In this week's "Rising High," The Fly's recurring series focused on cannabis and psychedelic stock news, The Fly looks back on an earnings, amended agreements and analyst views.
CANNABIS EARNINGS: Fire & Flower (FFLWF) reported first quarter earnings on Tuesday with a loss per share of (C$0.27) on revenue of C$40.9M, which compared to a loss per share of (C$2.06) on revenue of C$44.1M for the same period last year. Following the report, Stifel analyst Justin Keywood lowered the firm's price target on Fire & Flower to C$5.50 from C$8.50 and kept a Speculative Buy rating on the shares.
Additionally on Tuesday, High Tide (HITI) reported a Q1 loss per share of (C$0.14) on revenue of C$81M, which compares to a loss per share of (C$0.30) on revenue of C$40.87M for the same period last year. The company added that it expects to continue to increase its revenue through the third fiscal quarter of 2022, and for the remainder of the year.
HEXO (HEXO) also reported earnings on Tuesday for Q3, with net revenue of C$45.6M, which compares to net revenue of C$22.7M for the same period last year. The company also announced it was withdrawing previously issued guidance on operational synergies and expected incremental increases to cash flows for the 2022 and 2023 financial years. HEXO said, “The company now believes that it will not achieve the synergies and incremental cash flow increases to the level estimated in its previous guidance and it expects such figures and measures to be lower than previously guided.”
Meanwhile on Monday, RIV Capital (CNPOF) reported a Q4 loss per share of (C$0.12), which compared to a loss per share of (C$0.13) for the same period last year. The company reported an operating loss of (C$2M) for the quarter, compared with operating income of C$0.7M last year.
TILRAY ENTERS INTO AMENDING AGREEMENTS WITH HEXO: Tilray Brands (TLRY) announced Tuesday that the company has entered into amendments to improve the terms of its previously-disclosed agreements to acquire all of the outstanding principal, plus accrued and unpaid interest, under a secured convertible note issued by HEXO Corp. to HT Investments MA. These amendments provide for an additional discount to Tilray Brands’ purchase price as well as the reduction of the conversion price under the HEXO Note from C$0.85 to C$0.40 per share. Upon closing, Tilray Brands will nominate two directors to HEXO’s Board of Directors and one Board observer.
Following the news, Canaccord analyst Matt Bottomley lowered the firm's price target on Tilray to $7 from $9 and kept a Buy rating on the shares. The analyst noted the amendments, which include both a financial and commercial partnership, in an effort to improve the overall terms of the arrangement. The companies will also combine various innovation capabilities, leveraging IP and knowhow in respective areas of strength. Bottomley also downgraded HEXO to Hold from Speculative Buy with a price target of C$0.25, down from C$1, after the company reported fiscal Q3 results that came in below his expectations amid continued headwinds in the Canadian adult-use market. Though Tilray's strategic arrangement with HEXO is set to close next month and he previously believed the combined impact of Tilray's proposed acquisition of HEXO’s senior secured convertible notes and management's revised plan for operational rightsizing helped mitigate two notable overhangs for the company, Bottomley said he's made "meaningful updates" to his model as Hexo's turnaround prospects "continue to falter."
Meanwhile, Alliance Global Partners analyst Aaron Grey downgraded HEXO to Neutral from Buy with a price target of C$0.30, down from C$5, after updating his model to account for Q1, Q2 and Q3 earnings as well as the company's strategic alliance with Tilray. While "encouraged" to see the company remove investor concerns on the convertible debt, Grey cites uncertainty on how the strategic alliance will operate as well widening EBITDA losses and the continued competitive landscape in Canada for a lower rating and decreased price target on Hexo shares.
AYR WELLNESS BEGIN NJ ADULT-USE SALES: Ayr Wellness (AYRWF) announced Monday that it was beginning to serve adult-use customers at its three New Jersey dispensary locations on Wednesday, June 15. Ayr’s adult-use dispensaries are in prime locations in the towns of Woodbridge, Union, and Eatontown, all within Central New Jersey, a region of 3.4M people. Ayr’s adult-use stores represent 3 of 5 adult-use stores in this highly populated region. Ayr currently operates its New Jersey dispensaries under the Garden State Dispensary banner.
