Tilray (NASDAQ:TLRY) stock has become one of the biggest cannabis names following the Aphria-Tilray business combination.

The newly combined company now has a much greater chance at carving out a piece of the U.S. market following the deal. 

But the company is also currently making headlines in regard to other deal news as well. Specifically a deal with MedMen (OTCMKTS:MMNFF).

Tilray recently made headlines for its deal to buy a majority position in MedMen’s senior secured convertible notes. Tilray CEO Irwin Simon was optimistic, noting that the deal gives the company more traction in the U.S. market once legalization woes clear.

From where I’m sitting the fact of the deal alone isn’t enough to make TLRY stock worthwhile now. We have to rely on financial information contained in the company’s earnings reports rather than the hope that MedMen (OTCMKTS:MMNFF) news changes Tilray’s reality. 

And Tilray’s most recent earnings weren’t that great.

Recent Earnings and TLRY Stock

There was a lot of news to decipher from Tilray’s most recent earnings report, especially given the reverse acquisition of Aphria. 

One thing that stuck out to me was the company’s net losses in light of that acquisition. The company reported a net loss of $336.0 million in 2021 compared to net loss of $100.8 million in 2020. It claimed the losses were driven by $63.6 million of merger transaction costs and $170.5 million of non-cash unrealized loss in convertible debentures.

That is a fair assertion mathematically speaking. If we add the $63.6 million in transaction costs with the $170.5 million loss on convertible debt we arrive at $234.1 million in costs.

If Tilray didn’t have those costs its net loss would have been $234.1 million less. i.e., $336.0 million minus $234.1 million, or $101.9 million in net loss. 

That would be very similar to the $100.8 million net loss it incurred a year earlier. I won’t argue that Tilray undertook the acquisition and lost $336.0 million net as a result. I’ll give the company the benefit of the doubt in regard to its net loss argument.

But that then raises the question of where the company’s so-called cost synergies are showing up.

Cost Synergies

As stated in the earnings report, Tilray was counting on saving approximately $80 million as the result of cost synergies within eighteen months of closing the Aphria.

The company expected these synergies in cultivation and production, cannabis and product purchasing, sales, and marketing, and corporate expenses. So far that number is $35 million in about three months.

Synergies is a loose concept intended to mean a reduction of costs or some other form of increased efficiency as a result of combining. It doesn’t show up as a line item in any financial statement.

Ostensibly though, the $35 million of synergies the company has achieved to date should reflect in broad measures like net losses or gains. Tilray wants investors who pore through their financial statements to dismiss the cost realities of its business combination and console themselves with wishy-washy ideas like synergies. 

At the end of the day, investors know that business combinations result in significant costs and short-term losses. That’s fine. But it would be very helpful to potential investors if Tilray spelled out the details of these synergies, or at least made an effort to. 

The Bottom Line

The point I’m making here is that it’s difficult to see how Tilray is any better now financially than it was prior to the Aphria deal. 

The problems that Tilray faced a year ago persist. TLRY remains far from financially sound, and the market for cannabis remains fractured. 

The issue is going to continue to be that cannabis companies are not making money. Tilray can scale up its operations in the hope that tides will change and then it will be able to dominate the market due to scale, but there’s no sign of that occurring soon.

It might dominate if cannabis takes off, or it might end up a bloated whale that fades into irrelevance. 

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.