HEXO Launches New Tsunami Format, Targets Medical Customers


Jun. 4 2020, Published 9:58 a.m. ET

Last year, HEXO (TSE:HEXO) updated its packaging in order to comply with medical packaging regulations. The move resulted in the development of smaller products. On Wednesday, the company launched its high-THC strain Tsunami in a new 30-gram pack exclusively for medical usage. The new 30-gram format comes in a resealable, odor-proof, and child-resistant pouch. Management hopes that introducing a larger format will help it move towards sustainability. Also, the company expects the new pack to meet the needs of patients looking for high volume cannabis. HEXO plans to launch more strains in this new format.

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Speaking about the new launch, HEXO CEO Sebastien St-Louis said, “We know our medical clients have been waiting for this opportunity to purchase a higher volume of cannabis without excess packaging. Our Tsunami flower benefits from enhanced humidity controls for maximum freshness and to promote ideal bud density.”

HEXO received a license amendment from Health Canada

Earlier this week, HEXO received a license amendment from Health Canada for its manufacturing and processing facility in Belleville, Ontario. The company said that the license could expand its capabilities significantly and help it achieve greater economies of scale. Also, the company expects the license to help it roll out more innovative 2.0 products including hash, vapes, cannabis beverages, and other edible cannabis products. The Belleville facility boasts custom-built automation and best-in-class cannabis technology to streamline its processes. So, management expects the facility to lower its expenses and improve its margins.

Stock performance

Launching a Tsunami in a new and larger quantity pack impressed investors. On Wednesday, HEXO stock rose and closed at 0.94 Canadian dollars, which represents a rise of 6.8% from the previous day’s closing price. On Wednesday, the company outperformed the S&P 500 Index and the Horizons Marijuana Life Sciences Index ETF (TSE:HMMJ). The S&P 500 Index rose 1.4%, while HMMJ increased by 1.7%.

Despite the increase on Wednesday, HEXO has lost 54.6% of its stock value this year. Weak second-quarter earnings, rising debt, and concerns about dilution due to new equity offerings dragged the stock down. Meanwhile, the company has underperformed its peers and HMMJ. Canopy Growth (TSE:WEED), Aurora Cannabis (NYSE:ACB), and Aphria (NYSE:APHA) have all fallen by 18.1%, 42.5%, and 11.8% YTD, respectively. HMMJ has also fallen by 13.3% during the same period.


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