They now have #1 market share in Canada. Debt holders converted a bunch of debt to shares at a lower conversion price. Trying to buy more at .90. They still have a lot of debt but they SAY looking for non dilutive options. Cant see why Aleafia cant work something out as well but the issue will also be that they still wont have any operating cash by md year. Because of that I feel it would be preferable if they would negotiate a share sale of the company at maybe 3-4X 2021 revs. Which would be below the level we saw for other transactions but would be taking into consideration the current industry realities.
Hexo numbers-
All amounts are expressed in Canadian dollars unless otherwise noted.
- HEXO reports $50.2 million in total net revenue for Q1’22, an increase of 29% compared to the fiscal quarter ended July 31, 2021 (Q4’21)
- Maintains #1 Market Share position in Canada1
- Announces new strategic plan, “The Path Forward” to strengthen its balance sheet and accelerate its transformation to become a cash flow positive company within the next four quarters.
____________
1 Based on Headset data for the quarter of August to October 2021
GATINEAU, Quebec, Dec. 14, 2021 (GLOBE NEWSWIRE) -- HEXO Corp (TSX: HEXO; NASDAQ: HEXO) (“HEXO” or the “Company”), a leading producer of high-quality cannabis products, today reported its financial results for the fiscal quarter ended October 31, 2021 (Q1’22), and announced “The Path Forward”, a new strategic plan to solidify itself as Canada’s leading cannabis company and position it to capitalize on international opportunities. The plan utilizes HEXO’s current assets, including its recent acquisitions and unique capabilities to drive accelerated growth and become cash flow positive within the next four quarters. This plan is underpinned by actions to strengthen its balance sheet, its executive team and its corporate governance.
Q1 2022 Highlights
- Total net revenue increased 29% to $50.2 million from $38.7 million in Q4’21, and up 70% from the comparative quarter of fiscal 2021.
- The Company closed its acquisitions of Redecan and 48North which contributed net revenues of $13.5 Million and $1.1 Million respectively during the two months ended October 31, 2022.
- The Company’s total non-beverage gross margin before adjustments increased to 28% from 25% in the previous quarter.
- Revising expected synergies from acquisitions to over $50M from previously reported $35M.
- Forecasting positive cash flow within the next four quarters based on incremental cash flow of $37.5 million in fiscal 2022 and an additional $135 million in 2023 for a total of $175 million over the two years.
“We are taking immediate steps through our new strategic plan, The Path Forward, to strengthen our capital position, improve operations, accelerate organic growth and complete our transformation to be cash flow positive from operations within the next four quarters,” said Scott Cooper, President & CEO, HEXO. “Having visited all our core sites, and in meeting with our employees and customers, I am more confident than ever in HEXO’s future and our ability to accelerate the creation of short and long-term value for shareholders.”
The Path to Growth: A Strengthened Balance Sheet
As part of its plan to ensure the Company has adequate capital to meet its requirements, it is taking immediate action to reduce the dilutive effect of its senior secured convertible note (“Convertible Note”). The Company is working with investment banks, as well as its current debt holder towards a holistic solution to reduce its debt overhang.
The Company is actively evaluating alternatives in a manner which maximizes shareholder value. HEXO continues to be actively engaged in positive, ongoing conversations with its senior secured note holder on potential restructuring options of the note. As of December 14, 2021, USD$118 million and USD$375 thousand of principal on the Convertible Note has been redeemed and converted, leaving USD$241.625 million of principal outstanding.