CRON - Cronos Recovers As Revenue Rises Losses Trimmed
Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) delivered its 2022 first-quarter business results as revenue jumped by 99% to $25 million versus last year’s $12 million for the same time period. Cronos attributed the increase to its segment in the Israeli medical market and the Canadian adult-use market. Cronos beat the Yahoo Finance average analyst estimate for revenue of $23 million.
Cronos also trimmed its net loss by 80% to $32.7 million from last year’s net loss of $161 million. The improvement year-over-year was primarily driven by the fluctuation in the non-cash gain (loss) on the revaluation of derivative liabilities. The earnings per share were ($0.09), which missed the analyst expectations for earnings per share of ($0.08).
Chairman, President, and CEO Mike Gorenstein said, “The strategic realignment we announced in the first quarter of 2022 reset the organization to this mindset and we are seeing the benefits show through in our performance. Our execution in product development, manufacturing, and go to market strategy resulted in strong growth in both net revenue and gross profit in the first quarter of 2022, proving that we are headed in the right direction. Our Spinach brand is one of the most sought-after brands in the Canadian adult-use market, known for bringing high quality and differentiated products to the consumer. We are also winning with branded products in Israel, with Peace Naturals driving significant revenue growth in the first quarter of 2022. As we execute our strategic realignment, I am encouraged with the progress we are making by increasing our market share in both Canada and Israel and continuing to bring disruptive branded products to market. In combination with our industry-leading balance sheet, our borderless products, such as SOURZ by Spinach winning in Canada, is one of the best ways to be prepared for legalization in the U.S.”
The increase in year-over-year revenue was primarily driven by an increase in net revenue in the Israeli medical market largely attributable to the cannabis flower category and the Canadian adult-use market driven primarily by cannabis extracts used in edibles and vaporizers.
Realignment
In the first quarter of 2022, Cronos announced a strategic plan to realign the business around its brands, centralize functions and evaluate the company’s supply chain. The organizational and cost reduction initiatives undertaken are intended to better position Cronos Group to drive profitable and sustainable growth over time. These activities included the transfer of certain manufacturing equipment to Cronos GrowCo from the Peace Naturals Campus. In April 2022, the company began building dedicated space within Cronos GrowCo for various manufacturing and R&D activities. In the first quarter of 2022, Cronos GrowCo reported preliminary unaudited net revenue of approximately $7.0 million to licensed producers excluding sales to the company.