Struggling cannabis producer Hexo Corp. is cutting 180 jobs as part of its bid to reduce corporate spending by approximately one-third through the end of next year.
The layoffs, announced Wednesday, are part of the Quebec-based company’s “path forward” plan to become the first among its competitors to achieve cash-flow positive operations.
In December 2021, the company reported a net loss of 116.9 million Canadian dollars ($91 million) in the first quarter of fiscal 2022.
Hexo said the layoffs will result in CA$15 million in savings on an annualized basis, and 90 of the displaced workers are related to the previously announced closure of the Stellarton facility, according to a company news release.
Hexo had acquired the Stellarton, Nova Scotia, facility as part of its CA$235 million acquisition of rival producer Zenabis one year ago.
According to the release, “the remaining reductions are related to reducing back-office positions where there is significant overlap as a result of recent acquisitions and simplifying HEXO’s operating model to drive clearer accountability.”
Hexo expects the combination of cost reductions and anticipated organic revenue growth to generate incremental cash flow of roughly CA$37.5 million in fiscal 2022 plus an additional CA$135 million in fiscal 2023.
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Last week, an activist shareholder said he is pushing to replace the majority of the company’s board, with an eye to “turning around the underachieving company’s disappointing performance.”
The investor, Adam Arviv, who owns approximately 2% of Hexo, said he has been “waging a battle” with the company’s management since it acquired competing Canadian producer Redecan for CA$925 million in 2021.
Hexo said it is preparing its own board recommendations for the upcoming meeting.