Stockwatch ArticleHey queerlash - what was Hexo's adjusted EBITDA?
Pumptard - you havr zero credibility
Canadian cannabis grower Hexo Corp. (HEXO) lost 24 cents to $1.80 on 16 million shares. The fiscal 2021 financials that it released this morning did nothing to halt the rapid slide in the stock, which has fallen from nearly $9 over the last five months. New chief executive officer Scott Cooper (who took the job just last week) stared down a long road as he declared one of first priorities to be "reviewing our financial position."
The position, as laid out in today's financials for the fiscal year ended July 31, 2021, put Hexo with an operating loss for the year of $85-million, an operating cash outflow of $43-million and an accumulated deficit of $773-million. The company held $67-million cash at the end of the quarter, relative to $503-million in current liabilities.
These liabilities are largely related to mandatory monthly redemptions under a $360-million (U.S.) note that matures in May, 2023. While Hexo's stated preference is to settle this debt with equity (which will cause considerable dilution for shareholders), the noteholder is allowed to require cash payments if Hexo's shares trade below a specified level. The original level was $5 (U.S.). Last week, the noteholder agreed to revise it to $1.50 (U.S.). Today, Hexo's U.S.-listed shares closed at $1.47 (U.S.). The company has re-entered negotiations with the noteholder, but in today's financials, it had to flag the risk of cash payments -- which it does not have the cash on hand or incoming to handle -- and therefore had to include a blaring "going concern" warning.
The rest of the financials were not much of a mood-booster. In these sorts of press releases, most cannabis companies hype what is typically their most forgiving number, adjusted EBITDA. Hexo is usually no exception, but today's press release made no mention of it -- not a good sign. The SEDAR filings revealed why: Hexo's adjusted EBITDA deteriorated to negative $13-million in the fiscal fourth quarter (from negative $10.7-million in the third quarter). Operating loss came to $59-million and net loss was $67-million.
Hexo did enjoy a jump in revenue, which rose to $38.7-million in the fourth quarter from $22.6-million in the third quarter, thanks partly to the acquisition of Zenabis Global in June. Two more acquisitions -- including that of Redecan, which is actually profitable -- closed after the fiscal year-end and will start to show up in Hexo's next financials. New CEO Mr. Cooper is holding on to the hope that these future financials will be much healthier. Dubbing the Redecan deal "transformative," he said he plans to "build on Hexo's strong foundation, with an immediate priority of continuing to integrate our recent acquisitions and reviewing our financial position." Shareholders remained aloof in the face of a mountain of debt and the near certainty of heavy dilution.