With ink still drying on the recently closed mega-merger between Tilray Inc. (TSX: TLRY) (Nasdaq: TLRY) and Aphria Inc., the old Tilray quietly posted some ugly first-quarter results.
In a United States Securities and Exchange Commission filing on May 10, the Nanaimo, B.C.-based firm reported a massive US$341 million loss in the three months ended March 31.
It’s the final full quarter of financial results for the old version of the company.
Tilray shareholders approved the blockbuster tie-up with Aphria last week, creating a new cannabis, hemp, beer and pharmaceutical powerhouse in Canada, the U.S. and Europe.
Tilray 2.0 didn’t issue a press release on former Tilray’s first-quarter results, which generated little media attention.
The old firm posted US$48 million in first-quarter revenue, down 4 per cent from US$50.7 million in the previous quarter.
That’s after Aphria recorded C$153 million in revenue in its last quarter before the merger.
The new weed firm is expected to be one of the world’s biggest cannabis companies in terms of revenue, behind only the top U.S. operators. On Monday, Massachusetts-based Curaleaf Holdings Inc. (CSE: CURA) reported US$260 million in first-quarter revenue.
But analysts say Tilray 2.0 will have a tough time to grow sales in Canada amid increased competition and oversupply issues.
Investors shouldn’t be surprised if the new entity files future writedowns as both companies streamline their businesses, BCMI Cannabis Report managing editor Chris Damas told Mugglehead last week.
Damas expects the new company to close down Tilray’s old greenhouse in Petrolia, Ontario.
The original firm reported US$22.9 million in Canadian adult-use and medical cannabis sales, as well as US$8.6 million in international pot sales.
The company’s Manitoba Harvest hemp brand brought in US$16.6 million.
The bulk of Tilray 1.0’s massive first-quarter loss came from a US$263.2 million loss on a change in fair value of warrants.
The firm reported an operating loss of US$73.3 million.
The new firm will be led by former Aphria CEO Irwin Simon and his management team that has gained a reputation for fiscal responsibility.
Adjusted earnings before interest, taxes, depreciation and amortization came in at a loss of US$73.3 million loss.
As of March 31, the old Tilray had US$416.3 million in cash.
The new company expects to dominate Europe’s small but expanding medical cannabis sector. Tilray operates a medical facility in Portugal that can ship products into any European country with a legal medical program.
Shares of Tilray rose almost 4 per cent Tuesday to $18.91 on the Toronto Stock Exchange.
Top image via Tilray