(NYSE:HEXO) A cannabis stock to watch, opportunity to buy now?

HEXO CORP. 

(NYSE:HEXO) 5 day Chart 11/26/19

COMPANY OVERVIEW

HEXO Corp is helping shape an entirely new legal cannabis market – in Canada and abroad. We are working to change the world; and we are just getting started.

Just six years ago, two entrepreneurs set out to corner the cannabis market in Canada. Laying roots in the province of Quebec, the Company was influential in stimulating market acceptance and support, raising significant capital in the public markets since the beginning of fiscal year 2018. We have agreements and arrangements in place to supply cannabis in nine provinces, including a five-year supply contract with Quebec’s Société québécoise du cannabis (“SQDC”). In total, we have governmental or private retail distribution agreements covering most major Canadian markets, reaching over 95% of the Canadian population. Our brands – HEXO and Up – are available to Canadians across the country.

Today, HEXO is a consumer-packaged goods (“CPG”) cannabis technology company that has increased its focus globally. We believe that building a brand comes primarily from a strong distribution system and product quality, and from making a meaningful commitment to sustainability. Through our Hub and Spoke strategy, we are centralizing our intellectual property and branding it “powered by HEXO” and as we have done with Molson Coors Canada (“Molson”) we plan to partner with Fortune 500 companies in different facets of the CPG market, to participate in the cannabis market beginning in Canada and around the world. Fundamentally, we bring our brand value, cannabinoid isolation, formulation and delivery technology, licensed infrastructure and regulatory expertise to established companies, and in turn, we plan to leverage their international distribution, base products and their deep understanding of consumer markets.

We aim to provide a clear, legal regulatory path into worldwide markets and best in class technology to our current and future partners. We believe the U.S. represents a significant market in the evolution of the cannabis industry, and that to establish global cannabis brands, our goal is to be successful there. As the U.S. market continues to develop, we intend to bring American consumers innovative, consistent, and high-quality hemp-derived cannabidiol (“CBD”) infused products “powered by HEXO”. Through these partnerships, we plan to focus on large-scale CBD extraction from hemp, providing high quality ingredients to our current and future Fortune 500 partners, as well as hemp derivative wholesaling.

We have a history of innovation driven by our experienced management team. Under their leadership, we are building a robust research and development team to deliver the cannabis experiences sought by the market. We are among the cannabis industry’s top innovators, with award-winning products such as Elixir, Canada’s first line of cannabis peppermint oil sublingual sprays, and decarb, an activated cannabis powder designed for oral consumption. We are also pioneering a line of sexual health products with Fleur de Lune and have won top awards for the quality of our pre-rolled cannabis products. Our ability to develop consistent advanced cannabis formulations for use in world-renowned brands – beverages, food, cosmetics, and more – has already garnered the attention of Molson and resulted in the creation of Truss, an exclusive venture to develop non-alcoholic, cannabis-infused beverages. Our Innovation team is structured across three pillars, Clinical Evaluation, Advanced Research and Applied Research. We employ researchers and PHDs from extensive product development backgrounds driving the execution of better, scientifically supported, cannabis-based experiences.

Distribution

Processing and distribution capacity has significantly increased over the past fiscal year, with the activation and full licensing of our 250,000 sq. ft. greenhouse and a new 1 million sq. ft. greenhouse, each at our Gatineau campus. Additionally, through our acquisition of Newstrike, we acquired a state-of-the-art greenhouse and an indoor production facility with production and distribution capabilities currently being retrofitted and estimated to be completed for the end of Q1 to early Q2 of fiscal 2020.

The Company has acquired an interest in a 1.5 million sq. ft. facility in Belleville, Ontario, through the venture Belleville Complex Inc. established with a related party. The Company received the renewal of its Health Canada licensing for the Gatineau facilities on October 16, 2019 and continues to retrofit the Belleville Centre of Excellence ahead of licensing for the purposes of manufacturing value-added cannabis products, increasing capacity for distribution and storage and research and development activities. The Company currently holds a lease to 579,000 sq. ft. of the Belleville facility and has rights of first offer and first refusal to lease the remaining space in the building. Once licensed and completed, the Belleville Centre of Excellence will act as the main research, development and processing facility for HEXO’s cannabis derivative products.

