The Financial Post reports in its Wednesday, Oct. 30, edition that Hexo posted a fourth quarter net loss of $56-million, including an inventory writedown of $17-million. The Globe's Vanmala Subramaniam writes that Hexo attributed its inventory loss to "price compression" and overall net loss to the "significant" scale of its operations and increased research and development expenses.
Hexo posted net revenue of $15.4-million from the sale of 4,009 kilograms of cannabis for the quarter but its average selling price on the recreational market was just $3.51 per gram.
Hexo had sold 2,759 kilograms of cannabis at $4.30 per gram in its previous quarter.
Hexo chief executive officer Sebastian St. Louis says: "The challenge right now is not if cannabis will be a huge industry; we know that (it will). What is less clear is which companies will survive. I'm more confident than ever as we see the number of licensed producers dwindle drastically, we are almost certain to be one of those survivors."
While Hexo's revenue increased by 19 per cent from the previous quarter, expenses soared by more than 90 per cent and gross margins declined to 33 per cent, significantly below most analysts' expectations.
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