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March 17, 2020, 6:49 a.m. EDT

Hexo delays filing of financial statements as it looks to book 'significant' impairment loss

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By Tomi Kilgore

Hexo Corp. /zigman2/quotes/206508254/composite HEXO +0.37% /zigman2/quotes/200008967/delayed CA:HEXO -2.11% said Tuesday it missed the March 16 deadline to file its interim financial statements for the 3-month and 6-month periods ended Jan. 31. The Canada-based cannabis company said the delay in filing was a result "exceptional circumstances," such as "complex" calculations in determining the total of the "significant impairment loss" it will be recording in second-quarter filings. The expected range of the impairment is $265 million to $285 million. In the meantime, the company said it recorded fiscal second-quarter gross revenue growth of 23% to C$23.8 million ($16.9 million), while net revenue rose 17% to C$17.0 million. The company said it has decided to not to re-commence operations at its Niagara Facility, and plans to sell the facility, given an excess in cultivation capacity in the market and estimated forecast demand for cannabis products, as a result of slower-than-expected market development. The company said as of Jan. 31, the carrying amount of its total net assets "significantly exceeded" its market capitalization, as "the industry has experienced slower-than-expected retail store roll-outs in ‎Canada and delays in government approval for cannabis derivative products which has constrained distribution channels and adversely affected overall market sales and ‎profitability." The stock, which was still inactive in premarket trading, has lost 63.2% over the past three months, while the ETFMG Alternative Harvest ETF /zigman2/quotes/204332491/composite MJ +0.53% has declined 45.3% and the S&P 500 /zigman2/quotes/210599714/realtime SPX +1.16% has dropped 25.3%.

/zigman2/quotes/206508254/composite
US : U.S.: NYSE
$ 0.71
+0.0026 +0.37%
Volume: 3.94M
Aug. 12, 2020 1:18p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$291.86 million
Rev. per Employee
N/A
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/zigman2/quotes/200008967/delayed
CA : Canada: Toronto
$ 0.93
-0.02 -2.11%
Volume: 594,301
Aug. 12, 2020 12:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$388.18 million
Rev. per Employee
N/A
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/zigman2/quotes/204332491/composite
US : U.S.: NYSE Arca
$ 12.73
+0.07 +0.53%
Volume: 378,146
Aug. 12, 2020 1:18p
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/zigman2/quotes/210599714/realtime
US : S&P US
3,372.41
+38.72 +1.16%
Volume: 1.23B
Aug. 12, 2020 1:19p
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