New news. $298 million write in 2020 - how much in 2021?Re-posting for those new to the board and looking for honest facts and not just positive but misleading pumptarding. I'm thinking of starting a scrapbook to assist investors looking to put their family fiancnes into a cannabis company like Hexo Keeler - (7/18/2021 9:42:39 PM)
Gosh, I hate to be negative but.... if Hexo had to write off $298 million 6 months after acquiring Newstrike, for things like excess inventory, impairements, acqusiiton costs, stupidity etc. - you know, things that happen when you make bad business decisions - then how in the heck much are they going to write off this year with Zena.
Oh boy, I wonder .
Hexo Posts Net Loss of $298.2 Million, Effectively Writes Off Newstrike Transaction
March 30, 2020 9:00 AM Jay Lutz Hexo Corp Share Tweet Share Hexo Corp (TSX: HEXO) (NYSE: HEXO) released its second quarter financials this morning, in what might be referred to as a “kitchen sink” quarter given how much the company has impaired in terms of assets. Total net loss for the quarter came in at $298.2 million as a result of the cumulative write offs and impairments.
In terms of revenue, Hexo actually posted an improvement over the first quarter of 2020, posting net revenues of $17.0 million, as compared to $14.5 million in the first quarter. Adult use cannabis made up the bulk of this revenue, with net proceeds of $16.3 million via the sale of 6,579 kg of product. Net revenue per gram however decreased significantly, to $2.47 versus $3.24 in the prior quarter as a result of increased sales from the firms value line of product.
Largely, this is where the bad news begins for current Hexo shareholders.
Here’s a laundry list of the write downs and impairments taken by the company in the second quarter:
- Inventory impairment of $16.1 million, compared to an impairment of $23.0 million during the first quarter. Impairment is a result of falling cannabis prices, excess inventory, and sunk costs for package reconfiguration.
- Restructuring costs of $0.3 million connected to the “rightsizing of operations”
- Impairment of property, plant and equipment to the tune of $32.0 million related to the firms facilities acquired from Newstrike Brands which will now be posted for sale
- Impairment of intangible assets by $106.1 million related to the Newstrike Brands assets which are now up for sale.
- Impairment of goodwill to the tune of $111.8 million which is also related to the Newstrike acquisition, effectively writing off nearly the entire transaction less than a year after it closed.
- Realization of onerous contract of $3.0 million, in relation to the ongoing litigation with Medipharm Labs, a contract which has been labeled as being “bad faitth”
Also of interest for current shareholders, is that covenants related to current outstanding debt of $35.0 million with CIBC and BMO requires that the company close on at minimum $40 million in net cash proceeds from the issuance of equities by April 30, 2020. The funding can occur via an at-the-market offering, or via the sale of equity in a funding of at least $15.0 million, either of which must be announced on or before April 10, 2020.
Keeler - (7/18/2021 9:42:39 PM)
Gosh, I hate to be negative but.... if Hexo had to write off $298 million 6 months after acquiring Newstrike, for things like excess inventory, impairements, acqusiiton costs, stupidity etc. - you know, things that happen when you make bad business decisions - then how in the heck much are they going to write off this year with Zena.
Oh boy, I wonder .