Tilray, Inc. (Nasdaq: TLRY) delivered it financial results for the first quarter ending March 31, 2020, as revenue increased 126.2% to $52.1 million. The revenue beat analyst estimates by $2.45 million. The losses of $1.73 per share missed estimates by $1.21
The company said that the growth was driven by cannabis sales, which experienced meaningful increases across all channels with the exception of bulk, and the inclusion of the Manitoba Harvest acquisition for a full quarter in 2020 compared to a partial quarter in the prior year.
Still, the net loss was a staggering $184.1 million, versus last year’s net loss of $29.4 million. While it looked bad, Tilray pointed out that it wasn’t as bad as the fourth quarter’s net loss of $219.1 million, or $2.14 per share, in the fourth quarter of 2019 was largely due to improvements in gross margin in the first quarter of 2020 and the significant impairments recorded in the fourth quarter of 2019.
The company also noted that the net loss was primarily due to the change in the fair value of the warrant liability of $72.0 million related to its registered offering of common stock and warrants, impairment of assets of $29.8 million. In addition to that, the company also blamed the weakening of the Canadian dollar resulting in a foreign currency translation loss of $28.1 million, increased operating expenses related to growth initiatives in the company’s cannabis sector, and severance costs of $1.9 million related to headcount reductions.
“We are pleased to report strong sequential quarterly revenue growth across each of our core business segments for the first quarter of 2020,” says Brendan Kennedy, Tilray’s Chief Executive Officer. “We remain focused on executing on our long-term growth opportunities and our goal of generating positive Adjusted EBITDA by the end of the fourth quarter. As evidenced by our International Medical sales in the quarter, we expect this segment to demonstrate continued growth and positively impact margins. During and since the first quarter, we took significant steps to drive efficiencies across our business, enabling us to realize annualized cost savings of approximately $40 million compared to fourth quarter 2019 run rates. While the positive impact of these actions are not fully reflected in this quarter’s results, they will become more clearly evident over the course of this year.”
The company said that it has not experienced any adverse material effects from COVID-19. It has implemented work from home strategies where it could and instituted social distancing and additional safety protocols.
Tilray reported that its total cannabis kilogram equivalents sold increased by 92.4% to 5,794 kilograms from 3,012 kilograms in the first quarter of 2019. This growth resulted from increases in adult-use cannabis flower sales and the launch of Cannabis 2.0 products. The average cannabis net selling price per gram decreased to $5.28 (C$7.16) compared to $5.60 (C$7.54) in the first quarter of 2019. The decrease was due to a shift in product and channel mix. The average net selling price excluding excise duties for adult-use was $3.49 (C$4.73) per gram for the first quarter of 2020.