Cannabis shares turned red on Monday, impacted by Aphria Inc. after a significant loss in the third quarter that outweighed the increase in sales.
Early trading declined 15% after the Leamington, Ontario-based company reported a loss of $ 108.2 million ($ 43.1 million) or 43 cents per share in the third quarter after a gain of 12.9 Million CAD or 8 cents per share in the same period a year ago.
Excluding special items such as non-cash impairments and additional non-operating losses, adjusted gross profit was $ 13.4 million. FactSet does not provide any estimates for Aphria.
Sales increased from $ 10.3 million in the first quarter of Canadian legal cannabis to $ 73.6 million. However, the company sold less cannabis than a year ago. The kilograms sold fell from 3,408.9 to 2,636.5, while the median retail retail price for medicinal cannabis increased from $ 7.51 to $ 8.03 per gram, mainly due to higher oil sales. The average price for adult cannabis decreased from $ 5.32 to $ 5.14 due to the shift to smaller pack sizes.
The company stated that it had used a non-cash impairment charge of $ 50 million for its Latam assets acquired last September, which was later reviewed by a special committee. This review was triggered by a report by short sellers Quintessential Capital Management and Hindenburg Research, who said that the $ 280 million deal with companies in Argentina, Colombia and Jamaic put up red flags as their investigation indicated that the assets were worthless be.
The committee noted conflicts of interest for some board members that were not disclosed to the board, as MarketWatch reported in February.
"Aphria's revenue shows a quarterly loss of more than $ 100 million, negative margins, reduced production, regulatory review and a large write-down on the Latin American acquisition that we believe will be the first of many," said Gabriel Grego of Quintessential on Monday opposite MarketWatch.
"As our research showed, the actual performance of the company was not what they said to the market. We respect the new management team that undertakes the difficult task of correcting the predicament's plight. "
Separately, Aphria said it has entered into a number of agreements to accelerate the expiration date of the unsolicited offer offered by Green Growth Brands Inc.
If you missed it: The "hostile" takeover bid for the cannabis company Aphria is littered with red flags
Shares of Organigram Holdings Inc.
fell 4.5%. Like Aphria and other competitors, Organigram posted a loss in the second quarter of the fiscal year, while sales exceeded estimates. The company reported a net loss of $ 6.4 million ($ 4.8 million) or 5 cents per share, after a gain of $ 1.076 million, or 1 cent per share, in the prior year period.
See also: Cannabis shares fall after the Attorney General offers silent support for federal law
Net sales (excluding excise duties) amounted to $ 26.9 million. The consensus of four analysts interviewed by FactSet consisted of an EPS of 2 cents and a turnover of C $ 24.2 million.
The company said the total cost of cultivation was 85 cents per gram of dried flowers, compared to C $ 1.48 a year ago, mainly due to higher yields per plant. It now focuses on vaporizable pen technologies and a range of edible products prior to the introduction of derivatives in Canada in the fall of 2019.
American cannabis dealer MedMen Enterprises Inc.
MMNFF, + 0.36%
Unaudited revenue for the third quarter of the current fiscal year was $ 36.6 million, up 22% from the second quarter. Growth was driven by the company's expansion in Nevada and Arizona, where sales were up 34% and 513%, respectively, from the second quarter.
In Nevada, the company's Paradise location, which is closest to McCarran Airport, is the company's second-highest value, up 39% from the second quarter.
The company announced that pro forma revenue, including its ongoing acquisitions, was $ 54.9 million, up 11% from the second quarter. The company announced in October a purchase agreement for PharmaCann LLC as part of an all-stock deal worth $ 682 million. The shares rose by 0.7%.
In the regulatory news, the US Hemp Agency revises the guidelines for CBD manufacturers looking for a seal to ensure the safety of their products, and has set a deadline for manufacturers of April 15 to comment on how should regulate the industry itself, reported Marijuana Business Daily.
The US Food and Drug Administration has specifically agreed to hold a public stakeholder hearing on May 31 to share experiences and provide information and views on how to regulate the CBD market. While hemp was fully legalized in the December Farm Act, the DEA transferred CBD to the FDA, and the former said companies could not add it without food or beverage approval.
In the meantime, investors are getting ready for this week's IPO, which comes closest to a US-based cannabis company that trades on a major US stock exchange. Greenlane Holdings Inc.
GNLN, + 0.00%
A Florida-based manufacturer of hardware and accessories for cannabis vape for retailers and consumers in the US, Canada and other parts of the world is expected to praise its IPO on Wednesday and trading on Nasdaq on Thursday under the ticker symbol "GNLN. "
Do not miss: Greenlane IPO: 5 Things to Know What's Next for a US Cannabis Company to Publish on the Nasdaq
In other areas of the industry, Canopy Growth Corp.
decreased by 3.8%, Aurora Cannabis Inc.
fell 3.1% and Cronos Group Inc.
fell 4.4%, Cresco Labs
fell by 2.6%. Hexo Corp. declined by 3.8% and Green Organic Dutchman Holdings Ltd.
was down 5.8%. Aleafia Health Inc. f
7.9%, CannTrust Holdings Inc.
decreased 5.2% and GW Pharmaceuticals PLC
fell by 1.1%.
Read: Tilray shares are rising after the company has shown that they can sell recovery potential
Likewise: Cannabis stocks climb to Tilray's profit as New Jersey approaches the legal weed
The Horizons Marijuana Life Sciences ETF
fell 4% and the ETFM Alternative Harvest ETFMG
The Dow Jones Industrial Average
and the S & P 500 Index
had dropped by 0.2%.
See also: Forest fires burn both money and grain in Weed Country, California
Cannabis Watch: The entire market coverage of MarketWatch for cannabis companies
Additional coverage by Tomi Kilgore and Max Cherney