CannTrust Holdings Inc (NYSE: CTST) stock plunged over 19.1% on March 28th, 2019 (Source: Google finance) as the firm delivered a much wider than expected fourth-quarter loss and revenue that fell well short of analyst estimates. The company swung to a net loss of C$25.5 million ($19.0 million) from a profit of C$6.3 million, in the same period a year ago. As at December 31, 2018, CannTrust remained in a strong financial position with $72.0 million in cash and short-term investments, and a working capital position of $111.6 million.
CTST in the fourth quarter of FY 18 has reported the adjusted loss per share of 26 cents, missing the analysts’ estimates for the adjusted loss per share of 4 cents. The company had reported the adjusted revenue growth of 132 percent to C$16.2 million ($12.0 million) in the fourth quarter of FY 18, missing the analysts’ estimates for revenue of C$20.3 million. The company said the growth in sales, which was primarily due to growth in the medical patient base and recreational sales in Canada, was partially offset by the absorption of excise taxes. Total dried cannabis equivalent sold from extracts rose to 1.64 million grams from 0.46 million grams, while the average revenue per gram of cannabis fell to C$4.29 from C$9.34. Cash cost per gram sold fell to C$2.94 from C$5.16. Gross margin before fair value changes to biological assets declined to 35% from 69% in the sequential third quarter.
Moreover, the adjusted EBITDA declined to a loss of $8.5 million in the fourth quarter of 2018, compared to a loss in the comparable period of the prior year of $0.9 million. During the quarter, the Company made deliberate investments in operating expenses in support of its growth efforts. Specifically, these investments included marketing costs to support the launch of four recreational brands, personnel to advance product innovation and the international strategy, and costs in preparation of the Company’s listing on the New York Stock Exchange.
Meanwhile, the company closed the purchase of a 19.4 acre property on land adjacent to its Perpetual Harvest Facility in the Town of Pelham, which will be used to construct its Phase 3 expansion and bring total production capacity to 100,000kg per year upon its completion. Further, CTST has entered into Letters of Intent to secure approximately 200 acres of land through purchase and lease. The Company plans to use this land for outdoor harvest of cannabis using its proprietary genetics. These transactions are expected to close in the second quarter of 2019, subject to customary closing conditions.