Tilray Posts Wider-Than-Expected Loss

Canadian cannabis company Tilray reported a wider-than-expected loss and missed revenue estimates after the market closed Monday, citing increases in operating expenses, international expansion and the addition of new businesses.
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Tilray, Inc.  (TLRY) - Get Report reported a wider-than-expected fourth-quarter loss and missed revenue estimates after the bell on Monday, saying increases in operating expenses, and expansions weighed on its performance.

The company reported a net loss for the quarter of $219.1 million, or $2.14 a share, vs a loss of $31 million, or 33 cents a share a year ago. Revenue rose to $46.9 million.

The company had been expected to report a loss of $40.4 million, or 36 cents a share, on sales of $55.3 million, based on a FactSet survey of 13 analysts.

Tilray said the disappointing numbers “were primarily due to increases in operating expenses related to growth initiatives, expansion of international teams, and the addition of Manitoba Harvest and Natura Naturals businesses,” according to a statement.

The company also said it had recorded non-cash charges of $112.1 million "related to impairment of the Authentic Brands Group LLC ("ABG") agreement as well as $68.6 million in inventory reserves."

Shares of Tilray fell $1.25, or 8%, to $14.10 in after-hours trading Monday. 

Tilray was among three cannabis stocks downgraded by Cowen to market perform last week.

“We are downgrading  (ACB) - Get Report [Aurora Cannabis, Inc.],  (SNDL) - Get Report [Sundial Growers, Inc.] and TLRY to market perform, all from outperform, as we grow increasingly cautious on the outlook for cannabis in Canada,” the analysts wrote at the time.

“Headwinds that have plagued the industry (pricing, stores, inventory) do not appear to be fading as anticipated, while 2.0 is likely not the elixir that the market was hoping for."

Cannabis 2.0 refers to new-product form factors like edibles and prerolled cannabis cigarettes.

In addition, “we have seen a significant influx of value-based brands in the market, which speaks to the difficulty converting illicit market users, creating a bifurcation toward either value- or premium-priced flower, with a glut of mid-priced inventory,” the analysts said.