Hexo Corp (NYSE:HEXO) reported a growth of 94.3% to CAD 30.9 million in Q3 2020. Also, adult-use cannabis sales improved significantly to CAD 29.8 million during this quarter because of the launch of new products like oil extract drops and hash. It is on the backdrop of excellent teamwork of Hexo employees even during the COVID-19 pandemic.
Hexo, automated packaging activities, improved operational efficiencies, and selected right strains to reduce production and labor expenses and boost margins. The company targets to achieve gross margins of 40% going forward.
Hexo focuses on strains, which are in great demand from consumers, and developed 2.0 products by using trim. It reduced the reliance on inferior products from other suppliers and achieved operational excellence through internal manufacturing.
Forms a JV
Hexo, along with Molson Colors, created a JV called Truss CBD USA on April 15, 2020, to take advantage of Colorado’s opportunities for hemp-based cannabidiol beverages. Molson holds a majority stake in the JV.
Pete Marino, President of Molson, said cannabidiol beverages are witnessing strong growth in the non-alcohol category. The company selected Colorado because of the already established framework for cannabidiol. It will explore the opportunities and commercialize them to reap rich dividends.
Obtains license amendment from Health Canada
Health Canada awarded an amended license Hexo on June 1, 2020, permitting the sale of fresh and dried cannabis, topical, extracts, and edibles for use in its Belleville, Ontario based cannabis processing and a production facility. The amended license also allows Hexo expand the infrastructure to facilitate beverage production. Hexo can also roll out 2.0 products and promote its expansion strategy nationwide.
Mobilizes $10.25 million
Hexo mobilized funds of $10.25 million through the sale of Niagara facility on June 15, 2020. The company decided to divest cannabis cultivation assets after its review in March 2020. It decided not to restart the cultivation at its Niagara, Ontario facility because of excessive cultivation capacity and the sluggish market for cannabis products.
Introduces 30-gram medical flower format
Hexo unveiled an innovative 30-gram medical flower for its well-known Tsunami with high THC under the trademark ‘Hexo Medical Cannabis.’ The new product is available in child-resistant, odor-proof, and resalable pouch.