Toronto-based cannabis company Cronos Group reported an adjusted operating loss of $31.3 million for its second quarter, along with $40 million worth of coronavirus-related impairment charges on its U.S. operations.
About $2.2 million of that revenue came from Cronos’ U.S. operations, with the remainder coming from the “rest of world” business segment, which includes adult-use and medical sales in Canada and international interests in Australia, Colombia, Germany and Israel.
The $40 million impairment charge, which included $35 million for Cronos’ U.S. unit and $5 million for its Lord Jones hemp-derived CBD brand, was attributed to margin compression caused by pandemic-related measures. Those include pay increases for production workers, discounts including free shipping and “promotional events.”
Cronos said COVID-19 did not materially affect revenue or revenue growth in its operations outside the United States.
The company did not break out its Canadian recreational revenue, making it hard to assess the company’s performance in Canada’s increasingly competitive adult-use market.
However, Cronos wrote down $3.1 million of dried cannabis and extracts in the quarter, “primarily driven by cannabis product price compression in the Canadian market.”
“We anticipate further inventory write-downs due to pricing pressures in the marketplace,” Cronos management said in a regulatory filing.
Cronos had more than $1.1 billion of cash and cash equivalents on hand at the end of the quarter and nearly $214 million in short-term investments.
The company’s gross loss for the quarter was $3 million.
Earnings details from some publicly traded companies in the cannabis industry are available here.