There have been many reoccurring themes within the cannabis industry throughout the past year, but one thing that most people would agree upon is that 2018 has been an explosive year of growth. Many companies have posted revenue figures that show 200, 300, and even 400 percent growth over the past twelve months.
One Canadian-based producer, HEXO Corp (TSE: HEXO) announced that it’s first quarter financial results of it’s 2019 fiscal year showing a 506 percent growth in revenue sales, among other things.
What’s significant behind these reports is that HEXO is the first major Canadian producer to report partial post-legalization sales on its income statement. As such, these results are seen by investors as a sneak peek into future revenues for other competitors in the market going forward.
HEXO’s financial results showed a drastic surge in income post-legalization, out of the $6.7 million gross revenue during Q1 2019, $5.2 million of that was registered in the last two weeks of the quarter (October 17-31st). With 78 percent of all revenue for the three months coming from a two-week period, many see this as an incredibly optimistic sign for the industry going forward.
“HEXO hit tremendous milestones in the weeks following the legalization of adult-use cannabis. The Company continues to honor its commitment to executing on its plans, which has led to a significant portion of our first quarter’s $6.7 million in revenue generated in just two weeks and represents more than a 500% increase over last quarter,” said CEO and co-founder Sebastien St-Louis.
Other significant highlights include a total of 1,110,000 grams of cannabis sold in the quarter as opposed to 539,000 in the entire fiscal year of 2018. During the end of this quarter, HEXO also produced over 2,550 kg of dried cannabis, and are also looking to expand their existing 1,000,000 square foot production facility to be operational by the end of the year. The firm has also partnered with Molson Coors Canada as they pursue their corporate strategy of partnering with Fortune 500 companies for exposure.
Despite the positive revenue results, HEXO Corp shares dropped in value along with the rest of the sector today, dipping 3.3 percent. Positive revenue figures were offset by the company’s operating expenses, which soared to $22 million in comparison to $2.8 million last year and HEXO operated at a net loss of $12.8 million.
In this bearish market, investors have switched their interest from potential to actual profitability, and cannabis companies that are showing actual profits and strong fundamentals are gaining favor while those operating on the promise of growth at the expense of profitability have become less enticing.
HEXO Corp Company Profile
HEXO Corp. creates and distributes innovative, easy-to-use and easy-to-understand products to serve the Canadian cannabis market. One of the country’s lowest-cost producers, HEXO is rapidly increasing its production capacity in the lead up to the adult-use cannabis market.
The Company currently operates with over 310,000 sq. ft. of production capacity with construction on another 1,000,000 sq. ft. expansion set to be complete by year end. HEXO will serve the adult-use market under the HEXO brand, while continuing to serve its medical cannabis clients through the well-known Hydropothecary brand. –HEXO Corp