Sales are skyrocketing at HEXO Corp. but so are its expenses
A national, recreational, adult-use marijuana market opened for business nationwide in Canada last October, and surging demand from consumers eager to move their purchases out of the shadows is causing revenue to shoot up at Canada’s cannabis companies. Investors have already gotten a look at how the recreational market is playing out at Canopy Growth and Aurora Cannabis, and on Thursday they also found out how their smaller competitor HEXO (NYSEMKT:HEXO) is doing. Here are seven facts about HEXO’s fiscal second-quarter financial performance worth knowing.
1: Sales growth is jaw-dropping
HEXO’s gross revenue last quarter was 16.2 million Canadian dollars, up a remarkable 1,269% from one year ago and an impressive 144% from the previous quarter. Excluding excise taxes, net sales were CA$13.4 million, up from CA$1.2 million in the same quarter last year.
2: Quebec is king
The recreational market is the biggest reason for HEXO’s increasing revenue. It sold cannabis in three provinces last quarter, including Quebec, where it has a five-year agreement that enables it to sell 20,000 kilos during the adult-use market’s first year. Quebec accounted for 84% of the CA$12.2 million in revenue HEXO reported from the adult-use market last quarter.
Quebec’s likely to continue accounting for a large proportion of HEXO’s sales. HEXO expects to supply 35,000 kilograms in the second year and 45,000 kilos of marijuana in the third year of adult-use sales. The amount it supplies in the last two years of its preferred supplier agreement will be determined later, but HEXO estimates it could supply over 203,950 kilos to Quebec over the five-year period…
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