September Financial Reports Reinforce Stark Fundamental Differences between Canadian Cannabis Retailers and Producers

The Public Cannabis Company Revenue & Income Tracker, managed by New Cannabis Ventures, ranks the top revenue producing cannabis companies. 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 million) to qualify for what we are now calling the senior list and introducing a junior list with a minimum of US$12.5 million (C$15.5 million) in September. At the time of our last update in early September, 35 companies qualified for inclusion, including 31 filing in U.S. dollars and 4 in the Canadian currency, and this remains the number of qualifying companies. The junior list continues to include 12 reporting in U.S. dollars and 6 in Canadian dollars. On a combined basis, the Public Cannabis Company Revenue & Income Tracker includes 53 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.

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.

Since our last update on  MedMen (CSE: MMEN) (OTC: MMNFF) reported financials for companies reporting in American dollars. The Q4 financials included revenue from its operations in Arizona that had been previously considered discontinued operations. The company made progress on both revenue and profitability, but its operating loss remains quite high relative to peers.

American Dollar Reporting – Public Cannabis Company Revenue Tracker

The only company reporting in American dollars during October will be Tilray.  According to Sentieo, analysts expect it to have generated revenue of $175 million in its fiscal Q1 ending in August. This would be up 49% compared to a year ago, when the company’s financials included only legacy Aphria results. In Q4, the company’s results included a full quarter of legacy Aphria but only a month of legacy Tilray. Note that the majority of the company’s revenue is non-cannabis, including pharmaceutical distribution, alcohol and hemp food. Analysts expect adjusted EBITDA to be $13 million, with EPS at -$0.08. Data from Hifyre suggests that the company’s Canadian adult-use sales for the High Park and Aphria products grew only 1% from Q4 during Q1 compared to the overall market growth of 9%.

During September, three of the four top revenue generators that report in Canadian dollars filed financials. Retailers High Tide (TSXV: HITI) (NASDAQ: HITI) and Fire & Flower (TSX: FAF) (OTC: FFLWF) both expanded revenue at a fast pace compared to a year ago while generating modest operating losses. Licensed producer Aurora Cannabis (TSX: ACB) (NASDAQ: ACB) saw sales decline in its fiscal Q4 by 20% as the company generated a large operating loss.

Canadian Dollar Reporting – Public Cannabis Company Revenue Tracker

During October,  HEXO Corp. (TSX: HEXO) (NASDAQ: HEXO) is expected to report its fiscal Q4 ending in July, while The Valens Company (TSX: VLNS) (OTC: VLNCF) is expected to report its fiscal Q3 ending in August. According to Sentieo, HEXO is expected to have generated revenue of C$34 million, up 27% from a year ago. Valens is expected to have increased revenue by 46% to C$26.4 million.

For those interested in more information about companies reporting in October, we publish comprehensive earnings previews for subscribers at 420 Investor, including for Focus List members mentioned here, Tilray and Valens.

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 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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