Hexo announced annual losses of $82M and a $57M Q4 loss (adjusted to $43.7M), tripling analysts' average prediction of a $13.2M loss.
MJ Biz Daily, Bloomberg
- The company's revenue was $15.4M (up 19% quarter over quarter).
- Taking an inventory writedown, the company cut the value of its inventory by $17M, which BMO analyst Tamy Chen said was "an unsettling development" considering how much unfinished inventory LPs have.
- Hexo announced it would suspend cultivation in the Niagara facility it acquired as part of its $263M Newstrike acquisition this spring. 100 employees were laid off at that Beamsville, Ontario facility.
Hexo has a five-year supply agreement with Quebec, under which it was to provide the SQDC with 20,000 kg of product in the first year. However CEO Sebastien St-Louis said Hexo had only delivered half that amount. Given the slow retail rollout in the province, St-Louis said "We don't think it would be responsible to demand (that Quebec buy) 20 tonnes."
- Analysts John Zamparo and Krishna Ruthnum wrote in a client note, "Whether or not this is the right move is debatable, but without the [Quebec supply agreement], Hexo is relatively undifferentiated versus peers."
- The company retains 33% market share in Quebec, down from 60% at legalization.
- CBC Hamilton interviewed me about Hexo's cuts, as well as other challenges to cannabis retail in Ontario.
Hexo partner Molson Coors announced it was laying off 500 workers worldwide.
- The Green Organic Dutchman co-founder turned recently departed 48North co-CEO Jeanette VanderMarel emerged as CEO of Ontario LP Beleave, and she has plans to consolidate the number of stocks the LP has issued by a ratio of 10:1.
MJ Biz Daily
- A licensed Ontario hemp grower accused TD bank of racially profiling him when they froze his accounts and accused him of breaking the law after he asked them to transfer $35,000 to a vendor.