looking Ahead

Aurora said that it knew this quarter would be tough and that it expected a growth plateau. Vapes and edible products will soon be available for sale and the company said that this will bring back sales.

Mr. Booth added, “In order to capitalize on this global market, we recognize the need to be nimble and proactive. To enhance our financial flexibility and position us to take maximum advantage of future growth opportunities, we have also taken decisive steps to immediately strengthen our balance sheet. Specifically, these steps include: (1) the announcement of a formal plan to settle our 5.0% convertible debentures due March 2020, (2) a reduction in our capital investments over the next several quarters by over $190 million to better match near-term capacity expansion with anticipated demand, while maintaining our long-term demand outlook, and (3) raising over US$124 million in gross equity proceeds since the start of fiscal 2020 through our at-the-market (“ATM”) financing program.”

“We view these as short-term headwinds and despite them, Aurora has continued to maintain our position as the leading producer and supplier of high quality medical and consumer cannabis products,” said Booth on the earnings call.


Debra BorchardtDebra BorchardtNovember 14, 2019
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6min1690

Canopy Growth Corporation (TSX: WEED) (NYSE: CGC) fell over 9% on news that the company’s second-quarter earnings missed analysts’ estimates. The Canadian-based cannabis company reported (in Canadian dollars) gross revenue of $118 million, a 6% increase sequentially and a 408% increase over last year’s $23 million for the same time period ending in September. The net revenue of $76 million fell 15% sequentially and missed estimates by $29 million. It did increase by 229% over last year’s $23 million. The stock was lately trading at USD$16.68.

The net loss decreased sequentially from $1.2 billion in the first quarter to $374 million in the second quarter. It also increased by 13% from last year’s net loss of $330 million.

“The last two quarters have been challenging for the Canadian cannabis sector as provinces have reduced purchases to lower inventory levels, retail store openings have fallen short of expectations, and Cannabis 2.0 products are yet to come to market,” said Mark Zekulin, CEO, Canopy Growth. “However, we believe these conditions are a short-term headwind in what is a brand-new industry, and Canopy continues to be best positioned with cash-on-hand, a world-class infrastructure, and a portfolio of intellectual property to deliver sustained long-term market leadership.”

Restructuring Charge

Canopy Growth said it has “taken a restructuring charge of $32.7 million for returns, return provisions, and pricing allowances primarily related to its softgel & oil portfolio. Additionally, management has recorded an inventory charge of $15.9 million to align the portfolio with the new strategy.” The company said that the new strategy included new retail pricing architecture, a rationalized package assortment, and a focused marketing/educational strategy to further develop this category. The second-quarter gross margin impact of the portfolio restructuring costs is $40.4 million.

Added Zekulin: “We took the necessary steps to address inventory levels on our oils and softgels; looking beyond this, the fundamentals are strong: our retail store sales are growing on an overall and same-store basis, our Canadian medical revenues are up, and international medical sales are growing on both an organic and inorganic basis.  And, even though revenue is muted during the quarter due to the restructuring charge, actual cannabis shipments grew quarter-over-quarter, which is a great accomplishment in light of the inventory reset that’s occurring at the provinces.   We believe our fundamentals are strong and are confident we’re moving in the right direction.”

Cash Burn

The company is still sitting on a healthy war chest 0f $2.7 billion, but that is after a drop of $404.7 million from June 30, 2019.  The primary uses of cash were operations and capital spending of $228.3 million as the company finishes its build-out in Canada by constructing manufacturing and beverage production facilities. Operating expenses for the quarter were $269 million, a 48% increase year over year and a 15% increase sequentially. Consider that this is 100% over the revenue coming in.

Research and development costs increased 526% year over year, G&A increased 137% year over year and sales and marketing increased 50% over last year.

“After five years of investment in market research, product development, product marketing, production engineering, as well as production facility design, construction and qualification, we are ready to bring our Cannabis 2.0 product offerings to market,” said Zekulin.  “This marks the end of significant expansion investments in Canada and we are confident that the high quality, differentiated beverage, vape and edible products that we are bringing to market combined with a retail channel that we expect to grow significantly next fiscal year, will drive the next leg of growth for our business.”

Sales Mix

The revenue was a mixed bag between increases and decreases. Medical marijuana sales were up across the board sequentially. The only drop was a year over year decline in dry cannabis revenue. With recreational cannabis, the consumer side mostly saw sequential increases, with oil and softgels declining slightly by 1%. The B2B recreational sales saw sequential declines in each category except dry cannabis sales.

“International medical cannabis gross revenue was $18.1 million in Q2 2020, with the 72% growth driven primarily by the acquisition in May 2019 of C3, which contributed a full quarter of revenue in the amount of $14.0 million to our results in Q2 2020.”

 

 


Debra BorchardtDebra BorchardtNovember 13, 2019
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2min1900

Acreage Holdings, Inc. (CSE: ACRG.U) (OTCQX: ACRGF) reported third-quarter revenue of $22.4 million, a 307% increase over last year’s $5.5 million for the same period in 2018. The company also reported a net loss of $39.9 million versus last year’s net loss of $4.5 million and the EBITDA loss was $44 million.

CEO Kevin Murphy said in a statement, “The third quarter was highlighted by tremendous progress of our long-term plan. We launched great cannabis brands that are receiving strong influencer praise, continued building out our wholesale businesses across our national footprint, and achieved 100 percent retail distribution in the fast-growing market of Pennsylvania. Importantly, we also have a path to secure the capital resources necessary to fund our future expansion and acquisition activities. The last six months have been challenging for the entire industry, but as I have emphasized since day one, this is a long game and I have never been more optimistic about the future of Acreage.”

