Hexo Corp (NYSEAMERICAN: HEXO) stock fell over 7.6% on 13th June, 2019 (As of 10:56 am GMT-4; Source: Google finance) as the company posted lower than expected results for the third quarter of FY 19. The company is on-track ramping up to $400 million net revenue in fiscal 2020 and to double net revenue in Q4 fiscal 2019. This includes completing the first harvest in our 1 million sq. ft. In addition, the company has entered a syndicated credit facility with CIBC and BMO for up to $65 million available credit to fund continuing expansion and innovation initiatives.
HEX during the third quarter had produced 9,804 kg of dried cannabis, which is an increase of 98% over the previous quarter and sold 2,904 kg of gram and gram equivalents, which is an increase of 8% quarter over quarter. The company has signed a supply agreement for 200,000 kg of hemp to be supplied during fiscal 2020 for CBD extraction purposes. HEXO has also secured 60,000 kg of hemp to be supplied for CBD extraction purposes in preparation for upcoming edibles market and HEXO launch in eight American states in 2020
Meanwhile, the company had completed the acquisition of Newstrike Brands in May. Earlier in March, HEXO had signed an agreement to acquire Newstrike for CAD$263 million. After this acquisition, HEXO projects fiscal 2020 net and gross revenues from the sale of cannabis in Canada to be more than CAD$400 million and CAD$479 million, respectively. Further, the company has recently formalized its US presence by appointing Michael Monahan as CFO and establishing HEXO USA Inc. in Delaware. The company also named Donald Courtney as its Chief Operating Officer in May. With the passing of the Farm Bill to allow CBD extraction from hemp, HEXO Corp is confident of seizing a significant portion of market share in the US.
HEXO in the third quarter of FY 19 has reported the adjusted loss per share of CAD 0.04, missing the analysts’ estimates for the adjusted loss per share by 5 cents. The company had reported the adjusted revenue of $9.75 million in the third quarter of FY 19, missing the analysts’ estimates for revenue of $10.96 billion. The revenue grew due to increased adult use sales. In the third quarter, adult-use sales accounted for 91% of total revenue. In the medical segment, the net revenues fell by 7% to CAD 1.09 million, due to overall weakness in medical sales.