Tilray Inc. shares tumbled as much as 15 per cent in post-market trading after the cannabis company reported a wider-than-expected EBITDA loss and revenue that missed the lowest analyst estimate.
Tilray’s fourth-quarter revenue of $46.9 million was below the consensus estimate of $55.4 million and missed even the lowest analyst estimate of $53 million. It sold $17 million worth of recreational cannabis in the period, up 7.4 per cent from the prior quarter. Its adjusted EBITDA loss of $35.3 million also missed the consensus expectation of $21.8 million and was wider than the biggest estimated loss of $29.3 million.
Tilray announced that it closed a $60 million senior credit facility on Feb. 28 with a two-year term and 8 per cent interest. The company ended 2019 with $97 million in cash, a number that has prompted analysts to question whether it has enough funding to support its operations. The company recorded a $68.6 million inventory writedown and a $112 million impairment charge related to its revenue-sharing agreement with Authentic Brands Group.
“Between cash we have on hand and that senior credit facility, and then managing our cash burn and other levers to raise capital, we feel comfortable that can manage this to being EBITDA positive in Q4,” said Chief Executive Officer Brendan Kennedy, adding that he’ll continue to look for ways to cut costs and focus on the most profitable areas of the business.
Tilray’s adjusted gross margin fell to 29 per cent from 31 per cent in the prior quarter. Kennedy said that was the result of startup costs related to the launch of new products like vapes, chocolates and beverages, and he expects margins to return to third-quarter levels in the current quarter.
“The debt raise, while important, will not be enough to overlook a large top-line miss with outsized EBITDA losses,” MKM Partners analyst Bill Kirk said in a note.
Other cannabis companies fell in sympathy, with Canopy Growth Corp. down 2.4 per cent, Aurora Cannabis Inc. off 1.5 per cent and Aphria Inc. falling 1.4 per cent.