The process of licensing the full 1.5 million sq. ft Belleville Centre of Excellence in phases and ensuring it meets the requirements of the Cannabis Regulations may impact the initial operational timeline of the facility. However, this will provide the Company with the opportunity to

offer its prospective partners with turn-key access to a cannabis sector ready facility. The centralized location of the facility, the Company’s first outside of Quebec is ideally situated along primary shipping routes to distribute our products and fulfill commitments across Canada. This facility further delivers on our national expansion strategy and ensures necessary capacity for the manufacture of advanced cannabis products, including vapes, non-alcoholic beverages, other edible cannabis products and cosmetics.

The Company has also bolstered its distribution capacity with the establishment of a distribution and storage centre in Montreal, Quebec formed with Metro Supply Chain Inc. This 58,000 sq. ft. facility was strategically acquired for logistical purposes. Through it, we supply cannabis for all direct-to-customer sales placed in Quebec through the SQDC’s online store. Additionally, we house, supply and distribute direct-to-customers the cannabis products of all licensed producers who have contracts with the SQDC through this distribution centre.

The Company now holds supply agreements and arrangements with entities across nine provinces. The Company is present within 23 private cannabis retailers across Ontario and has a strategic alliance agreement with the cannabis retailer Spirit Leaf.

LEARN MORE ABOUT HEXO CORP DIRECTLY FROM THE COMPANY’S annual financial statements

490 Boulevard Saint-Joseph, Suite 204 
Gatineau, Québec 
Canada J8Y 3Y7 
1-(844) 406-1852 
(Address and telephone number of Registrant’s principal executive offices)
 
CT Corporation System 
1015 15th Street N.W., Suite 1000 
Washington, DC 20005 
(202) 572-3100 

LEARN MORE ABOUT HEXO CORP DIRECTLY FROM THE COMPANY’S annual financial statements

(NYSE:HEXO) 6 month chart 11/26/109

Hexo (NYSE:HEXO) stock, you’re probably wondering if it can get any worse. Hexo’s share price was recently down 80% from its April peak. Just since the beginning of October, HEXO stock had lost more than half of its remaining value. Shares recently plumetted below the $2 mark following lousy earnings both at Hexo and at rivals such as Canopy Growth (NYSE:CGC) and Aurora Cannabis (NYSE:ACB). This week of November 20th 2019 HEXO stock has put in a substantial turnaround, moving from below $2 back to more than $2.50 per share.

With Marijuana Legalization on the horizon, Hexo can become a big player in the market and right now could be a good time to enter as the stock has really bottomed out.

Recent News

HEXO Corp granted new licences: Belleville Centre of Excellence, research, sale of new cannabis categories

GATINEAU, Quebec, Oct. 28, 2019 (GLOBE NEWSWIRE) — HEXO Corp (“HEXO” or the “Company”) (TSX:HEXO; NYSE:HEXO) is pleased to announce it has received licences from Health Canada for its cannabis Centre of Excellence in Belleville, Ontario, for research, and for the sale of cannabis topicals, extracts, edibles and beverages from its flagship Gatineau campus.  

“The research licence will allow us to take our innovation work to the next level, with testing on derivative products, including taste testing. Consumers have high expectations for their packaged goods experiences, and cannabis will be no different,” said Sebastien St-Louis, CEO and co-founder of HEXO Corp. “We are committed to not only ensuring a quality consistent experience but to also guaranteeing that experiences powered by HEXO meet these expectations.”

While a Processing Licence provides for testing on live plants, fresh and dried plant material, seeds, and oil, a Research and Development Licence significantly expands the scope of work that can be conducted on cannabis and its derivatives. The Company plans to conduct research and development at its Vaughan and Montreal Innovation, Development and Engineering hubs, as well as at its Centre of Excellence in Belleville and in other facilities.

Health Canada also granted HEXO Corp’s cannabis Centre of Excellence in Belleville licensing for its first phase. The space – a former distribution centre, retrofitted to house not only HEXO but also Fortune 500 partners entering the cannabis space – has ample capacity for the manufacturing of advanced cannabis products, including cosmetics, vapes, non-alcoholic beverages and other edibles. The Centre’s centralized location, conveniently located along primary shipping routes in Ontario, presents the opportunity to process and distribute products and to fulfil commitments across Canada. The issuance of a first licence for the site signals federal support for the Company’s production and distribution hub, a required step to delivering cannabis derivative products to Canadian consumers. On October 17, 2019 HEXO submitted 60-day notification to Health Canada for new products in the recently legalized product categories.