INNOVATIVE INDUSTRIAL PROPERTIES ACQUIRES TEXAS PROPERTY: Innovative Industrial Properties (IIPR) announced Wednesday that it closed on the acquisition of a property in Texas and entered into a long-term lease with a subsidiary of Texas Original Holdings. The purchase price for the property was approximately $12M, which was derived from costs Texas Original incurred to acquire the 25 acres of land and develop the property through the date of closing. At the time of closing, the majority of project sitework had been completed and two of the four buildings have been dried in with interior finish out under construction. Texas Original is expected to complete construction of the approximately 85,000 square foot industrial and hybrid greenhouse facility, for which IIP has agreed to provide reimbursement of up to approximately $10M, consisting of completion of building shell, interior buildout of cultivation and production rooms, and mechanical, electrical and plumbing systems. Assuming full reimbursement for the construction, IIP’s total investment in the property is expected to be $22M or approximately $259 per square foot. Upon completion, the property is expected to include approximately 49,000 square feet of cultivation space, with the balance of the space utilized for manufacturing, processing, testing and administrative activities.
VALENS INTRODUCES BON JAK IN QUEBEC: The Valens Company (VLNS) announced Thursday the launch of a Quebec-exclusive brand, Bon Jak. Valens continues to build its presence in Quebec with the addition of several new SKUs under the Bon Jak brand, which is focused on delivering unique user experiences in the province of Quebec. Products include dried flower: Bon Jak BC God Bud, Bon Jak Indica Ground, and Bon Jak Sativa Ground as well as cannabis-infused beverages: Bon Jak Lime Seltzer, Bon Jak Grapefruit Seltzer and Bon Jak Mango Seltzer. The products are expected to be listed to the Société québécoise du cannabis effective September 12, 2022, and expected to be distributed through the SQDC retail and online channels.
OTHER CANNABIS/PSYCHEDELIC STOCKS: Publicly-traded companies in the space include Acreage (ACRHF), Akerna (KERN), Aleafia (ALEAF), Atai Life Sciences (ATAI), Awakn Life Sciences (AWKNF), Audacious (AUSAF), Aurora Cannabis (ACB), BC Craft (CRFTF), Body and Mind (BMMJ), Cannara Biotech (LOVFF), Canopy Growth (CGC), RIV Capital (CNPOF), Chicago Atlantic (REFI), Columbia Care (CCHWF), Compass Pathways (CMPS), CordovaCann (LVRLF), Clever Leaves (CLVR), Cresco Labs (CRLBF), Cronos Group (CRON), CV Sciences (CVSI), Curaleaf (CURLF), CURE Pharmaceutical (CURR), Delic Holdings (DELCF), Delta 9 (DLTNF), Entourage Health (ETRGF), Flora Growth (FLGC), General Cannabis (CANN), Goodness Growth (GDNSF), Greenlane (GNLN), Green Thumb (GTBIF), GrowGeneration (GRWG), Harborside (HBORF), Hemp (HEMP), HEXO, IM Cannabis (IMCC), India Globalization Capital (IGC), Indiva (NDVAF), InterCure (INCR), Wellbeing Digital (KONEF), Khiron Life Sciences (KHRNF), Lowell Farms (LOWLF), Lotus Ventures (LTTSF), MediPharm (MEDIF), MedMen (MMNFF), Neptune Wellness (NEPT), NewLake Capital (NLCP), Thermic Science (ENDO), Organigram (OGI), Planet 13 (PLNHF), Relmada (RLMD), RYAH Group (RYAHF), Sproutly (SRUTF), Stem Holdings (STMH), Small Pharma (DMTTF), Skye Biosciences (SKYE), Sundial Growers (SNDL), Sunniva (SNNVF), TerrAscend (TRSSF), Tetra Bio-Pharma (TBPMF), Trulieve (TCNNF), Tryp Therapeutics (TRYPF),, Verano Holdings (VRNOF), Village Farms (VFF), Wesana Health (WSNAF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).
Fire & Flower
+0.1409 (+6.65%)
High Tide
-0.04 (-1.96%)
Hexo
+
RIV Capital
+
Tilray
-0.105 (-3.28%)
Ayr Wellness
+ (+0.00%)
Innovative Industrial Properties
-4.46 (-3.83%)
Valens
+
Aurora Cannabis
-0.07 (-5.24%)
CV Sciences
+
CannTrust
+
Canopy Growth
-0.205 (-5.82%)
Cronos Group
-0.045 (-1.65%)
Trees Corporation
+
Goodness Growth
+0.06 (+4.03%)
Green Thumb Industries
+0.095 (+1.01%)
IGC Pharma
+
Trulieve Cannabis
+0.45 (+3.41%)
ZYNE
+