Cannabis producer Hexo reported a lower loss for the quarter ended Jan. 31, 2023, but the Gatineau, Quebec-based company’s sales took a nosedive, according to its quarterly report.
Hexo on Thursday reported adjusted earnings before interest, taxes, depreciation and amortization of negative 2.4 million Canadian dollars ($1.6 million) for its second quarter, an improvement over adjusted EBITDA of negative CA$5.6 million in the second quarter in the previous year.
Net revenue for the three-month period was CA$24.2 million, 55% lower than the same period one year earlier.
Sales fell across the board.
Gross revenue from:
- Recreational cannabis was CA$33 million in the quarter, down 40% compared to one year ago.
- Medical cannabis declined 35% year-over-year to CA$634,000 in the quarter.
- Wholesale dropped 50% year-over-year to CA$1.8 million.
International sales fell 103%. International sales were CA$8.2 million in the same quarter in 2022, but the company shows a revenue deficit in the quarter this year worth CA$265,000.
On a conference call with analysts, CEO Charlie Bowman discussed the “price war” in Canada’s cannabis industry.
“I don’t think anyone was surprised with the price war and the magnitude that went on in the last five months,” he said.
“I think the damage that could occur to the industry is significant, because no one wins in a price war.”
Hexo also said it achieved positive net income for the first time in its history.
Net income was CA$722,000 in the quarter, compared with a net loss of CA$710.1 million in the same quarter last year.
Hexo shares also trade on the Toronto Stock Exchange.