During the past trading week (February 10 to 14), another Canadian cannabis player made significant staff cuts as the trend of streamlining continues to sweep across the sector.
Aurora Cannabis (NYSE:ACB,TSX:ACB) revealed a drop in its marijuana production in some middling quarterly results, while Canopy Growth (NYSE:CGC,TSX:WEED) soared following some surprisingly solid numbers in its quarterly report.
Here’s a closer look at some of the biggest cannabis news over the week.
Supreme makes cuts to corporate, operational staff
Like others in the space, The Supreme Cannabis Company (TSX:FIRE,OTCQX:SPRWF) decided to let go of some of its staff in an effort to cut costs amid market uncertainty.
The cannabis firm told investors on Tuesday (February 11) it planned to cut a total of 15 percent of its workforce across the company. About a third of its corporate-level staff will be let go, while 13 percent of operational positions are getting the cut, Supreme said.
“Recent staff reductions were an extremely difficult decision for myself and the Board,” Interim CEO Colin Moore said in a statement, “but I believe them to be necessary to create a more agile, focused and profitable organization for the long-term benefit of all of Supreme Cannabis’ stakeholders.”
In doing so, Supreme joins a host of other marijuana businesses, including Tilray (NASDAQ:TLRY), Aurora and Sundial Growers (NASDAQ:SNDL), which have also made recent reductions in search of profitability.
While the cuts have led to drops in value, Purpose Investments Portfolio Manager Nawan Butt told the Investing News Network (INN) the cuts will ultimately be a net positive for the companies.
“I think this is the sort of soft catalyst that you need for these licensed producers to refocus their efforts to become profitable and make this industry sustainable and viable in the long term, rather than just being an accumulation of assets at wild valuations,” Butt told INN.
On Friday (February 14), Supreme announced its Q2 2020 results, revealing a decrease in net revenue of 21 percent quarter-over-quarter to C$9.1 million in its most recent quarter from C$11.4 million in Q1 2020. Supreme attributed the drop to its transition away from the wholesale market and towards the recreational industry.
Aurora pivots to higher quality cannabis, reports lower harvest in Q2 2020
Elsewhere in the Canadian cannabis landscape, Aurora reported a 26 percent drop in its cannabis production in its Q2 2020 results due to a switch to high-quality strains with a lower yield, the company said.
The Alberta-based producer also doubled its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) loss as well to C$80.2 million this past quarter compared to C$39.7 million Q1 2020.
Michael Singer, interim CEO at the firm, said in an earnings call on Thursday (February 13) that shifting consumer needs, a nearly non-existent retail segment and provincial inventory changes have put a damper on cannabis in Canada as a whole.
The results follow shortly after the firm announced some cost-cutting initiatives last week, including millions of dollars in write downs and reductions to capital expenditures.
Along with the streamlining, the producer also lost former CEO Terry Booth as he retired from his role at helm of the company.
Aurora said the headwinds facing the sector are likely to stunt its quarterly growth moving into Q3.
“Due to several short-term factors, there is likely to be a slower than previously expected rate of industry growth in the near-term,” Aurora said, adding that revenue will probably see little to no sequential growth.
Canopy Growth surprises investors with increased revenue
Another cannabis firm is having a better time in the open markets after releasing some unanticipated results.
On Friday, Canopy Growth reported C$123.8 million in net revenue in its Q3 2020, a 62 percent increase quarter-over-quarter when compared to the C$76.6 million reported in the second quarter of its fiscal 2020 year.
Shares leapt over 20 percent from market close on Thursday to early in the trading session on Friday. As of 9:42 a.m. EST, prices are at C$31.34.
The firm tightened its losses as well, reporting C$92 million in EBITDA losses, C$64 million narrower than its Q2, in which they had an EBITDA loss of C$155.7 million.
Canopy attributed the positive results to an increase in sales, lower operating expenses and higher gross margins. David Klein, CEO of Canopy, said in a statement the company was successful in driving growth through strategic acquisitions and international operations.
“We have a lot of work to do. We are eager to capitalize on the opportunity to create an unassailable position through a tight focus on the consumer and on critical markets,” Klein added.
Canopy will also be making strides to streamline its operations, according to CFO Mike Lee.
“We plan to take further steps to reduce our costs and right-size our business to ensure that we can generate a healthy margin profile and cash generation in the coming years,” Lee said.
