Tuesday , 12 November 2019


Tilray, Inc. Reports Major Q2 Net Loss – Stock Drops More Than 20%

Shares of Tilray, Inc. (Nasdaq: TLRY) – a US$3.8B cannabis company – dropped 15% on Wednesday after reporting a net loss of US$35.1M for the second quarter ended June 30, 2019 despite producing revenue of US$45.9M and continues to fall further today.

By Lorimer Wilson

2nd Qtr Financial Highlights

All the financial information provided below is reported in U.S. dollars, unless otherwise indicated and all comparable figures are for the second quarter ended June 30, 2018.

  • Revenue increased 371.1% to $45.9M from the following 4 market segments:
    • Edibles (43%)
    • Adult-use (33%)
    • Patient-direct & Bulk (20%)
    • Int’l (Medical) 4%
  • Total kilogram equivalents sold increased by 269.1%
  • Average net selling price per gram decreased by 27.7% to $4.61 due to:
    • a reduced mix of higher priced extract products and
    • a greater mix of adult-use revenue which are at lower prices per gram compared to other channels.
  • Gross margin increased to 27% from 23% in the prior quarter but was down from the 43% gross margin achieved in the second quarter of 2018 negatively impacted by:
    • increased costs incurred with the ramping up of cultivation facilities in Canada and Portugal,
    • acquiring third-party supply and
    • a $1.4M non-cash charge related to purchase accounting for the fair value of inventory. Excluding this purchase accounting charge, gross margin was 30% for the quarter.
  • Net loss increased to $35.1M or $0.36/share compared to a loss of $12.8M or $0.17/share for the prior year period due to:
    • the increase in operating expenses related to growth initiatives,
    • interest expense from convertible notes,
    • the addition of Manitoba Harvest and Natura businesses, and
    • the expansion of international operations.
  • Adjusted EBITDA increased to $17.9M compared to a loss of $4.7M the prior year period due to:
    • the increase in operating expenses related to growth initiatives,
    • interest expense from convertible notes,
    • the addition of Manitoba Harvest and Natura businesses, and
    • the expansion of international operations.

2nd Qtr Business Highlights

  • Expanded international export capacity with standard manufacturing license and Good Manufacturing Practices (GMP) certification for the EU Campus allowing Tilray Portugal to manufacture and export GMP-certified dried cannabis as an active substance for medicinal products.
  • Increased international export capacity with an additional 50 acres of outdoor cultivation space in Portugal through a Definitive Agreement with Esporão. This agreement will expand Tilray’s total production and manufacturing footprint to 3.4 million square feet worldwide.
  • Announced an investment of $32.6M to increase the Canadian production and manufacturing footprint by 203,000 square feet across three facilities.
  • Exported GMP-certified finished medical cannabis oil solutions to Ireland under the Medical Cannabis Access Programme.
  • Launched a Broad Spectrum Hemp Extract line (via Manitoba Harvest) in the U.S. marking Tilray’s first entry into the U.S. CBD market under this brand.
  • Acquired Smith & Sinclair, an innovative U.K.-based confectionery company that will introduce CBD-infused consumer products where regulations permit.
  • Appointed an Executive Vice President of Corporate Affairs to globally oversee communications, government affairs and corporate social responsibility.
  • Strengthened the European leadership team with the addition of 5 major executive positions.

About Tilray Inc.

Tilray is involved in cannabis research, cultivation, production and distribution and currently serves tens of thousands of patients and consumers in 13 countries spanning 5 continents.

Below is a chart showing its stock performance over the past 12 months.

The above chart shows an unbelievable 833% decline in the price of the Tilray stock from a high of $214.06 in mid-Sept. 2018 (and a 29% in just the last 2 months) to $35.36 as of 10:30 today, Thursday, August 15th.

Tilray, nevertheless, as can be seen in the above report, is currently undergoing a major expansion of its business the results of which should warrant a significant appreciation in its stock price (perhaps to its previous peak?) in the months to come.