OGI - Tilray slips after Q3 revenue miss despite Hexo deal

2023-04-10 16:48:56 ET

Despite announcing a buyout deal with rival Canadian cannabis player Hexo Corp. ( NASDAQ: HEXO ), Tilray Brands ( NASDAQ: TLRY ) fell ~4% post-market Monday after reporting lower-than-expected revenue for Q3 of fiscal 2023.

Leading a decline in other Canadian cannabis stocks, Hexo ( HEXO ) fell ~24% after TLRY agreed to close the transaction in June 2023 following a ~$56M all-stock deal. OrganiGram Holdings ( OGI ), Aurora Cannabis ( ACB ), and Cronos Group ( CRON ) are all trading lower after the close.

On the financial front, Tilray ( TLRY ) beat earnings expectations for Q3 while missing revenue forecasts for its major segments. Net revenue for the quarter grew ~1% YoY to $145.6M, while distribution revenue rose ~5% YoY to $65.4M, and net cannabis revenue fell ~14% YoY to $47.5M.

In terms of market channel, revenues from Canadian adult-use cannabis products and international cannabis products dropped ~14% YoY and ~39% YoY to $6.0M and $9.7M, respectively.

Meanwhile, TLRY swung to a gross loss of $11.7M during the quarter compared to $40.0M gross profit in the prior year quarter, and its cash and equivalents fell short of expectations to reach ~$165.0M indicating a ~60% drop from FY22 end.

As for adjusted EBITDA, the company’s quarterly figure of $14.0M and the full-year forecast of $60M – $66M fell short of expectations.

Read: Seeking Alpha contributor Alan Brochstein issued a Strong Sell on TLRY ahead of the earnings noting that the stock is trading as much as two times its fair value.

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