Zenabis Posts Revenues of $27.4 Million, Loss of $15.8 Million For Q2 2020

Zenabis Global (TSX: ZENA) reported their second quarter 2020 financials results this morning, with mixed success. While revenues grew on a quarter over quarter basis to $27.4 million, the company posted declining quarterly cannabis revenues, while its propagation segment was down on a year over year basis. The company posted a net loss of $15.8 million for the three months ended June 30, 2020.

The company saw a total of $11.8 million in cannabis revenues on a net basis for the period, down from $12.6 million in the prior quarter. The decline came from consumer net revenue, which came in at $8.5 million compared to $9.8 million in the first quarter. Wholesale bulk actually rose, from $2.8 million to $3.2 million, while medical and other revenue amounted to $81 thousand, compared to $47 thousand in the prior quarter.

Total gross margin before fair value adjustments amounted to $8.8 million, while total operating expenses totaled out at $9.1 million. The largest expense over the quarter was salaries and benefits at $3.8 million, followed by depreciation and amortization at $1.5 million.

Other income and expenses is primarily what did Zenabis in for the quarter, with interest expenses amounting to $8.0 million, loss on early conversion of debt coming in at $4.3 million, and the loss on modification and extinguishment of debt amounting to $10.7 million. This resulted in a net loss of $15.7 million, which was positively impacted by unrealized gains on changes is fair value of biological assets.

Cash fell over the course of the quarter from $8.4 million to $6.7 million, despite the company conducting a $21.7 million financing during the quarter. Receivables fell from $10.6 million to $8.8 million, while inventories ballooned to $56.0 million from $44.6 million. Total current liabilities increased modestly from $103.0 million to $107.9 million over the course of the quarter.

Payables meanwhile declined from $28.3 million to $23.6 million, while customer deposits stayed essentially flat, dropping from $37.9 million to $37.2 million. The big change however came from loans and borrowings, which fell from $59.9 million to $16.2 million, a function of certain debts being pushed out for extended terms. Convertible loans also declined, from $22.5 million to $11.4 million. Total current liabilities overall fell from $149.2 million to $88.5 million.

Lastly, the company provided guidance for the third quarter of 2020, with revenues expected to be in the range of $22 to $26 million, of which $17 to $21 million is anticipated for the cannabis segment, and $5 to $6 million for the propagation segment.

Zenabis Global last traded at $0.14 on the TSX.

Information for this briefing was found via Sedar and Zenabis Global Inc. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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