Zenabis Global Inc. (OTC: ZBISF) announced its financial results for the year and quarter ending December 31, 2020. Zenabis reported that net revenue for the quarter decreased by 16% sequentially from $19 million in the third quarter to $15 million in the fourth quarter. It was an improvement over 2019’s fourth-quarter revenue of $10.9 million. The company said the drop was due to decreased wholesale bulk sales to some export markets which were temporarily delayed due to regulatory changes, partially offset by an increase in recreation sales.
The company reported that its consolidated net loss from continuing operations for the quarter totaled $11.4 million or $0.01 per share, fully diluted, compared to $16.6 million or $0.03 per share, fully diluted, in the third quarter and $45.8 million or $0.18 per share, fully diluted, in the fourth quarter of 2019. Consolidated net loss for the quarter totaled $30.1 million or $0.05 per share, fully diluted versus $98.7 million or $0.34 per share, fully diluted, in the fourth quarter of 2019.
Full Year Results
For the full year 2020, Zenabis reported consolidated net revenue increased 95% to $59.3 million from $30.4 million in 2019. The loss from operations was trimmed to $2.3 million versus $59.2 million in the prior year. The consolidated net loss from continuing operations totaled $54.9 million or $0.10 per share, fully diluted, compared to $72.6 million or $0.30 per share, fully diluted, in 2019. The consolidated net loss for 2020 totaled $70.5 million or $0.13 per share, fully diluted, compared to $127.0 million or $0.53 per share, fully diluted, in 2019;
Shai Altman, Chief Executive Officer of Zenabis said, “We are pleased to report that Zenabis has completed a successful second year of operations with substantial growth in revenue and a much-improved balance sheet. Net revenue increased 95% year-over-year with growth across all sales channels. Sales into the Canadian recreational market grew 78% as the recreational market grew during the year, but more importantly, the company’s market share increased from 1.0% to 1.7%. Sales in the wholesale bulk channel also grew substantially by 242% year-over-year, due in large part to the Company’s entrée into export markets, notably Israel and Australia, during the year.”
He continued, “The cost reduction actions undertaken in the first quarter of the year and the continued focus on operational efficiency and excellence resulted in a 51% decrease in operating expenses in 2020, excluding the impact of impairment losses recorded in 2019. Overall, the growth in revenue and the reduction in costs resulted in Zenabis recording adjusted EBITDA for the year of $3.5 million compared to negative $38.7 million in 2019.”
Improvements To The Balance Sheet
During the year, Zenabis sold the non-core assets of Bevo Farms Ltd. and the Zenabis Delta facility. Overall, the company said it was able to reduce its loans and borrowing during the year by 57% or $88.2 million from $153.9 million to $65.7 million.
Zenabis believes that the Canadian recreational market has opportunities for continued growth in 2021, with the continued addition of retail stores throughout the country, providing increased access to cannabis products in each province. Additionally, the increasing availability of derivative products is also expected to significantly expand the Canadian adult-use recreational market. Zenabis said it believes that shipments will recommence in the second quarter of the year into export markets as the Company addresses the new regulatory requirements in those markets that were introduced in the fourth quarter of 2020.
In February, HEXO Corp. (TSX: HEXO; NYSE: HEXO) said it was buying Zenabis in an all-stock deal valued at approximately $235 million