HEXO Corp (NYSE:HEXO) recently announced, in connection with announcing that it was acquiring the entities that operate the Redecan business that it has obtained. As a result, it’ll be filing Redecan’s completed consolidated financial statements for the fiscal year of 2020. In addition, the company recently announced a share purchase agreement to buy Redican, one of the largest licensed and privately-owned producers in Canada.
HEXO’s co-founder and Chief Executive Officer, Sebastien St-Louis, said that Redecan has the highest consumer loyalty in the region, leading products and an impressive market share. He said that they were elated to finally be able to share HEXO’s additional financial information with its shareholders. Redican’s financial statements show what they already knew. Redican is arguable the fastest-growing LP in Canada. It has positive income statements from its strong revenue, lean operational efficiency, impressive margins and operations. Once completed, the acquisition of this company will further help boost HEXO’s position as a leading cannabis products supplier in Canada. This acquisition will also bolster HEXO as it looks to become one of the biggest global cannabis products supplier.
Key Financial Highlights
- Revenue- a $73.6 million net of excise duty for F20 and a $24.7 million in the first quarter of F21. This represents a 146% increase over Q1, 2020
- Unadjusted $28.9 million EBITDA for 2020 and $12.4 million for 2021
- $6.9 million net earnings and $8.3 million operations income for 2021
- $11.6 million net earnings and $16.7 million operations income for 2020
- A depreciable capital base of $84.1 million, consisting of equipment, plant and property
- Administrative, general and selling costs, (defined as administrative and general plus promotion and marketing, plus development and research) as a percentage of sales of about 23% in Q1 2021
The close of this acquisition is expected to happen by Q3 2021. However, it’s subject to customary closing conditions satisfaction, including getting applicable regulatory approvals as well as shareholder approvals as provided for in the TSX rules. The company’s historical financial statements for Q1 2021 have been furnished or filed,
Proforma Highlights for both HEXO and Redican adjusted to IRFS (International Financial Reporting Standards):
- $155.6 million net revenue
- A $69.1 million, or 44.4%, gross margin
- A $38.6 million operations income