Finally, an amended licence has been issued to HEXO Corp allowing the sale of cannabis topicals, cannabis extracts and edible cannabis from its Gatineau cultivation, harvesting and production facility.

“We trust that by continuing to demonstrate Good Production Practices, by operating in complete alignment with regulations, and by working closely with our partners, licences and amendments will be issued in a timely manner that supports a vibrant and healthy legal cannabis sector,” added St-Louis.

The number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 256,981,753

Investor Relations: 
Jennifer Smith 
1-866-438-8429 
invest@HEXO.com 
www.hexocorp.com

Media Relations: 
(819) 317-0526 
media@hexo.com

Recent News

HEXO Corp provides additional transparency on licensing

GATINEAU, Quebec, Nov. 15, 2019 (GLOBE NEWSWIRE) — HEXO Corp (TSX: HEXO; NYSE: HEXO) (“HEXO” or the “Company”) is providing additional information about licensing at its facility in Niagara, Ontario. 

In November 2018, prior to HEXO Corp’s acquisition of Newstrike Brands Ltd., the UP Cannabis cultivation facility in Niagara was licenced by Health Canada and production from that facility began shortly after. Block B – the space in question – was included in the licence application. In October 2018, Health Canada requested additional information for the application, pertaining specifically to the building where Block B is housed. When the licence was received, the team was under the impression that Block B was included in the licence. In February 2019, Health Canada conducted an inspection of the facility, which included Block B and no observations were made about cultivation in this space. This further reinforced the assumption that it was indeed a licensed growing space.

On July 30, 2019, shortly after the Newstrike Brand Ltd. acquisition closed, HEXO discovered that cannabis was being grown in Block B, which was not adequately licensed. HEXO management immediately ceased cultivation and production activities in the unlicensed space. The Company notified Health Canada instantly, and the regulator was satisfied with HEXO management’s corrective actions. The Company is confident that all product cultivated and produced in all its facilities is grown according to the highest quality standards and following all standard operating procedures. As an additional quality assurance measure, HEXO’s Chief Operating Officer personally inspected and certified any shipments for sale from that facility. All of the inventory on site at that time was held from shipping and scheduled for destruction.

“HEXO is keenly focused on producing high-quality products that Canadians can trust,” said HEXO CEO and co-founder Sebastien St-Louis. “Upon discovering that cannabis was being grown in an inadequately licensed area of the Niagara facility we immediately ceased all activities and notified Health Canada. While we are disappointed with what we uncovered, we assume responsibility for any issues with UP products prior to the acquisition.”

Today, the facility is no longer operational. On October 24, 2019, HEXO announced it was right-sizing its operations and winding down operations in Niagara. UP cannabis is now grown at HEXO’s Gatineau licensed cultivation facility in Gatineau, QC, as well as in Brantford in an in-door cultivation facility, and the Company retains the ability the reinstate the Niagara facility should demand increase. On October 28, 2019, the Company announced it had received renewed licences, as well as new licences for its Belleville Centre of Excellence, for research, and for the sale of new cannabis categories.

HEXO is choosing to proactively address this occurrence now as it recently became aware false information that was being circulated to damage the reputation of the Company. HEXO felt that it was diligent to ensure factually accurate information was available to its stakeholders.

About HEXO Corp

HEXO Corp is an award-winning consumer packaged goods cannabis company that creates and distributes innovative products to serve the global cannabis market. Through its hub and spoke business strategy, HEXO Corp is partnering with Fortune 500 companies, bringing its brand value, cannabinoid isolation technology, licensed infrastructure and regulatory expertise to established companies, leveraging their distribution networks and capacity. As one of the largest licensed cannabis companies in Canada, HEXO Corp operates facilities in Ontario and Quebec. The Company is also expanding internationally and has a foothold in Greece to establish a Eurozone processing, production and distribution centre. The Company serves the Canadian adult-use markets under its HEXO Cannabis, Up Cannabis and Original Stash brands, and the medical market under HEXO medical cannabis. For more information please visit hexocorp.com.

