Canopy Growth Corporation (TSX: WEED) (Nasdaq: CGC) announced its total net revenue fell 7% to $78.5 million for the fiscal third quarter ending December 31, 2023. All figures are in Canadian dollars.
Revenue numbers
Breaking down the revenue, Canopy Growth said that Canadian adult-use cannabis business-to-business revenue increased 9% year-over-year to $23 million in the quarter driven by growth in Tweed flower as well as the addition of the Wana brand edibles to the portfolio. However, without the business-to-consumer Canadian cannabis revenue for the quarter, revenue fell from last year’s total of $32 million.
Canadian medical cannabis net revenue increased to $15.6 million over last year’s $4 million. The company said the Canadian medical cannabis revenue increase was due largely to a shift in its customer mix and a larger assortment of cannabis product choices offered to its customers.
Rest-of-world cannabis sales jumped to $10 million over last year’s $5 million, but Storz and Bickel fell to $18 million from last year’s $20 million. However, Canopy noted that Storz increased 54% sequentially driven by strong sales of its new VENTY portable vaporizer, traditionally strong seasonal sales, including the brand’s most successful Black Friday sales event to date.
Cash burns
The net loss for the quarter fell to $216 million from last year’s $259 million. However, the loss from continuing operations grew in the quarter to $230 million from $226 million. Cash and cash equivalents plunged from $667 million at the end of 2022 to just $142 million at the end of 2023.
“This is the dawn of a new era at Canopy Growth. We’re singularly focused on cannabis and demonstrating growth across all of our business units. With our Canopy USA strategy now moving forward, we expect to be the first and only U.S. listed company offering shareholders a unique opportunity to gain exposure to the fastest growing cannabis market in the world.” said CEO David Klein.
The company also recognized a loss of $30 million in the quarter on the This Works divestiture.
Going concern
Despite Klein’s rosy tune, Canopy’s earnings noted the company is a going concern. The filing stated, “The Company has certain material debt obligations coming due in the short-term, has suffered recurring losses from operations, and requires additional financing to fund its business and operations. If the Company is unable to raise additional capital, it may be unable to meet certain of its financial obligations.” Canopy has an eye-popping deficit of $10 billion. The filing also stated that Canopyt plans to fund the operations and debt obligations through existing cash positions.
CFO Judy Hong said, “Our Q3 FY2024 results demonstrate the substantial improvement in profitability and reduction in cash burn compared to the previous year as well as Q2 FY2024. Our right-sized business is consistently delivering profitability improvements as well as sequential growth. These results, paired with our ongoing actions to strengthen Canopy Growth’s balance sheet, reinforce our confidence in continued performance along this path for a sustainable, profitable future.”
Looking ahead
Canopy said it expects to file its definitive proxy statement with the U.S. Securities and Exchange Commission on or about February 13, 2024, and plans to host a special meeting on April 12, 2024, regarding the company’s strategy for Canopy USA. At the Special Meeting, shareholders will be asked to consider a special resolution authorizing an amendment to its articles of incorporation to, among other things, create a new class of non-voting, non-participating exchangeable shares in the capital of the company.
Canopy USA will combine the acquisitions of edibles company Wana Brands, Acreage Holdings, and clean vape company Jetty.
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