Hexo Surges After Cannabis Company Smokes Revenue Estimates

Canadian cannabis company Hexo surprises analysts with better-than-expected quarterly sales.
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Shares of Hexo  (HEXO) - Get Report rose sharply Thursday as the Canadian cannabis grower and distributor topped analysts' revenue estimates for its latest quarter.

Hexo's stock price shot up 8.01% to $1.10 a share after the Ottawa-based marijuana company reported revenue for its latest quarter ended April 30 of $16.3 million, up from $12.6 million in the previous quarter.

Hexo's numbers for its fiscal third quarter blew past the estimate of analysts surveyed by Zacks Investment Research, who had forecast lower revenue of $14.9 million.

Hexo also beat the estimate of analysts polled by FactSet, who had pegged the cannabis company's quarterly revenue at just under $15 million.

Still, Hexo reported a loss of $14.4 million for the quarter, or 7 cents as share, wider than the 5 cents a share forecast by Zacks and FactSet.

The Canadian cannabis company reported a 42% jump in adult use grams sold, to 9,338 kilograms. Overall, adult-use cannabis revenue grew to $22.07 million, up from just over $17 million in the previous quarter and $10.8 million in the same quarter a year before.

The biggest driver was an increase in sales of the "Original Stash" brand, with new products, such as hash and oil extract drops, contributing as well to the jump.

Gross margins increased by 40% while operating expenses fell to $19.5 million, Hexo said in a press release on its latest quarterly numbers.

 Hexo noted it had also struck a deal on April 15 with Molson Coors to explore the sale of non-alcoholic hemp-derived CBD beverages in Colorado.