Cannabis Stocks Endure Tepid Quarterly Earnings Reports

The Public Cannabis Company Revenue & Income Tracker, managed by New Cannabis Ventures, ranks the top revenue producing cannabis companies. August was an extremely heavy month for reporting.

Tracker Rules

This data-driven, fact-based tracker will continually update based on new financial filings so that readers can stay up to date. Companies must file with the SEC or SEDAR and be current to be considered for inclusion. When we launched this resource in May 2019, companies with quarterly revenue in excess of US$2.5 million qualified. As the industry has scaled and as more companies have gone public, we have raised the minimum several times subsequently, including a move to US$5 million in October 2019, to US$7.5 million in June 2020, to US$10 million in November 2020 and US$12.5 million in August 2021. Due to the rapid growth in the cannabis industry, we raised the minimum to US$25 million (C$31.5 million) to qualify for what we now call the senior list and introduced a junior list with a minimum of US$12.5 million (C$15.6 million) in September 2021.

A Note About Adjusted Operating Income

In May 2019, we added an additional metric, “Adjusted Operating Income”, as we detailed in our newsletter. The calculation takes the reported operating income and adjusts it for any changes in the fair value of biological assets required under IFRS accounting. We believe that this adjustment improves comparability for the companies across IFRS and GAAP accounting. We note that often operating income can include one-time items like stock compensation, inventory write-downs or public listing expenses, and we recommend that readers understand how these non-cash items can impact quarterly financials. Many companies are moving from IFRS to U.S. GAAP accounting, which will reduce our need to make adjustments. Please note that our rankings include only actual reported revenue and not pro forma revenue. We also note that companies with non-cannabis operations must provide segment-level financial reports that detail not only revenue but also operating profit to be have their operating profit included in the tracker. Currently, Jazz Pharma (NASDAQ: JAZZ) and Tilray (TSX: TLRY) (NASDAQ: TLRY) aren’t providing this information.

Tracker Inclusion Updates

At the time of our last update on August 1, 38 companies qualified for inclusion on the senior list, including 31 filing in U.S. dollars and 7 in the Canadian currency. Currently, 30 companies that file in U.S. dollars qualify and 8 that file in Canadian dollars are qualifying for the senior lists, a total of still 38. The junior list now includes 11 companies reporting in U.S. dollars and 7 in Canadian dollars. In August, Cronos Group (TSX: CRON) (NASDAQ: CRON) fell out the American senior group to the junior group, and SNDL (NASDAQ: SNDL) climbed from the Canadian junior list to the senior group. Lowell Farms (CSE: LOWL) (OTC: LOWLF) also joined the American junior list. Red, White & Bloom (CSE: RWB) (OTC: RWBYF) joined the Canadian junior list as did Delta 9 Cannabis (TSX: DN) (OTC: DLTNF). On a combined basis, the Public Cannabis Company Revenue & Income Tracker now includes 56 companies.

We expect to add additional companies in the months ahead, and, due to pending or recently completed mergers, we anticipate some removals as well. We note that Intercure (TASE: INCR) (NASDAQ: INCR), which reports in the Israeli currency, qualifies for the junior list, but we haven’t yet added it due to its different reporting currency.

Included Companies That Reported in August

Since our last update in early August, there were lots of reports in all of the sectors.

Senior – American Dollar Reporting

The Q2 reports for the largest operators were mixed, with several surprises much lower than expected. Those companies that performed best were the ones that met their modest expectations. The top 10 names in revenue included mainly MSOs that showed for the most part single-digit sequential growth. The 7 leading MSOs by revenue levels include Curaleaf (CSE: CURA) (OTC: CURLF), Trulieve (CSE: TRUL) (OTC: TCNNF), Green Thumb Industries (CSE: GTII) (OTC: GTBIF), Verano Holdings (CSE: VRNO) (OTC: VRNOF), Cresco Labs (CSE: CL) (OTC: CRLBF), Columbia Care (NEO: CCHW) (CSE: CCHW) (OTC: CCHWF) and Ayr Wellness (CSE: AYR.A) (OTC: AYRWF).

Two ancillary companies, Scott’s Miracle-Gro (NYSE: SMG) and Hydrofarm (NASDAQ: HYFM) showed major sequential declines., like some of their smaller peers. Jazz Pharmaceuticals (NASDAQ: JAZZ) generated double-digit sequential growth in its GW Pharma business during its Q2.

This week, Jushi Holdings (CSE: JUSH) (OTC: JUSHF) will report its Q2 on August 29th. According to Sentieo, analysts expect the company to generate revenue of $70 million, up 13% sequentially. During September, MedMen (CSE: MMEN) (OTC: MMNFF) will announce its Q4 results.

Junior – American Dollar Reporting

Goodness Growth (CSE: GDNS) (OTC: GDNSF), which is being acquired by Verano Holdings, reported a very strong quarter, with sales expanding 35% sequentially. urban-gro (NASDAQ: UGRO) and Agrify (NASDAQ: AGFY) were two ancillary companies that were also quite weak.

Senior – Canadian Dollar Reporting

Canopy Growth (TSX: WEED) (NASDAQ: CGC) saw revenue shrink and endured a massive operating loss due to write-downs. SNDL, formerly Sundial, saw revenue boosted from its Alcanna acquisition.

High Tide (TSXV: HITI) (NASDAQ: HITI) has scheduled its Q3 call for September 14th. Sentieo suggests that the analysts expect revenue to increase 10% sequentially to C$89 million. Aurora Cannabis (TSX: ACB) (NASDAQ: ACB) will report its Q4 financials in September. The analysts are expecting revenue will increase 2% sequentially to C$51 million, a decline of 7% from a year ago.

Junior – Canadian Dollar Reporting

Red White & Bloom moved from not on the list to its top with its Q1 report, which was late. They should report Q2 this week.

Stay up to date

Visit the Public Cannabis Company Revenue Tracker to track and explore the complete list of qualifying companies. We have recently created a way for our readers to access our library of Revenue Tracker articles. For our readers who are interested in staying on top of scheduled earnings calls in the sector, we have created and continually update the Cannabis Investor Earnings Conference Call Calendar.

Get ahead of the crowd by signing up for 420 Investor, the largest & most comprehensive premium subscription service for cannabis traders and investors since 2013.

Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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