In this Trade To Black Podcast episode, TDR Founder Shadd Dales and lead financial writer Benjamin A. Smith speak with former CEO of Canopy Growth (TSX: WEED) (NASDAQ: CGC), Bruce Linton. Following the company’s disappointing financial results for the third quarter ended December 31, 2022, Bruce opines with his thoughts on Canopy’s Q3 2023 numbers, declining market share and re-organization plans, as well as the signals he’s looking for to indicate that business operations have turned around.
On February 9, Canopy Growth under-performed already low expectation by releasing financial results that can best be described as abysmal. Net revenue of $101 million declined 28% year-over-year, and 23% when adjusting for the impact of its C 3 and Canadian retail business divestitures. Gross margins came in at (-7%), which means the company lost money on business operations even before accounting for regular business expenses.
And net loss was $267 million—a $151 million increase in the net loss versus Q3 FY2022—driven primarily by non–cash fair value changes and an increase in asset impairment and restructuring costs.
Needless to say, as a net debtor company, these types of results are unsustainable or further equity dilution is inevitable to fund future operations. According to Yahoo! Finance, Canopy Growth has total debt of $1.32 billion versus $796.99 million in total cash.
To add insult to injury, competitor Aurora Cannabis Inc. reported a 20% rise in sequential revenue from the previous quarter and approximately one percent year-over-year. While Aurora is hardly the gold standard in which to compare operational prowess, they at least have revenues moving in a positive direction.
Bruce also gives his take on Canopy Growth’s halt on cultivation in its flagship Smiths Falls facility, as well as consolidating other business segments.
To view our previous Trade To Black podcast with Canadian Securities Exchange CEO Richard Carleton, click here.