The beleaguered CannTrust Holdings (NYSE:CTST,TSX:TRST) told investors it has finally selected a new CEO after former leader Peter Aceto was fired when it was discovered that executives at the firm knew of illegal growing operations at its cultivation facilities last summer.
Greg Guyatt, CannTrust’s current CFO, will now take his place at the head of the company. CannTrust also announced its remediation activities at its Vaughan facility will be completed sometime in the second quarter of 2020.
The move is an effort to have its cultivation and production licenses reinstated by Health Canada after they were suspended following an investigation by the federal agency.
CannTrust has also received an extension from the New York Stock Exchange after the bourse warned CannTrust it risked being delisted due to its low share price in December. The firm now has until mid April to file its backlog of financial statements.
In the US, Curaleaf Holdings (CSE:CURA,OTCQX:CURLF) confirmed that its acquisition of the privately held GR Companies, aka Grassroots, is nearing completion after the expiration of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 waiting period.
The deal is now expected to close in spring this year, subject to customary closing conditions. It was first announced in July 2019.
“Upon closing, Curaleaf will gain a strong foothold across key states in the Midwest, increasing access for patients and customers to our industry leading brands,” said Joseph Lusardi, CEO of Curaleaf, in a statement.
Don’t forget to follow us @INN_Cannabis for real-time news updates!
Securities Disclosure: I, Danielle Edwards, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
In the evolving rush of mergers and acquisitions (M&A) in the Canadian cannabis market, Canopy Growth (NASDAQ:CGC,TSX:WEED) announced it will acquire The Supreme Cannabis Company (TSX:FIRE,OTCQX:SPRWF) in a deal worth approximately C$435 million.
Meanwhile, a cannabis operator in the US confirmed this week that it will receive a financial boost from a partner to solidify its position in the burgeoning Pennsylvania state market.
The Board of Directors of Aphria Unanimously Recommends Shareholders Vote “For” the Arrangement
Aphria to Host Special Meeting of Shareholders on Wednesday, April 14, 2021 to Approve Proposed Aphria-Tilray Business Combination
Love Hemp Group PLC (AQSE: LIFE) (OTCQB: WRHLF), one of the UK’s leading CBD and Hemp product suppliers, announces that as part of the equity fundraise announced yesterday, Antony Calamita and Andrew Male, Directors of the Company, subscribed for 285,714 Ordinary Shares and 1,428,571 Ordinary Shares respectively. The subscriptions are at a price of 3.5 pence per ordinary share for a total of £60,000. Following these subscriptions, Antony Calamita is now interested in 54,385,714 Ordinary Shares, representing 8.61% of the Company’s share capital as increased by the fundraising, and Andrew Male is now interested in 6,138,196 Ordinary Shares, representing 0.97% of the Company’s issued share capital as increased by the fundraising
Further, the timetable for receipt of applications under the Broker Option, which was also announced yesterday, has been extended until 5:00 pm 9 April 2021 to capture additional interest which was unable to be completed yesterday.
Revive Therapeutics Ltd. (“Revive” or the “Company”) (CSE: RVV, USA: RVVTF), a specialty life sciences company focused on the research and development of therapeutics for medical needs and rare disorders, would like to provide the following dial-in information for the Company’s upcoming Annual and Special Meeting (the “Meeting”) scheduled to be held at 11:00 a.m. Eastern Daylight Time on April 12, 2021. Shareholders and proxyholders may access the Meeting via teleconference by dialing 647-723-3984 or 1-866-365-4406 from Canada or the United States, then entering participation code “8487744” followed by the pound (“#”) sign.
In consideration of the COVID-19 pandemic and the recent restrictions imposed by the Ontario Provincial Government, shareholders and proxyholders will only be able to attend the Meeting via teleconference and will not be permitted to attend the Meeting in person at the address provided on the Notice of Annual and Special Meeting of Shareholders.
Gage Cannabis Announces Exclusive Partnership With Blue River to Bring Award-Winning Cannabis Extracts to Michigan
Gage Growth Corp. (“Gage” or the “Company”) (CSE:GAGE), a leading high-quality craft cannabis brand and operator in Michigan, announced today that it has signed an agreement with Blue River™ Extracts & Terpenes (“Blue River™”) to bring the brand’s award-winning solventless technology and other trademark branded products to the state’s medical patients and cannabis consumers. The Company will have exclusive rights to Blue River™’s premium product offerings in Michigan.