Cronos Group (CRON) stock popped over two percent in early market trading after the Canadian cannabis reported that its revenue for the second quarter jumped 428% to $3.4 million. It was an increase of $2.8 million over the previous year’s quarter.
The main drivers behind the revenue increase were an expansion in patient onboarding, an increase in average sales price and the strong growth in cannabis oil sales. Second quarter cannabis sales were responsible for 40% of the company’s domestic medical sales.
The company delivered a gross profit of $6.3 million for the quarter versus $1.1 million for the same quarter in 2017. The net income rose to $723,000 for the quarter versus $174,000 for the same quarter last year. Cronos strengthened its balance sheet by raising $100.0 million of gross proceeds through a bought deal offering of common shares in April 2018. bringing the company’s total liquidity to $118.0 million.
“Cronos Group delivered encouraging results across the Company in the second quarter with sales growing among all of our products and channels, impressive improvements in cultivation yields since the start of the year, and continued business development success in penetrating new markets and establishing new partnerships for expansion,” said Mike Gorenstein , CEO of Cronos Group.
The company has been busy since the quarter closed. Last month it announced a 50/50 strategic joint venture with a group of investors led by Bert Mucci to create a new partnership named Cronos Growing Company Inc. The group plans to construct an 850,000 square foot greenhouse for cannabis production on approximately 100 acres of land owned by Cronos GrowCo in Kingsville, Ontario. Once fully operational, the greenhouse is expected to produce up to 70,000 kilograms of cannabis annually.
In addition to that joint venture, Cronos entered into a supply agreement with Cura Cannabis Solutions, which is one of the largest cannabis companies in the world by revenues in the first quarter of 2018. The five year take-or-pay supply agreement is set to purchase a minimum of 20,000 kilograms of cannabis per annum from Cronos GrowCo starting from the date Cura receives its production and sales licenses from Health Canada. Cura also expects to build its proprietary, state-of-the-art extraction facility on a parcel of land owned by Cronos Group in the heart of Okanagan Valley, British Columbia.
Cronos stock was moving up over 2% in early trading to $5.96. The stock’s 52-week high was $10.39 and the year’s low is $5.12.