Diversified and vertically-integrated cannabis company Cronos Group has released its quarterly earnings report. The company, which was founded in 2012 in Toronto, Canada, has revealed its losses in US dollars — a gross loss of almost $20.4 million for the fourth quarter concluding on December, 31, 2019. 

On the plus side, it is an improvement from the gross profit loss in Q4 2018, which rested at $22.3 million. Moreover, net revenue of $7.3 million was recorded for Q4 2019 — a $3.0 million increase from Q4 2018. Growth in Cronos’ net revenue was stimulated by a rise in the volume of products sold by the company in the “Rest of World” segment in its report. Cronos’ closure of its Redwood Holding Group Acquisition in September 2019 has also prompted revenue growth.

The release of Cronos Group’s financial results were initially supposed to be published in late February. However, as a result of an unstated “delay in the completion of its financial statements,” the company chose to suspend the publishing of its financial results.

Cronos Group’s financial results: Inventory write-downs put a dent in company’s profits

One of the main reasons why Cronos saw such a big gross loss was down to the fact that the company recorded inventory write-downs to the amount of $24 million. The results included a $1.9 million write-down for the repurposing of the world’s largest purpose-built cannabis facility Peace Naturals; a designated area of the facility is being transformed into a space for research and design. In addition to the write-down of its Peace Naturals facility, Cronos’ financial report was impacted by a write-down for cannabis plants to the value of $22.1 million.

“We anticipate inventory write-downs in the short term due to pricing pressures in the marketplace and while the company executes its operational repurposing of the Peace Naturals campus,” reads an official news release published by the cannabis company.

Cronos recently reassessed and updated its financial statements for Q1, Q2 and Q3 2019 following a review of “certain bulk resin purchases and sales of products through the wholesale channel.” The company was forced to announce that it will restate 2019 unaudited interim financial statements to represent reduced revenue for the three months that concluded on March 31, 2019 by CAD $2.5 million (approximately USD $1.8 million,) as well as the three months that concluded on September 30, 2019 by CAD $5.1 million (approximately USD $3.7 million.)

Based on Cronos’ restated financial reports, net revenue of $7.6 million was reported in Q3; an increase from the $7.3 million reported in Q4, which demonstrated a 71 percent year-over-year increase. Although these figures are somewhat desirable, they fall short of what analysts initially predicted — $12.5 million.

In summary, the Canadian cannabis company highlighted its total profit for Q4 at $61.6 million; or $0.16 per diluted share. Of that amount, $2.7 million was accrued in the United States, while the rest of the world constituted $4.6 million. Cronos did not reveal revenue results for adult-use and medical cannabis sales in Canada.

Cronos Group’s financial results: Company’s facilities are still functioning amid the COVID-19 crisis

While the COVID-19 pandemic may have negatively impacted numerous industries across the globe, the cannabis industry seems to be thriving. In fact, cannabis dispensaries across the United States have announced increased sales as a result of the outbreak. In Cronos’ case, production will continue as normal inside the company’s facilities. Notwithstanding the fact that business will continue as usual for Cronos, the company says that “the ultimate impact of the COVID-19 outbreak is uncertain and subject to change.”

Stock market investors can find Cronos trading on the Toronto Stock Exchange and Nasdaq under the ticker symbol “CRON”.