Quebec cannabis producer Hexo to lay off 450 employees

Another blow for the former Quebec flower. The cannabis producer has announced a net loss of C$146 million (€108 million) for the February-April quarter, or a loss of C$953.8 million (€707 million) for the first nine months of its 2022 fiscal year.

Sales for the Quebec-based company fell by 14% to C$45.6 million in the third quarter.

«The company now believes that it will not realize incremental synergies and cash flow increases at the level estimated in its previous forecasts and expects these figures and measures to be lower than previous forecasts,» Hexo noted in a statement.

Hexo had previously pledged to be the only major Canadian cannabis producer to be cash flow positive, and had made a commitment to achieve this goal. self-propelled 3rd largest producer of recreational cannabis in Canada following the acquisition of one of its competitors, Redecan.

The Quebec-based company said it was reducing its workforce by 450 positions, which should result in cost savings of C$30.6 million. At the same time, Hexo spent C$7.8 million on severance packages for large management positions this year.

« HEXO is committed to streamlining its operations across all functions. This enables our best-selling brands to remain competitive in the marketplace while aligning with our long-term financial objectives. We look forward to sharing further details in our third-quarter results. » a declared the company to MJBizDaily.

The rapprochement with Tilray is mechanically changed. Hexo's debt will now be converted at a price of 0.40 $ CA per share, about half the 0.85 $ per share previously agreed. The company's shares were trading at around 0.21 $ CAD at the time of writing on the Toronto Stock Exchange.

The modifications could eventually give Tilray up to 50 % of Hexo, compared with an estimated 35 %.

«The strategic partnership with Tilray Brands significantly improves HEXO's capital structure and offers the opportunity to accelerate our growth in global markets,» said Charlie Bowman, Hexo's President and CEO, in a statement.

«Difficult stock market conditions have necessitated modifications to the agreement, but this is an essential step in unlocking the shareholder value held by the company.»