November 5, 2021 By Tara Deschamps, The Canadian Press
Canopy Growth Corp. pushed back its profitability target as it reported a $16.3 million loss in its second quarter.
The Smiths Falls, Ont. cannabis company previously predicted it would be profitable in the second half of its fiscal 2022, but said Nov. 5 that reaching that goal will take longer than expected because of market share challenges and a slower-than-expected U.S. launch of its BioSteel products.
But the company’s chief financial officer promised the target will still be reachable.
“Achieving profitability remains a top priority,” said Mike Lee in a statement.
“We are focused on increasing market share in Canada, premiumizing our product mix and delivering on our cost savings commitment.”
Lee’s remarks came as the company has been on an acquisition spree meant to position Canopy for profitability and for taking on the U.S. market, if federal cannabis legalization occurs.
Over the course of the COVID-19 pandemic, Canopy acquired Supreme Cannabis Co. Inc. and AV Cannabis Inc.
Its most recent purchase came in October, when it reached an agreement to buy Boulder, Colo.-based Wana Brands. The deal is contingent on the U.S. making tetrahydrocannabinol (THC), the main psychoactive component in cannabis, federally permissible.
While Canopy has made such deals and begun integrating those brands, it has also reported consistent losses and seen its revenues tumble.
The company said Nov. 5 that its revenue for the period ended Sept. 30 totalled $131.3 million, down from $135.2 million at the same period last year.
Its total net cannabis revenue reached $95 million in the quarter, a one per cent increase from a year earlier.
Excluding the impact from acquired businesses, Canopy said net revenue declined 13 per cent and cannabis revenue declined 14 per cent.
Canopy executives believe revenue will pick up in the second half of its current fiscal year as it tries to stabilize its share of the Canadian recreational market by increasing its supply of high-THC flower products and launching new pre-rolled joints, vapes, edibles and beverages.
The company is also working to expand distribution of BioSteel items, and improve distribution of high-margin products while reducing supply chain complexity and improving service levels on priority products..
Despite these efforts, it still warned that the magnitude and pace of improvement of its revenues is expected to be “more modest than previously anticipated.”
The company’s $16.3 million loss in its most recent quarter was improved from the $96.5 million loss Canopy recorded during the same quarter last year.
Its basic and diluted loss per share amounted to three cents, down from a loss of nine cents during its previous second quarter.
Analysts on average had expected a loss of 21 cents per share, according to financial markets data firm Refinitiv.
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