The third quarter Non-GAAP EPS of -$0.17 beat estimates by $0.03 and the GAAP EPS of -$0.45 missed by $0.13.

Compensation expenses caused a large increase in the company’s earnings for the quarter and accounted for roughly $23 million.

The revenue breakout was as follows:

New England    $4.5m

Mid-Atlantic     $2.2m

Midwest             $2.1m

West                    $712k

 

The stock was rising by 1% to lately trade at $4.88


Debra BorchardtDebra BorchardtNovember 13, 2019
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4min2900

Charlotte’s Web Holdings, Inc. (TSX: CWEB)(OTCQX: CWBHF)  reported that its revenue rose 41.8% to $25.1 million in the third quarter that ended September 30, 2019, versus $17.7 million for the same period in 2018. Still, the company delivered a net loss of $1.3 million versus last year’s net income of $1.8 million.

Rising Expenses

The operating expenses soared to $19.6 million over last year’s $9.8 million for the same time period. The company said in a statement that its “third-quarter operating expenses were $4.7 million”, but that isn’t the number that appeared in the financial table. The company did say that the rising expenses were “to support the Company’s growth and transition to a consumer-packaged goods operating company.

During the quarter Charlotte’s Web moved into larger office facilities in Boulder and added senior CPG management to the leadership team along with related personnel.  “Employee headcount was 307 on September 30, 2019, a 35.8% increase from 226 at September 30, 2018.”

“In an increasingly crowded, noisy and confusing CBD market, brands matter, and Charlotte’s Web is the most trusted hemp extract in the world,” said Deanie Elsner, Chief Executive Officer of Charlotte’s Web. “Consumer education is increasing and a 68% year-over-year increase in traffic through our online store drove Q3 B2C sales to new highs. As the CBD category’s flagship brand, we saw a similar 66% increase in sales pull into our B2B segment which includes the food/drug/mass (“FDM”) and natural health retail channels. This helped drive Q3 growth to 42% year-over-year.”

The revenue breakdown was as follows: Human consumables, topicals, and pet products grew by 43.6%, 156.7%, and 57.5%, respectively. On a year-over-year basis for the quarter ended September 30, 2019, B2C sales grew by 38.7% and accounted for 51.2% of total revenue in the quarter as online traffic increased 68% through expanded marketing and social media programs. B2B sales grew by 66.4% year-over-year and accounted for 48.8% of total revenue in the quarter as mass retailers including Kroger Co., Vitamin Shoppe and CVS Pharmacy locations entered the market in 2019.

Pets Performing

The company said that early sales traction for the new 12 SKU pet line from Charlotte’s Web has been encouraging with a 57% year-over-year increase in revenue with notable success in the independent retail channel.

Lowering Guidance

Ms. Elsner updated the Company’s revenue guidance: “We’re pleased with our growth of 42% for Q3 and 49.6% year-to-date. We expect full-year revenue for 2019 to be in the range of $95 to $100 million and to maintain growth rates for 2020 in the 40% to 50% range or until clear regulations are set.” In the last quarterly report, Rich Mohr, Chief Financial Officer said, “Our previously communicated revenue guidance for 2019 of between $120 million and $170 million remains in place.”

Elsner added, “We are prudently investing in the expansion of our production and distribution capacities as planned, ahead of anticipated FDA regulatory clarity that could enable wider adoption of our product portfolio. We remain hopeful that broad political support will help drive quick regulatory resolutions in 2020.”


Debra BorchardtDebra BorchardtNovember 12, 2019
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3min1490

Canadian-based Tilray, Inc. (Nasdaq: TLRY) reported that second-quarter revenue increased 371.1% to $45.9 (C$60.9) million versus last year’s $9.7 million. Tilray said that the increase in revenue was driven by the Manitoba Harvest acquisition, the legalization of the Canadian adult-use market, and growth in international medical markets, particularly in Europe. Excluding excise tax, revenue was $42.0 (C$55.8) million.

Net Losses Rise to $35 Million

The company delivered a net loss for the quarter of $35.1 million or $0.36 per share versus last year’s loss of $12.8 million or $0.17 per share. The adjusted net loss for the quarter was $31.2 million or $0.32 per share for the second quarter of 2019. The adjustments to the net loss are non-recurring acquisition-related charges and a non-recurring non-cash charge related to purchase accounting for the fair value of inventory. Adjusted EBITDA was a loss of $17.9 million compared to a loss of $4.7 million the prior-year period. The company said that the increased net loss and Adjusted EBITDA declines were primarily due to the increase in operating expenses related to growth initiatives, interest expense from our convertible notes, the addition of Manitoba Harvest and Natura businesses, and the expansion of international operations.

“We are pleased with our second-quarter results and strong business momentum,” said Brendan Kennedy, Tilray President, and Chief Executive Officer. “Our team has executed against our plan, with adult-use revenue nearly doubling in the second quarter compared to the first quarter and gross margin increasing sequentially for the second quarter in a row. As we continue to grow, we remain focused on our long-term strategic objectives and deploying capital to maximize stockholder value.”

Prices Fall

The average net selling price per gram decreased to $4.61 (C$6.12) versus last year’s $6.38 (C$8.36). The decrease was due to a reduced mix of higher-priced extract products and a greater mix of adult-use revenue, which are at lower prices per gram compared to other channels. Total kilogram equivalents sold more than tripled to 5,588 kilograms from 1,514 kilograms in the prior-year period.

 

 



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