(Montreal) Cannabis producer Hexo has enough cash to wait for the lifeline, announced at the beginning of the month, by its competitor Tilray, assures the management of the Gatineau company, which revealed, on Friday, a quarterly loss of 690 million.
Hexo, which is trying to improve its financial situation, signed an agreement at the beginning of March with its competitor Tilray, which will buy up to 211 million convertible debt securities giving it the right to buy back up to 37% of the shares. of Hexo.
Until the deal closes, Hexo has plenty of cash, chief financial officer Curtis Solsvig said on a conference call to discuss the latest quarterly results. “We are monitoring our liquidity very, very closely. We manage them very carefully. […] We believe we have enough cash to make it through to closing the deal with Tilray in mid-May. »
During the second quarter (ended January 31), management focused its energies on reducing costs and increasing organic growth. “We’ve made significant progress on our plan in just one quarter, and it’s delivering results,” commented President and CEO Scott Cooper.
Mr Cooper came to the helm of Hexo in November in the midst of a storm as the company’s auditor expressed serious concerns about his future. In January, NASDAQ, where the company’s stock is also listed, informed Hexo that it did not meet the minimum bid price requirement.
Results below expectations
Hexo unveiled earlier Friday financial results below analysts’ forecasts.
For the second quarter, the producer posted a loss of 690 million, compared to a loss of 117 million in the same period last year.
Hexo recorded a charge of 616 million. The charge takes into account the problems of the company and allows it to “start on new bases”, according to management.
The adjusted loss per share reached 94 cents, compared to 17 cents for the same period last year. Revenues, for their part, increased by 61% to 52.8 million.
Prior to the earnings release, analysts had expected an adjusted loss per share of 7 cents and revenue of 55.8 million, according to forecasts compiled by financial data firm Refinitiv.
Many things happened during the quarter, which complicates the interpretation of the results, judge Frederico Gomes, of ATB Capital Market. “It was a confusing quarter with a major operational turnaround as management works to adjust the business of the company. »
The action lost Friday afternoon, 3 cents, or 3.8%, to trade at 76 cents on the Toronto Stock Exchange.