Cronos Group Inc fell short of quarterly revenue estimates on Tuesday, as the Canadian producer’s revenue per gram of cannabis sold fell in a market suffering from surplus supply.
The cannabis industry in the country is facing a supply glut as companies ramp up production. But retail sales have failed to offset the surplus, even though there has been a rise in the number of weed stores and the sale of cannabis-derivative products has been allowed in Canada.
Cronos said its net product revenue per gram sold outside the United States nearly halved to $3.75 in the third quarter, dulling a 31-per-cent improvement in cost of sales per gram sold.
Total operating expenses rose nearly five fold to $34.8-million, driven by a surge in general and administrative expenses.
Higher spending on research and development, acquisitions and expanding in new markets has weighed on cannabis companies’ profitability, with the sector down about 25 per cent this year.
Cronos said cannabis sales rose six fold to 3,142 kilograms outside the United States, primarily driven by increased cannabis production.
The Toronto-based company reported a wider-than-expected adjusted core loss of $23.9-million, in the quarter ended Sept. 30, compared with the average analyst estimate of $19.87-million, according to IBES data from Refinitiv.
Revenue rose more than three fold to $12.70-million, but missed expectations of $14.14-million.