Cronos Group Inc. (NASDAQ: CRON) beat revenue and earnings estimates for the second quarter of 2019, sending the shares climbing 6.8% in premarket hours on Thursday. Analysts had forecast a loss of $0.02 per share on revenue of $5.6 million.
Total revenue jumped 202% to CAD10.2 million from the same period last year, mainly driven by the launch of the adult-use market in Canada.
Net income was CAD251 million, or CAD0.22 per share, compared to CAD0.72 million, or CAD0.00 per share, last year.
The company sold 1,584 kilograms during the quarter, which was up 232% year-over-year, mainly driven by increased cannabis production and the launch of the adult-use market in Canada. Cronos saw continued growth in cannabis oil sales, which represented 20% of net product revenue compared to 19% last year.
Net product revenue/gram sold fell 8% to CAD6.44. Cost of sales before fair value adjustments per gram sold was CAD3.01, up 14% from the prior-year quarter.
Cash and cash equivalents totaled CAD1.57 billion at the end of the quarter.
During the quarter, Cronos entered into a supply agreement with MediPharm Labs Corp., under which MediPharm will supply Cronos with approx. $30 million of cannabis concentrate over 18 months and potentially up to $60 million over 24 months. Cronos also established Cronos Device Labs, an R&D facility for vaporizer innovation, in Israel.
Cronos has also entered into an agreement to acquire four of Redwood Holding Group’s operating subsidiaries for approx. $300 million, net of cash and debt. Redwood produces and distributes hemp-derived CBD-infused skincare and other consumer products in the US under the Lord Jones brand. The deal is expected to close in the third quarter of 2019.