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Canopy Growth’s Revenue Drops 21% in Q4

May 31, 2022

Major Canadian producer Canopy Growth reported financial results for the quarter ended March 31, in which revenue dropped 21% sequentially to C$111.8 million ($88.2m). Canopy faced stiff headwinds as cannabis revenue dropped across the board. Sales of dry bud were down 38% compared to the same period last year, falling from C$67.9 million ($53.6m) to C$41.9 million ($33.1m). Beverages, edibles, topicals, and vapes collectively provided a slight counterweight, gaining 13% to reach C$8 million ($6.3m).

Those sales trends made for heavy losses in the quarter. With a cost of goods sold of C$271 million ($213.9m), the company’s gross margin showed a loss of C$159.2 million ($125.7m). After asset impairments and restructuring costs of C$241.1 million ($190.3m) and total operating expenses of C$370.4 million ($292.4m), Canopy took an operating loss of C$529.6 million ($418.1m) in the quarter. Things didn’t look much better on an underlying basis, as adjusted EBITDA still showed a loss of C$121.8 million ($96.2m).

Canopy also reported results for the full fiscal year, in which net revenue sank 5% from fiscal 2021, falling to C$520.3 million ($410.9m). Flower sales were down 11% for the full year, totaling C$211.7 million (167.2m) in revenue. With operating expenses of C$889.6 million ($702.4m), Canopy’s full year operating loss was just over C$1 billion ($789.6m) and its net loss was C$320.5 million ($253.1m). Its full year adjusted EBITDA was a loss of C$415.4 million ($328m).

With the Canadian market in such dire straits, CEO David Klein focused on the company’s progress in entering the U.S. on the earnings call. “Canopy’s model is fundamentally different from our competitive set, giving us unique positioning in the U.S. with our THC assets that include Acreage, Wana Brands, Jetty Extracts, and a sizable ownership stake in TerrAscend,” he said. “I want to be clear. We aren’t waiting for U.S. legalization to start extracting value from these assets. We’ve already paid for majority ownership positions in Wana and Jetty with Acreage and TerrAscend offering valuable routes to market. Critically, all these entities are already generating healthy profits.”—Danny Sullivan

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