HEXO Corp announces $70 million private placement of convertible debentures led by Directors, CEO, and long-term shareholders; reschedules FY 2019 earnings call

GATINEAU, Quebec, Oct. 23, 2019 (GLOBE NEWSWIRE) — HEXO Corp (“HEXO” or the “Company”) (TSX:HEXO; NYSE:HEXO) today announced that it has entered into subscription agreements with a group of investors pursuant to which the investors have agreed to purchase, on a private placement basis, $70 million principal amount of 8.0% unsecured convertible debentures of the Company (the “Debentures”). The Company has also announced that in light of the financing and additional time required to finalize its year end filings, the Company has rescheduled the release of its fourth quarter and full year ended July 31, 2019 financial results to October 28, 2019 and its earnings call to discuss these results to 8:30 a.m. EDT on Tuesday, October 29, 2019 (details below). All amounts are expressed in Canadian dollars.

The group of investors includes, but is not limited to, Sebastien St-Louis, CEO and co-founder of HEXO Corp, as well as Board members Dr. Michael Munzar, Vincent Chiara, Nathalie Bourque and Adam Miron.

“The confidence in HEXO Corp that this $70 million private placement demonstrates is a testament to the value the Company is expected to bring to shareholders,” said Sebastien St-Louis, CEO and co-founder of HEXO Corp. “We remain focused on garnering significant market share, driving growth, and in shaping this company into a mature, resilient and valued leader in our industry.”

The Debentures will bear interest from the date of closing at 8.0% per annum payable quarterly and will mature on the date which is three years from issuance. Following the date which is one year from issuance, the Debentures will be convertible at the option of the holder into common shares of the Company at any time prior to maturity at a conversion price of $3.16 per share (the “Conversion Price”), subject to adjustment in certain events.

“It is important to note the one-year anti-dilution feature in this arrangement, meaning that the financing does not dilute current shareowners’ ownership of the Company in the short term,” added St-Louis.

Beginning on the date which is one year from issuance, the Company may force the conversion of all of the principal amount of the then outstanding Debentures at the Conversion Price on not less than 30 days’ notice should the daily volume weighted average trading price of the common shares of the Company be greater than $7.50 for any 15 consecutive trading days.

At any time on or before the date which is one year from issuance, the ‎Company may repay all, but not less than all, of the principal amount of the ‎Debentures, ‎plus accrued and unpaid interest. ‎

Upon any repayment of the principal amount of the Debentures, the ‎Company shall have the right to satisfy the repayment of the principal amount, ‎together with all accrued and unpaid interest thereon, through the conversion of ‎such amounts into common shares of the Company at the Conversion Price.‎

Upon a change of control of the Company, holders of the Debentures will have the right to require the Company to repurchase their Debentures, in whole or in part, on the date that is 30 days following the giving of notice of the change of control, at a price equal to 115% of the principal amount of the Convertible Debentures then outstanding plus accrued and unpaid interest thereon (the “Offer Price”). If 90% or more of the principal amount of the Convertible Debentures outstanding on the date of the notice of the change of control have been tendered for redemption, the Company will have the right to redeem all of the remaining Debentures at the Offer Price.

The Debentures and any common shares of the Company issuable upon conversion thereof will be subject to a statutory hold period lasting four months and one day following the closing date.

The Company intends to use the net proceeds of the private placement for working capital and general corporate purposes.

Closing of the Offering is expected to occur on or about November 15, 2019.  The private placement is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals, including the approvals of the Toronto Stock Exchange and the New York Stock Exchange.                                                                                          

It is anticipated that certain insiders of the Company will purchase approximately $8.676 million principal amount of the Debentures under the private placement. These purchases will be considered to be “related party transactions” pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Company will be exempt from the requirements to obtain a formal valuation or minority shareholder approval in connection with the participation of these insiders in the private placement in reliance of sections 5.5(a) and 5.7(1)(a) of MI 61-101.

Hexo Corp Does not pay a Dividend at this time.

LEARN MORE ABOUT HEXO CORP DIRECTLY FROM THE COMPANY’S annual financial statements