Cronos Group Inc. (NASDAQ:CRON) (TSX:CRON) announced its 2021 third-quarter business results, revealing net revenue of $20.4 million, compared to $11.4 million in the same period of 2020. The increase year-over-year was primarily driven by continued growth in the adult-use market in Canada, increased sales in the Israeli medical cannabis market and increased sales in the U.S. segment.
Q3 Financial Highlights
- Gross profit of $(0.7) million in Q3 2021 improved by $0.8 million from Q3 2020. The increase in gross profit year-over-year was primarily driven by an increase in sales of cannabis extracts in the rest of world (ROW) segment, which carry a higher gross profit and gross margin than other product categories.
- Adjusted EBITDA of $(46.8) million in Q3 2021 decreased by $16.7 million from Q3 2020.
- Net income amounted to $77.66 million, compared to $68.46 million in the corresponding quarter of 2020.
- Capital expenditures of $2.5 million in Q3 2021 decreased by $5.8 million from Q3 2020. The decrease year-over-year was primarily driven by a reduction in construction costs in the ROW segment and a decrease in costs related to the implementation of the company’s enterprise resource planning system.
Audit Committee Evaluation Update
The audit committee of the company's board of directors completed its evaluation of goodwill and indefinite-lived intangible assets in the company's U.S. reporting unit for impairment. Following completion of this evaluation, and on the recommendation of the audit committee and in consultation with the company's independent auditor, KPMG LLP, the board determined that Cronos Group restate its unaudited interim financial statements for the second quarter of 2021. Accordingly, the Company recorded an impairment charge of $236.1 million on goodwill and indefinite-lived intangible assets and on long-lived assets in its U.S. reporting unit for the three and six months ended June 30, 2021. The impairment charges have no impact on cash and cash equivalents or revenues.
"We are pleased that the Audit Committee has completed its evaluation, and that Cronos Group is now current with the filing of our financial reports," Kurt Schmidt, president and CEO, Cronos Group stated. "As we move forward, we are committed to improving our internal controls and financial reporting practices, maintaining the highest standards of transparency and accountability, and enhancing our capabilities and resources across functions to support our strategy."
Price Action
Cronos shares traded 0.53% lower at $3.77 per share during Friday's pre-market session.
