Neptune Wellness Solutions (NASDAQ: NEPT) reported a sharply wider net loss for the second quarter of 2020 as revenues declined 8%. The company said it signed an agreement with International Flavors & Fragrances to co-develop hemp-derived CBD products.
The Quebec, Canada-based cannabinoids extraction company reported a net loss of C$20.78 million for the September-quarter, compared to a loss of C$3.05 million a year earlier. The deterioration in performance is mainly attributable to an increase in costs related to stock-based compensation, depreciation, and amortization.
Revenues down 8%
Second-quarter revenues dropped 8% annually to C$6.5 million from last year’s revenue of C$7.07 million. Revenues from the Nutraceutical segment decreased by 27% to C$5.1 million. Adjusted EBITDA1 was a loss of $4.58 million, down from the year-ago period.
“We achieved a significant milestone in mid-October when we completed our Phase II capacity expansion. This additional capacity will alleviate our constraints in the near-term and help accelerate the company’s revenue growth in the cannabis segment. However, the start-up of our ethanol process has been longer than initially expected which has delayed the full ramp-up by one month to the end of December,” said CEO Michael Cammarata.
Neptune said it is well-positioned to leverage the strong demand for extraction services in Canada and continue to diversify its client base in the coming months. The facility in North Carolina, U.S, is expected to reach a processing capacity of 1,500,000 kg of biomass annually by the end of December.
During the quarter, the company completed the acquisition of the assets of SugarLeaf, for initial consideration of C$23.7 million. It also announced the creation of Neptune Ventures, a strategic investment arm and technology incubator designed to stimulate innovation and partnerships in the cannabis and wellness industries.
Separately, the company said it entered into an agreement with International Flavors & Fragrances (IFF) to co-develop hemp-derived CBD products for the retail and health & wellness markets. The deal will help Neptune leverage its proprietary cold ethanol extraction processes and formulation IP to deliver extracts for hemp-derived products infused with essential oils.
Neptune’s shares have been on a losing streak since hitting a record high in July. The stock closed the last trading session slightly higher in the Nasdaq stock exchange.