Cannabis firm Cronos’ quarterly gross loss grows to $20.4 million

Canadian cannabis firm Cronos Group reported a gross loss of nearly $20.4 million for the fourth quarter ending Dec. 31, 2019, widening from a restated gross loss of $14.8 million (CA$21 million) in the previous quarter.

The Toronto-based company has begun reporting its quarterly results in U.S. dollars.

For all of 2019, Cronos posted a gross loss of $17.9 million versus a gross profit of $6.2 million in 2018.

In the fourth quarter, Cronos reported inventory write-downs of $24 million, including a $1.9 million write-down related to the repurposing of its Peace Naturals facility – part of which is being converted from cultivation to research and design – and a $22.1 million write-down in the value of cannabis plants.

“We anticipate inventory write-downs in the short term due to pricing pressures in the marketplace and while the company executes its operational repurposing of the Peace Naturals campus,” according to a Cronos news release.

The quarterly results were supposed to be disclosed in late February, but Cronos delayed the release due to an unspecified “delay in the completion of its financial statements.”

Cronos also on Monday restated its financial statements for the first, second and third quarters of 2019 after the company’s board reviewed “certain bulk resin purchases and sales of products through the wholesale channel.”

The restated quarters for 2019 included reduced revenue for the previously reported quarters ended March 31 and Sept. 30.

Cronos said it earned net revenue of $7.3 million in the fourth quarter, up from a restated, reduced-net revenue of $5.3 million (CA$7.6 million) in the previous quarter.

The United States accounted for nearly $2.7 million worth of Cronos’ net revenue for the quarter, with revenues from the rest of the world totaling more than $4.6 million.

Cronos’ results did not break out Canada or other international jurisdictions from its “rest of world” revenue figure.

The company did not disclose revenue for adult-use or medical cannabis sales in Canada.

The company’s facilities are still operating in the face of the COVID-19 pandemic, although the company warned that “the ultimate impact of the COVID-19 outbreak is uncertain and subject to change.”

The company remains flush with cash from major investor Altria Group, reporting cash and cash equivalents worth nearly $1.2 billion plus short-term investments valued at more than $300 million as of Dec. 31.

Cronos trades as CRON on the Nasdaq and the Toronto Stock Exchange.

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