HEXO Corp (TSX:HEXO)(NYSE-A:HEXO) reported its third-quarter results for fiscal 2019 on Wednesday. Cannabis revenues for the period ending April 30 reached $13 million after excise tax, up exponentially from the $1.2 million in sales that the company generated this time last year.
The adult-use market continues to produce significant numbers with flower and dry products accounting for 84% of recreational sales, while oil products made up the remaining 16%.
Production nearly doubled from last quarter as the company produced 9,804 kg of dried cannabis in Q3. More is on the way as it recently finished a new harvest in its new 1,000,000 sq ft expansion. And with the recent acquisition of Newstrike, HEXO anticipates its annual production capacity will reach 150,000 kg of cannabis once everything is up and running.
Production is going to be key as HEXO announced it is also planning to sell hemp in as many as eight U.S. states next year.
Unfortunately, one of the side effects of all this growth is that the company has been incurring a lot of costs along the way. Operating expenses totaled $24.1 million and were nearly five times the $5.3 million that HEXO incurred last year.
Stock-based compensation and general and admin costs were both up by more than $7 million each.
Despite the company benefiting from fair value adjustments this quarter, HEXO still recorded a loss of $7.8 million compared to $2 million last year.
However, it was still a good quarter for HEXO as it looks like it has some things in its pipeline that investors can get excited about.
