Valens ( NASDAQ: VLNS ) stock has lost 14.5% to $0.61 in Thursday morning trading, after the cannabis company reported a wider sequential Q2 loss, a fall in Q2 provincial sales and the recognition of impairment losses.
VLNS after hours on Wednesday said its Q2 GAAP loss per share widened to -C$2.13 from -C$0.38 in Q1. Adj. gross profit of C$3.4M was also flat compared to Q1.
Q2 net revenue rose 3.5% from Q1 to C$24M. However, provincial sales, VLNS' largest revenue segment, fell 14.8% from Q1 to C$9.2M.
The decline in provincial sales was partly attributable to absent depletion weeks as the company rebranded, VLNS said in its earnings report . The company added that $0.5M of provincial sales revenue generated towards the end of May was pushed into Q3 due to an "in-transit adjustment."
"Despite the temporary setback in provincial sales... momentum has reaccelerated in June with record monthly provincial sales as well as seeing strong visibility into our pipeline of purchase orders into July," said VLNS CEO Tyler Robson.
The company also said that, during the quarter, it had identified "indicators of impairment" as a result of market conditions in the cannabis industry. These indicators resulted in management re-assessing the current valuation of certain intangible assets and goodwill.
Consequently, the company recognized an impairment loss on goodwill and intangible assets of C$52.9M and C$67.9M, respectively.
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Valens stock falls after Q2 results disappoint, co records impairment losses