[ad_1]
The green rush is underway in North America and all eyes are on marijuana stocks. With Canada becoming the first industrialized country in the world to legalize recreational cannabis, investors are eager to see how multi-billion dollar profits (when the industry is at full speed) will be shared among the major players.
One of those key marijuana stocks, Auxly Cannabis Group (NASDAQOTH: CBWTF), partially answered this question by publishing its third quarter operating results on Monday morning, November 12, 2018. While the fundamentals remained light, as might be expected from a sector that was getting wet. From a legal point of view, Auxly is continuing its efforts to expand the three sectors of its business model.
Source of the image: Getty Images.
Third quarter results of Auxly Cannabis Group: raw numbers
| Metric | Q3 2018 | Q3 2017 | Change from one year to the next |
|---|---|---|---|
| Returned | CA $ 512,000 | CAD $ | N / A |
| Net loss per share | CA $ 0.02 | CA $ 0.03 | + 33% |
| Cash and cash equivalents | CA $ 236.9 million | CA $ 33.5 million | + 607% |
Data source: Auxly Cannabis Group and SEDAR. All data is in Canadian dollars.
As you can see, Auxly recorded just over CAN $ 0.5 million in contract revenue in the third quarter, after not recognizing any sales in the corresponding period of the prior year. Fair value adjustments to financial instruments accounted for in FVPTL (fair value through profit or loss) reduced the company's adjusted quarterly loss per share to only C $ 0.02, compared to an adjusted loss per CA $ 0.03 for the quarter of the previous year.
What happened with Auxly Cannabis Group this quarter?
Being a vertically diversified marijuana company, with its upstream (production), average (value added / diversification of production) and downstream (sales and distribution) activities of the sector, it makes sense to split these verticals into separate components. look at what happened in the third quarter.
- Upstream: The most important event was probably the receipt of the company's sales license for the Kolab project, which will be its first source of production. Auxly has also made a strategic investment in the Manitoba company Delta 9 Cannabis and has signed a long-term supply contract with the company. Such investment provides a short-term supply that should help Auxly cope with an initial surge in domestic demand. Finally, its subsidiary Dosecann has signed a supply agreement for the purchase of up to 20,000 kilograms of dried flowers or cannabis oil equivalent from Aphria.
- Midstream: In the middle segment, the most significant development was the finalization of the acquisition of KGK Science, a $ 12.3 million CA outsourcing organization, which will work hand-in-hand with Dosecann to ensure compliance. quality and safety measures. In addition, Dosecann received its Health Canada distributor's license, which allows it to manufacture cannabis oils and resins by extracting dried cannabis flowers. These cannabis alternatives generally carry higher margins than traditional dried marijuana.
- Downstream: The most exciting downstream development was the announcement of a strategic partnership with ICC International Cannabis. ICC has entered into agreements to supply medical cannabis to a European pharmaceutical distributor serving approximately 35,000 pharmacies in 16 countries. Auxly also entered into a strategic partnership with Atlantic Culture after the end of the third quarter, which should give it access to the Newfoundland and Labrador markets in eastern Canada.
Source of the image: Getty Images.
What management had to say
As you can imagine, the Auxly management team is optimistic about the company's progress in the cannabis supply chain. Chuck Rifici, CEO of Auxly, said:
Auxly continues to develop its platform at a fast pace and to progress in the development of its assets and partners at all points of contact in the cannabis value chain … Needless to say, we are satisfied with steady progress we have made Over the past three months, the company has been striving to achieve its long-term strategic goals.
President and CEO Hugo Alves echoed this sentiment, while emphasizing the emerging differentiation of society:
The third quarter of 2018 was marked by additional progress we made in developing our assets and securing new relutive relationships across all our business channels. We are differentiating ourselves more and more by focusing on the science-based product innovation at Dosecann.
Looking forward to
This is only one stage of a marathon for marijuana companies like Auxly Cannabis Group. Investors may have to wait a little longer before they get tangible results, both in substance and profitability, that they can nibble on, but understand that this industry is still developing. It will not happen overnight.
However, it is a well capitalized company – closed the quarter with C $ 236.9 million in cash and cash equivalents – and trusts its vertically integrated expansion approach. We are now looking at the next steps in the process of legal cannabis maturation.
Sean Williams has no position in any of the actions mentioned. The Motley Fool recommends Auxly Cannabis Group. Motley Fool has a disclosure policy.
[ad_2]
Source link
