Canopy Growth reports decline in revenue for 2024

Canopy Growth Corp. (TSX: WEED) (NASDAQ: CGC) announced its financial results for the fourth quarter and fiscal year ending March 31.

In the fourth quarter, Canopy reported that its revenue increased 7% over last year’s fourth quarter to $72.8 million. This beat the Yahoo Finance average analyst estimate for revenues of $52.99 million. The net loss for the fourth quarter was $94.7 million, an 84% increase over last year’s fourth quarter net loss.

Full-year results

Total revenue for 2024 fell to $343 million from 2023’s revenue of $381 million. It fell even further from 2022’s revenue of $537 million. Net revenue was $297.1 million in fiscal 2024, compared to $333.3 million in fiscal 2023.

Canopy attributed the decline in revenue to the divestiture of its retail business in Canada in the third quarter of fiscal 2023, as well as the divestiture of This Works in the third quarter of fiscal 2024 and a decrease in the Canadian business-to-business channel. However, the company said these decreases were partially offset by growth in the Canadian medical market, increases in Storz & Bickel, and international markets cannabis sales growth.

Canopy trimmed its net loss for the fiscal year to $657 million from a net loss of $3.2 billion for the previous year. Loss per share was ($8.79) versus last year’s net loss per share of ($70.69).

“In fiscal 2024, we fortified Canopy’s foundation for future growth. With a resolute focus on cannabis, we have momentum and are poised to seize the opportunity presented by continued regulatory developments in Germany and the United States,” CEO David Klein said.

Improving financials

Canopy Growth’s cash has dwindled from 2023’s ending year amount of $667 million to $170 million at the end of the 2024 fourth quarter. However, the company said it addressed many of the financial concerns pressing it at the end of 2023. At that time, it filed its earnings as a going concern.

In its latest regulatory filing, the company said that it had completed the following steps to alleviate its financial pressures:

• Completion of a $35 million private placement unit offering in January.
• Receipt of $25 million of proceeds in March from the BioSteel Canada asset sale.
• The exchange of the $100 million promissory note held by a subsidiary of Constellation Brands into exchangeable shares of Canopy Growth.
• Receipt of gross proceeds of approximately $50 million and the exchange of approximately $27.5 million of existing debt that will mature in September 2025 in exchange for a new senior unsecured convertible debenture of the company, maturing May 2029, and the issuance of warrants of the company.

Canopy said it does not have any material debt obligations coming due until March 2026. The company also completed the sale of This Works at the end of 2023 and no longer includes that in its earnings.

Canopy did take a $42 million impairment charge for Storz & Bickel, even as the brand reported increased revenue. Storz & Bickel’s net revenue in the quarter increased 43% compared to last year’s $22 million driven by strong sales of the new Venty portable vaporizer.

“We have made remarkable progress and delivered dramatic reductions in expenses, cash burn, and debt over the past year,” CFO Judy Hong said. “These efforts have significantly enhanced our financial stability and moved us toward achieving positive consolidated adjusted EBTIDA. With no material debt maturing until 2026, Canopy is equipped to capitalize on growth opportunities and enhance shareholder value.”

After the quarter end

Canopy Growth also made notable moves after the quarter ended that could have a material effect on its financial health going forward.

• The company overwhelmingly approved the creation of a new class of non-voting and non-participating exchangeable shares in the capital of the Company at the special meeting of shareholders held on April 12.
• On April 18, Canopy Growth announced that Constellation Brands converted its common shares to exchangeable shares of the company.
• On May 6, Canopy USA initiated the acquisitions of Mountain High Products, Wana Wellness, The Cima Group, and Lemurian Inc. (Jetty). These acquisitions are expected to close in the first half of FY2025.