Hexo Corporation (NYSE:HEXO), the producer of high-quality cannabis products which has agreed to a takeover by Tilray Brands Inc (NASDAQ:TLRY), has reported a decline in net revenues and an adjusted EBITDA loss for the third quarter of its 2023 fiscal year.
The company also noted that at a special meeting on Wednesday, June 14, 2023, Hexo shareholders approved the Tilray takeover arrangement agreement. Hexo shareholders will receive 0.4352 of a share of Tilray common stock for each whole Hexo common share held.
In the third-quarter results statement, Charlie Bowman, president and CEO of Hexo said: "We continue to expect the transaction will be completed by June 30, 2023."
In the third quarter of 2023, Hexo recorded net revenues of $21.6 million, representing an 11% decline from the second quarter, and recognized an adjusted EBITDA loss of $3.9 million, compared to a loss of $2.4 million in the second quarter.
Despite the decline in net revenues, Hexo reported improvements in certain areas, notably seeing general and administrative expenses, excluding Health Canada cannabis fees, improve by $2.6 million, or 25%, compared to the second quarter. Selling, marketing, and promotion expenses remained largely flat quarter-over-quarter but showed a 48% improvement compared to the same period last year.
Hexo also highlighted its efforts to control costs but acknowledged impairments in its material cash-generating unit by $73.7 million, indicating the challenges it faces in the current market environment.
Despite the mixed financial results, Hexo reported improvements in its loss from operations and operating cash flows compared to the same period last year.
The company recognized the need to address its financial performance. "We are committed to optimizing our operations, controlling costs, and executing our growth strategy to drive long-term success," said CEO Bowman.
Contact the author at jon.hopkins@proactiveinvestors.com