Canopy Posts 7% Sequential Increase, Sees Business At “Inflection Point”November 15, 2022
After a quarter highlighted by several high-profile moves including a gambit to accelerate entry into the U.S. market and the divestiture of its Canadian retail operation, Canopy Growth says it’s seeing improved momentum across its business. The Canada-based company posted sales up 7% sequentially to C$118 million ($89m) in its fiscal second quarter ended in September, with adjusted EBITDA showing a loss of C$78 million ($59m), an improvement of roughly 50% compared with a year earlier.
“Our second quarter marks a key inflection point for Canopy, demonstrating momentum across our key businesses and accelerating our entry into the U.S. cannabis market through the creation of Canopy USA,” said chief executive David Klein. CFO Judy Hong added that the company is “pressing forward on our path to profitability in Canada and expect Canopy USA will meaningfully enhance our growth and profitability over time once it closes the announced acquisitions of Acreage, Jetty, and Wana.”
Those acquisitions are expected to be rolled up into the Canopy USA unit that was announced last month. Under the plan, which is subject to shareholder approval, Canopy Growth will have two designees on the four-person board of managers of Canopy USA, but will not hold a direct interest in any shares or interests in Canopy USA holdings Acreage, Wana, Jetty, or TerrAscend. Altogether, Canopy USA’s presence will stretch across 21 states.
Canopy noted that Acreage grew sales 28% year-on-year in the third quarter of calendar 2022, with its adjusted EBITDA positive for seven straight quarters, while Jetty is seeing 30% growth in its solventless vape retail sales. Additionally, the Wana edibles brand rolled out new Optimals Fast Asleep SKUs in Nevada and Michigan while also debuting in the Montana market, with more states in the pipeline.
Canopy also highlighted share gains in the Canadian market during the second quarter for premium flower and pre-roll brand Doja, mainstream brands Tweed and Vert, and Deep Space beverages, all of which contributed to a stabilizing of adult-use sales in Canada in the three-month period. In addition to fast-tracking its U.S. entry, Canopy recently announced it’s exiting Canada’s retail tier as it aims to reduce costs and accelerate growth across its business.—Daniel MarstellerSubscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning. You will also receive the Cannabis edition as part of your subscription.