Here Are The Major Takeaways Investors Need To Know From Hexo’s Latest Earnings Release

Due to the relationship that HEXO Corporation (HEXO.TO) (HEXO) has with Molson Coors, we have been closely following the Canadian Licensed Producer (LP) and believe that it is an operator to be aware of.

Yesterday, HEXO released second quarter financial results for the period that ended on January 31^st and we are impressed with how the business has advanced, when compared to the prior quarter and the same quarter last year.

During the quarter, HEXO had its seventh consecutive quarter of improving adjusted EBITDA numbers and this is a trend that we are bullish on. When compared to the same quarter last year, HEXO recorded a 94% increase in revenue and generated $32.8 million of revenue during the period.

HEXO benefited from the growth of its recreational cannabis beverage business in Canada and when compared to the prior quarter, the business saw an 11% spike in revenue from the sale of these products. When compared to the prior quarter, the Canadian LP also saw an 11% increase in sales of non-beverage recreational cannabis products.

We expect Canada’s recreational cannabis market to play an important role in the growth of HEXO and are bullish on this vertical. During the second quarter, HEXO announced that Canadian recreational cannabis revenue increased by more than 10%. This milestone represents the fifth consecutive quarter of growth on the recreational side of the business and are favorable on the trend

In the second quarter earnings report, HEXO highlighted the previously announced acquisition of Zenabis Global Inc. (ZENA.TO). The acquisition agreement remains subject to customary closing approvals and we will monitor how the transaction advances in the current quarter. Although we have never been excited about Zenabis, we expect HEXO to benefit from the exposure that Zenabis has to the European Union (EU).

One of the reasons we are excited about HEXO is related to how it has been able to capture additional market share in Canada and maintain the number one position in Quebec. Going forward, we are excited about HEXO’s launch of cannabidiol (CBD) beverages in Colorado and will monitor how the products gain traction in this market.

Going forward, the management team expects the acquisition of Zenabis to be accretive and is expected to position HEXO for accelerated domestic and international growth. based on the most recent interim quarterly financial statements, the acquisition would place HEXO in the top three LP for Canadian recreational cannabis sales.

The market responded favorably to the acquisition and the shares initially traded more than 10% higher in before the market opened on Thursday. HEXO gave up these gains and ended the day down more than 5%. If want to stay up to date with HEXO, please send an email to support@technical420.com with the subject “HEXO” to be added to our distribution list.

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Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

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