Hexo reports Q3 earnings as Organigram, Canndoc enter supply agreement
In this week's "Rising High," The Fly's recurring series focused on cannabis stock news, The Fly looks back at an earnings report, a supply agreement and acquisitions.
HEXO REPORTS EARNINGS: On Thursday, Hexo (HEXO) reported third quarter net revenue of C$22. 1M, which compares to net revenue of C$13M for the same period last year. The company said adult-use grams and gram equivalents sold increased 42% to 9,338 kg compared to the second quarter and adjusted EBITDA improved to negative $4.3M from negative $8.5M in Q2. Hexo also reported it is tracking towards positive adjusted EBITDA in the first half of fiscal 2021. The company said, “While we continue to operate during a pandemic, we continue to be cautious about future expectations. Our plans to achieve adjusted EBITDA positive in the first half of fiscal 2021 will depend on the growth of retail stores in our two largest markets, Ontario and Quebec. It is difficult to determine the timing of new licenses for new retails stores in Ontario and the build out of additional stores in Quebec. We await additional information from the authorities of each Province and Territory. "
ORGANIGRAM, CANNDOC ENTER SUPPLY AGREEMENT: Organigram (OGI) announced Tuesday that it has entered into a multi-year agreement for supply of dried flower to Canndoc, a subsidiary of InterCure. Under the terms of the agreement, the company will provide a guaranteed 3,000 kg of indoor-grown dried flower product to Canndoc by December 31, 2021 for processing and distribution into the Israeli medical market and may provide an additional 3,000 kg during the same time period at Canndoc’s option. The agreement provides for a tiered pricing scheme and the exact value will vary depending on factors such as potency and product mix. The agreement also contemplates, among other things, an opportunity for Organigram to launch branded medical products with Canndoc in the Israeli and EU markets, and grants exclusivity and related rights to Canndoc within the Israel market for a period of approximately 7.5 years.
CHARLOTTE’S WEB ACQUIRES ABACUS: Charlotte's Web Holdings (CWBHF) and Abacus Health Products (ABAHF) announced Thursday that they have completed the previously-announced plan of arrangement, under which Charlotte's Web acquired all the issued and outstanding subordinate voting shares of Abacus. All the outstanding proportionate voting shares of Abacus were converted into Abacus Shares prior to closing of the Arrangement. Pursuant to the Arrangement, holders of Abacus Shares received 0.85 of a common share of Charlotte's Web for each Abacus Share held at the time of closing. Combined, the companies distribute to more than 21,000 unique retail locations with limited shelf overlap due to adjacent but complementary positions across the ingestible and topical CBD product categories. Recently Charlotte's Web added 1,100 new drug stores, more than 700 pet stores, and Abacus added more than 5,000 retail doors with the signing of a new retail partner. Perry Antelman has been the CEO of Abacus since 2016 and will join Charlotte's Web as EVP and President of Topicals.
SCHWAZZE TO ACQUIRE 14 STAR BUDS STORES: Schwazze (SHWZ) announced Monday that it has signed definitive acquisition agreements for 14 Star Buds locations in the state of Colorado as part of the company’s pending acquisitions. Star Buds is home to a wide selection of strains, concentrates, edibles and tinctures. The acquisitions include 13 retail operations located throughout the Colorado front-range with four dispensaries in Denver, two dispensaries in Aurora, one dispensary in each of Commerce City, Westminster, Louisville, Longmont, Niwot, Pueblo and Pueblo West, and one cultivation in Denver. The acquisition of the 14 Star Buds locations is represented by 13 different ownership groups and agreements. Based on the consolidated, unaudited 2019 results the company received from Star Buds, these acquisitions collectively earned approximately $50M in revenue with a strong EBITDA margin. The company has submitted change of ownership applications with the Colorado Marijuana Enforcement Division for the 14 Star Buds locations and the transactions are expected to close in the third quarter of 2020.
CANOPY REOPENS TWEED STORES: Canopy Growth (CGC) announced Monday that Tweed cannabis stores across Newfoundland are reopening to foot traffic guests who are looking to purchase their cannabis products in store, following a period of reduced operations in response to the COVID-19 pandemic. A number of enhanced health and safety protocols have been added to the in-store experience to increase the safety of guests, including limiting the number of guests in store, increasing sanitation frequency and the addition of floor markers to help with physical distancing. Tweed customers may also continue purchasing their products online with Click and Collect service that allows for contactless pickup of orders in store.
OTHER CANNABIS STOCKS: Other publicly-traded companies in the space include Akerna (KERN), Aleafia (ALEAF), Aphria (APHA), Aurora Cannabis (ACB,) Auxly Cannabis Group (CBWTF), Biome Grow (BIOIF), CannTrust (CTST), Canopy Rivers (CNPOF), Cresco Labs (CRLBF), Cronos Group (CRON), CV Sciences (CVSI), Delta 9 (VRNDF), DionyMed Brands (DYMEF), Elixinol Global (ELLXF), FluroTech (FLURF), General Cannabis (CANN), Green Thumb Industries (GTBIF), GrowGeneration (GRWG), Harborside (HSDEF), Hemp Inc. (HEMP), India Globalization Capital (IGC), Indiva (NDVAF), Innovative Industrial Properties (IIPR), ICC International Cannabis (WLDCF), Khiron Life Sciences (KHRNF), Liberty Health Sciences (LHSIF), MediPharm Labs (MEDIF), MedMen (MMNFF), Mjardin (MJARF), Neptune Wellness Solutions (NEPT), Origin House (ORHOF), Planet 13 (PLNHF), Real Brands (RLBD), Sproutly (SRUTF), Sunniva (SNNVF), Supreme Cannabis (SPRWF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Trulieve (TCNNF), Valens (VLNCF), Vireo Health (VREOF), Wayland Group (MRRCF), WeedMD (WDDMF), Westleaf (WSLFF), Wildflower Brands (WLDFF), YSS Corp. (YSSCF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).