(This story has been updated to note the company’s “going concern” warning.)
Cannabis producer Canopy Growth reported a net loss of 3.3 billion Canadian dollars ($2.5 billion) for its fiscal year ended March 31, and the company warned of its ability to continue as a “going concern.”
The Smiths Falls, Ontario-based business attributed the net loss primarily to a CA$1.6 billion increase in asset impairment and restructuring costs and CA$1.2 billion related to non-cash fair value changes.
Canopy reported a net loss of $330.6 million for its fiscal 2022.
The company’s management also disclosed a “going concern” warning.
“Management has raised substantial doubt as to the company’s ability to continue as a going concern due to certain material debt obligations coming due in the short term,” according to a regulatory filing with the U.S. Securities and Exchange Commission.
“If we are unable to obtain additional capital, our financial results, financial condition and our ability to continue as a going concern will be adversely affected and we may have to delay or terminate some or all of our business development or commercialization plans or cease certain of our operations.”
As of March 31, Canopy had CA$468 million in required principal repayments to be settled in cash within the next 12 months.
Canopy failed to stabilize its sales in 2023.
Overall net revenue in fiscal year 2023 fell to CA$402.9 million, a 21% reduction from the previous year’s CA$510.3 million.
Compared to last year, revenue in fiscal 2023 from:
- Canadian medical cannabis fell 27%, to CA$187.1 million.
- International cannabis fell 51%, to CA$39 million.
- Storz & Bickel fell 24%, CA$65 million.
- BioSteel increased 101%, to CA$69.6 million.
- This Works dropped 19.4%, to CA$26 million.
Drilling further into the Canadian sales, Canopy reported:
- Adult-use cannabis sales fell 36% year-over-year, to CA$131.2 million in 2023.
- Medical cannabis sales increased 6% over 2022, to CA$55.8 million.
Canopy reiterated its pledge to achieve breakeven to positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in all of its businesses, with the exception of BioSteel, by March 2024.
Canopy’s free cash flow in fiscal 2023 was an outflow of CA$567 million.
“Fiscal 2023 was a transformational year for Canopy Growth as we began to implement a comprehensive strategy to accelerate our path to profitability, and position our business to realize the tremendous opportunities ahead,” CEO David Klein said in the news release.
“Our actions are already yielding results and we expect to realize significant benefits from our cost reduction program in Fiscal 2024.”
Canopy launched a business transformation plan earlier this year, which the company expects to yield overall cost savings of CA$240 million to CA$310 million by the end of fiscal 2024.
Canopy’s workforce appears to have taken the brunt.
As of March 31, Canopy had 1,621 employees, a nearly 50% reduction from one year earlier, when Canopy employed 3,151 people.
In the fourth quarter of fiscal 2023, Canopy’s net revenue of CA$88 million was 14% lower compared to the same quarter last year.
The company’s net loss in the January-March quarter was CA$648 million, which Canopy says was driven primarily by an increase in asset impairment and restructuring costs.
Free cash flow in the quarter was an outflow of CA$143 million.
Canopy reported a reduction of approximately CA$500 million in debt from the second quarter of fiscal 2023 to the first quarter of fiscal 2024.
Canopy had cash and short-term investments worth CA$783 million as of March 31.