Cronos Group Inc. (NASDAQ: CRON) released its 2020 fourth quarter and full-year business results for the quarter ending in December. Cronos delivered net revenue increased 133% to $17.0 million in the fourth quarter versus $9.7 million for the same time period in 2019. The net loss for the quarter was a whopping $111 million versus last year’s net income of $61 million. The stock was slipping by 2% in early trading as the fourth quarter GAAP EPS of -$0.31 missed by $0.23.
The company said that the increase year-over-year was primarily driven by continued growth in the adult-use market in Canada, sales in the Israeli medical market, and growth in our U.S. segment. The adjusted EBITDA loss of $53.1 million in the quarter increased by $1.5 million from 2019. The increase in losses year-over-year was primarily driven by an increase in general and administrative expenses and an increase in R&D spending.
“Our fourth quarter 2020 results are the summation of the hard work and perseverance the company has put into this past year despite the challenges of 2020. As we look to 2021, I’m incredibly excited about the teams we have supporting our brands and the breakthrough research and development (“R&D”), innovation and exciting marketing campaigns Cronos Group plans to execute on. We are poised to build upon the growth we experienced in 2020 as we continue to push cannabinoid innovation and differentiated product offerings under our portfolio of brands,” said Kurt Schmidt, President and CEO of Cronos Group. “My goals this year will be to focus on building a winning team by fostering a collaborative, performance-driven culture; continue to focus on creating disruptive technology and innovation; grow and develop our brands and strengthen our ability to compete through R&D, strategic global infrastructure and engaging in the legislative process in key markets.”
Full Year Results
Cronos reported net revenue grew by 83% to $37.2 million for the full year of 2020 versus $16.8 million for 2019. The company attributed the increase year-over-year to continued growth in the adult-use market in Canada and sales in the Israeli medical market. It was partially offset by non-recurring wholesale revenue in the Canadian market in Full-Year 2019 and strategic price reductions on various adult-use cannabis products in Canada in Full-Year 2020. The net loss for the year was $75 million versus last year’s net income of $1.1 million.
Gross loss of $30.0 million in Full-Year 2020 increased by $10.5 million from Full-Year 2019. The increase in losses year-over-year was primarily driven by third party purchased flower associated with adult-use products in Canada and a decline in wholesale sales in Full-Year 2020 versus Full-Year 2019. The company said it expects that gross margin will continue to fluctuate as price and mix change from quarter-to-quarter. Adjusted EBITDA loss of $98.3 million in Full-Year 2020 increased by $13.5 million from Full-Year 2019. The increase in losses year-over-year was primarily driven by an increase in gross loss, increased R&D spending, increased general and administrative expenses, and higher sales and marketing costs related to brand development.
Still, Cronos wrote down an inventory of $26.1 million for the full year 2020 on dried cannabis and cannabis extracts, primarily driven by cannabis product price compression in the Canadian market. The company said it may incur further inventory write-downs due to pricing pressures in the marketplace.
The company incurred an inventory write-down in the fourth quarter of $15.0 million on dried cannabis and cannabis extracts, primarily driven by cannabis product price compression in the Canadian market.