Canopy Growth shares stumble 8% after company posts quarterly loss
Sales increased but so did costs in quarter than ended just before legalization
Shares of Canopy Growth Corp., slipped as the cannabis producer reported a wider loss of $330.6 million in its latest quarter, missing analyst estimates, as operating costs surged ahead of the legalization of recreational marijuana in Canada.
Revenue for the quarter ended Sept. 30 totalled $23.3 million, up from $17.6 million a year ago but down sequentially from $25.9 million in the previous quarter.
The slowdown in quarterly revenues stemmed from "hiccups" in shipping medical cannabis to Germany and medical patients being distracted by Canada's impending legalization of recreational pot on Oct. 17, said Canopy's co-chief executive Bruce Linton. He also said that there was little revenue during the quarter from the Canadian adult use market, only shipments "stress testing" the system with provinces and territories.
"I would attribute half of the decline to not-normal-course Germany, and a little bit of a pause with the medical people … It is the first time in our history that I'm aware of that we actually had a slowdown, but it was more of a distraction than a pattern," Linton told analysts on a conference call Wednesday.
Canopy's loss during the second quarter of its 2019 financial year amounted to $1.52 per share compared with a loss of $1.6 million or a penny per share a year ago. Analysts had expected a loss of 12 cents per share, according to Thomson Reuters Eikon.
The Smiths Falls, Ont.-based marijuana company's shares in Toronto were down as much as eight per cent on Wednesday to $46.47 from its closing price of $50.89 on Tuesday. Shares were down nearly six per cent on the Nasdaq to $36.26 US.
The pot producer's operating expenses soared to $180.6 million during the quarter, nearly six times the $27.7 million it spent during the three months ended Sept. 30, 2017. Elevated spending went toward sales and marketing ahead of the legalization of adult use pot last month, totalling $39 million, up from $7.6 million one year earlier.
The quarter included $700,000 in revenue from what Canopy said were test shipments to test supply chain systems ahead of the launch of recreational marijuana on Oct. 17.
During the quarter, the company sold 2,197 kilograms and kilogram equivalents at an average sale price of $9.87 per gram, up from 2,020 kilograms and kilogram equivalents at an average price of $7.99 a year ago.
Canopy says it had 84,400 active registered medical marijuana patients, up from 63,000 a year ago.