Canadian cannabis producer Canopy loses CA$231.9 million in quarter

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Canadian cannabis producer Canopy Growth reported a net loss of 231.9 million Canadian dollars ($172 million) in its second quarter, reflecting “non-cash fair value changes” as well as a jump in asset impairment and restructuring costs.

The red ink reflected a CA$216 million increase in the net loss from last year’s second quarter, the company said Wednesday.

Adjusted EBITDA in the quarter ended Sept. 30 was a loss of CA$78 million, representing an CA$85 million improvement versus the same period last year.

Overall net sales were CA$117.9 million in the three months ended Sept. 30, down 10% versus the same quarter last year, according to the Smiths Falls, Ontario-based company.

Canopy’s Canadian recreational cannabis sales were CA$38.1 million in the second quarter, down 35% from the CA$58.6 million recorded a year earlier.

The company said its recreational marijuana business-to-business net revenue in the quarter fell 40% versus a year ago, to CA$25.3 million. The declined stemmed primarily from lower sales volumes in value-priced dried flower.

That is part of the company’s strategic shift away from value-priced offerings.

Canadian medical sales were a bright spot for Canopy, growing 8% versus CA$14.2 in last year’s second quarter.

Another positive segment for Canopy was BioSteel beverage sales.

BioSteel revenue surged 299% over last year’s quarter to CA$29.9 million in the July-September quarter – two times more than Canopy’s medical marijuana sales.

Outside Canada, medical cannabis sales decreased 9% to CA$10.6 million.

By product form, Canopy’s gross sales were:

  • CA$43.2 million for dry bud, down 30% versus last year’s second quarter.
  • CA$11.9 million for oils and softgels, down 11%.
  • CA$10.1 million for beverages, edibles, topicals and vapes, down 5%.

Canopy said revenue from Storz & Bickel vaporizers decreased 7% in the second quarter over the previous year’s period because of slowing consumer spending, temporary disruptions with distributors and the impact of foreign exchange rates.

Storz & Bickel sales were CA$13.5 million in the three months ended Sept. 30.

Also in the quarter, Canopy announced a plan to accelerate its entry into the United States.

Instead of waiting for legalization to occur at the federal level in the United States, the company announced the creation of Canopy USA, which will purchase the American cannabis businesses – multistate operator Acreage Holdings, extractor Jetty Extracts and edibles maker Wana Brands – that Canopy had agreed to buy once recreational marijuana was legal under U.S. law.

“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,” CEO David Klein said in a statement.

“Canopy is ideally positioned to capitalize on this once-in-a-generation opportunity and accelerate our path to North American cannabis market leadership.”

Canopy shares trade as WEED on the Toronto Stock Exchange and CGC on the Nasdaq.