Tilray, Inc. (Nasdaq: TLRY) reported that its total revenue for the third quarter was flat at $51.4 million and up 2.0% sequentially. Net losses fell to  $(2.3) million versus last year’s net loss of $(36.4) million and fell sequentially from $(81.7) million in the second quarter. The most significant driver of the change in net loss during the period was the revaluation of the outstanding warrants associated with the equity offering completed in March. Tilray stock was slightly higher in after-hours trading.

“Our third-quarter results demonstrate the significant progress we have made throughout the organization despite the unprecedented challenges presented by the COVID-19 pandemic. We realized solid year-over-year revenue growth in our core businesses and have achieved a significantly more focused, efficient and competitive cost structure, all of which position Tilray for future success. We look forward to building on these accomplishments and remain focused on our goal of achieving break-even or positive Adjusted EBITDA in the fourth quarter,” said Brendan Kennedy, Tilray’s Chief Executive Officer.

The company attributed the disappointing results on the discontinuation of bulk sales and a slight decrease in Canada medical sales which caused cannabis segment revenue to fall by 11% to $31.4 million. Total cannabis kilogram equivalents sold decreased 53% to 5,107 kilograms from 10,848 kilograms in the prior year’s third quarter. Adult-Use and International Medical sales grew 26% and 42%, respectively. Excluding the year-over-year impact related to bulk sales, total cannabis revenue increased by 24%. Hemp segment revenue increased 28% to $20.0 million (C$26.5 million).

Prices Rose, But So Did Costs

The average cannabis net selling price per gram increased to $6.15 (C$8.15) versus $3.25 (C$4.32) in the third quarter of 2019 and $2.64 (C$3.59) in the second quarter of 2020. The increase was due to a continued shift in distribution channels and product mix, including growth in International Medical sales, a shift in sales to higher potency and higher-priced products in the Adult-Use market, and the continued growth of Cannabis 2.0 products in Canada.

The average cannabis net cost per gram increased to $4.23 (C$5.61) compared to $2.28 (C$3.03) in the third quarter of 2019 and $2.06 (C$2.80) in the second quarter of 2020. The year-over-year increase was the result of lower kilograms sold due to the discontinuation of bulk sales and partly due to increased sales of Cannabis 2.0 products which have higher costs than dried flower.

Outlook

Tilray said it was set to deliver positive or break-even Adjusted EBITDA in the fourth quarter of 2020. The company said that it expects to see continued opportunities to leverage its Kindred partnership structure and focused selling strategy to grow market share and revenues for the Canadian adult market. With regard to its international business, the completion of our Portuguese facility will position Tilray for “first mover” advantage as new international markets legalize medical and/or recreational cannabis. Construction on the Portuguese cultivation facility remains largely on track to be completed by the end of the fourth quarter of 2020 with total costs expected to be less than the original budget of approximately $33.0 million.

On the hemp products, Tilray said it will leverage the plant-based food trends in the United States and broaden our product offerings to include CBD once the FDA provides guidance on a nationwide basis. Cash and cash equivalents totaled $155.2 million at the end of the third quarter 2020