Cannabis company Canopy Growth loss narrows as operating expenses drop

By Steve Gelsi

Stock rises as company's revenue matches Wall Street estimates

Canopy Growth Corp.'s stock was up fractionally Thursday after the Canadian cannabis company reported a lower quarterly loss on higher revenue and lower expenses.

Canopy Growth's (CGC) (CA:WEED) fourth-quarter loss narrowed to C$92.3 million, or C$1.03 a share, from C$640.1 million, or C$12.83 a share, in the year-ago quarter.

The FactSet consensus estimate for Canopy Growth's fourth quarter was a loss of 44 cents a share in Canadian currency.

Revenue rose 5% to C$72.8 million, in line with analyst estimates.

Total operating expenses fell to C$122.2 million from C$480.46 million.

Canopy Growth's stock rose by 0.4% after gaining as much as 6% earlier in the session.

Company highlights in the quarter include record fourth-quarter revenue for its Storz & Bickel vaporizer brand and a 16% rise in Canada medical cannabis net revenue.

The cost of goods sold in Canada cannabis fell by 54%.

"Canopy has growing businesses in all of the world's most attractive cannabis markets, a leading portfolio of high-impact brands, and a rapidly developing U.S. ecosystem," the company said.

Chief Executive David Klein said the company "delivered dramatic reductions in expenses, cash burn, and debt over the past year."

Canopy said it has no material debt maturing until 2026 and that it is "equipped to capitalize on growth opportunities and enhance shareholder value."

Bernstein analyst Nadine Sarwat reiterated a market-perform rating on Canopy Growth and said the company missed some of her projections, although revenue came in ahead of her estimate by about 7%.

While the performance of Canopy Growth's medical business in Canada beat expectations, recreational sales were about 11% short of estimates, even as rival Cronos Group Inc. (CRON) was able to outperform.

Sarwat said Canopy Growth "is not out of the woods yet" in its plan to turn the company around and generate profits.

Prior to Thursday's moves, the stock was up by 66% in 2024, compared with a 12.7% increase by the Nasdaq COMP.

Also read: Canopy USA exercises options to buy Wana Brands and Jetty Extracts as it moves into the U.S.

-Steve Gelsi

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05-30-24 1514ET

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