Cannabis giant Canopy cites ‘spreadsheet error’ for under-reporting adjusted EBITDA

The lobby of Canopy Growth's Tweed facility in Smiths Falls, Ontario. (Photo by Justin Tang)

Canada’s leading cannabis company, Canopy Growth, was forced to refile its management discussion and analysis (MD&A) with the Canadian Securities Administrators to correct adjusted earnings before interest, tax, depreciation and amortization (EBITDA).

The original MD&A stated that the adjusted EBITDA loss for the nine months ended Dec. 31, 2018, was 69 million Canadian dollars (CA$52 million).

However, Canopy’s adjusted EBITDA loss amounted to CA$155 million for the nine months ended Dec. 31, 2018.

“The correction was made due to a formula error in the spreadsheet supporting the year-to-date adjusted EBITDA loss calculation,” Canopy noted in a news release. “The Adjusted EBITDA loss for the three months ended as Dec. 31, 2018, was correct as reported, as were all prior quarters as released.”

Canopy said no changes are required to the interim consolidated financial statement, released Feb. 14, 2019, for the three and nine months ended Dec. 31, 2018.

Matt Bottomley, an analyst with Toronto-based investment firm Canaccord Genuity, said the amended MD&A could add to investor confusion, but Canaccord views the refiling as “purely clerical in nature as it did not represent a restatement of the company’s previously issued operating performance.”

“The sum of Canopy’s adjusted EBITDA loss for the first three quarters already equated to (CA$155 million),” Bottomley added. “However, the figure in its most recent Q3 MD&A did not add the nine-month period correctly.”

Canopy did not immediately reply to queries from Marijuana Business Daily.

It’s not the first time Canopy Growth had to refile an MD&A.

In 2017, the Smiths Falls, Ontario, company filed amended and restated consolidated financial statements and amended and restated MD&A for the year ended March 31, 2017.

As a result of that restatement, Canopy’s reported net loss was slashed from CA$16.7 million to CA$7.6 million.

Canopy Growth’s shares trade on the New York Stock Exchange under the ticker symbol CGC and on the Toronto Stock Exchange as WEED.

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