Shares of Canopy Growth (NASDAQ:CGC) (TSX:WEED) were trading up in pre-market activity this morning after the cannabis heavyweight unveiled its latest quarterly earnings this morning, dipping slightly in the minutes after the opening bell.
The cannabis company reported C$148 million (US$123 million) in revenue for the fourth quarter, which ended Mar. 31. That figure is up an impressive 38%, and only slightly below analysts’ expectations of C$151 million (US$125 million) - C$153 million (US$127 million).
The Canadian grower also reported a C$94 million (US$78 million) adjusted EBITDA loss. In a statement, the company said it is on track to achieve positive adjusted EBITDA in the second half of 2022.
The company, which markets a wide range of cannabis-infused drinks, gummies, and chocolates as well as dried flowers, cut its operating expenses by 25% in the last three-month period, stating its cost-savings program is predicted to achieve C$150 million (US$125 million) to C$200 million (US$166 million) in savings in the coming year.
In the last 12 months, shares of Canopy Growth have gained about 50%. They closed last Friday on the NASDAQ at US$26.09. The US market was closed Monday for the Memorial Day holiday. In Toronto, Canopy closed yesterday at C$32.25. In the last year, Canadian-traded Canopy stock has gained about 25%.
Hexo Headed To Top Of Canadian Cannabis Pack
Deals in the cannabis industry are picking up—both in pace and scope. Earlier this spring, Tilray (NASDAQ:TLRY), merged with Aphria (NASDAQ:APHA) to create the biggest marijuana company in the world, which continues to trade under the Tilray name. And now, another Canadian-based cannabis grower is looking to expand, increasing its reach and possibly challenge Tilray for its title.
Late last week, Hexo Corp (NYSE:HEXO) (TSX:HEXO), announced it was buying Redecan Pharm, a privately-owned Canadian cannabis company, for close to C$1 billion (US$830 million). The deal is not only a major acquisition, but signals an official trend among Canadian cannabis companies battling it out for market share.
Once completed, the C$940-million (US$780 million) cash-and-stock deal will see Redecan shareholders own a 31% stake in the enlarged Hexo. The purchase still must obtain regulatory approval and receive the go-ahead from Hexo shareholders. Although no date has been announced as to when all this could take place, Hexo officials said the deal could be completed by the third quarter of this year.
What Does This Deal Mean For Hexo?
The scope of the expansion is all about where it positions Hexo. The company can now look beyond its plan to be among the top three cannabis companies in Canada to possibly leap-frogging straight into top spot—having the largest share of the adult recreational market. But Hexo’s ambitions go beyond North America.
Earlier this year, Hexo announced it was buying Zenabis Global (OTC:ZBISF), a European-based cannabis grower, for C$235 million (US$195 million). This move expanded Hexo’s footprint in the European medical marijuana market.
Then in May, Hexo continued on is buying spree, picking up 48North Cannabis (OTC:NCNNF), a small grower that is traded in Canada and the US, for $50 million.
Put all together, these deals could put Hexo at the top of the leader board in terms of being the most significant Canadian cannabis company—ahead of Tilray and Canopy Growth.
The news of Hexo’s expansion plans sent shares trading in the US up almost 10% last Friday, where they closed at US$7.18. They are still trading below the high they reached in early May of about US$7.40. In the last year, Hexo stock has gained an impressive 183.6%.