Hexo Corp (NASDAQ: HEXO) announced financial results for the fiscal Q1 2022 ending October 2021 and revealed “The Path Forward,” a new strategic plan to fortify its position in Canadian cannabis sector and position itself to leverage international opportunities.
Total revenue climbed 29% in Q1 2022
HEXO’s current assets, including recent acquisitions and exceptional capabilities, will be used to accelerate expansion and become cash flow positive in the next four quarters, according to the strategy. This strategy is supported by initiatives to improve the company’s balance sheet, corporate governance, and management team.
Total net revenue climbed by 29% to $50.2 million in Q1 2022, up from $38.7 million the previous quarter and up 70% from the same quarter in fiscal 2021. During the two months ended October 31, 2022, the company completed its acquisitions of Redican and 48North, which provided net revenues of $13.5 million and $1.1 million, respectively.
Before adjustments, the company’s overall non-beverage gross margin improved to 28 percent from 25 percent in the prior quarter. Expected acquisition synergies have been increased from $35 million to above $50 million. Positive cash flow is expected within the next year, based on the extra cash flow of $37.5 million in fiscal 2022 and $135 million in fiscal 2023, for a total of $175 million across the two years
Hexo strengthening its cash position to leverage opportunities
CEO and president Scott Cooper, “We are taking immediate steps through our new strategic plan, The Path Forward, to strengthen our capital position, improve operations, accelerate organic growth and complete our transformation to be cash flow positive from operations within the next four quarters. Having visited all our core sites, and in meeting with our employees and customers, I am more confident than ever in HEXO’s future and our ability to accelerate the creation of short and long-term value for shareholders.”
The company is evaluating options to optimize shareholder value. Notably, the company is in discussions with a senior secured note holder to restructure the note.
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