Canopy Growth shares fall

Shares of Canopy Growth Corp. slipped on Friday after the cannabis company reported an uptick in fourth-quarter net revenues but a wider-than-expected fourth-quarter loss as operating expenses ballooned.

During the three-month period ended March 31, Canopy reported net revenue of $94.1 million, up from $22.8 million a year earlier and more than the $92.6 million expected by analysts.

But Canopy's net loss attributable to shareholders jumped to $335.6 million or 98 cents per share for the quarter, compared with a loss of $61.5 million or 31 cents per share during the same period a year ago.

That is three times the net loss of 30 per cents per share expected by analysts, according to Thomson Reuters Eikon.

Canopy's co-chief executive Bruce Linton said it has been investing heavily for longer-term growth, such as ramping up production capacity and preparing for the launch of edibles and other next-generation cannabis products when legal later this year.

"You need to use that capital to build scale. And we did," Linton said on a conference call on Friday, noting that those investments have resulted in assets that are not yet benefiting the bottom line.

Canopy's stock slipped to $52.99 on the Toronto Stock Exchange in early afternoon Friday, down more than eight per cent.

On an adjusted basis, Canopy's loss before interest, taxes, depreciation and amortization (EBITDA) amounted to $98 million, compared with its $21.7-million loss a year ago, as its operating expenses grew by more than 300 per cent.

Quarterly operating expenses totalled $242.9 million, up from $56.2 million during its financial fourth quarter in 2018.

"Lack of profitability should be no surprise given recent company commentary on investment commitments," said Jefferies analyst Ryan Tomkins in a note to clients. "But, given the degree of the losses and the fact that profitability is becoming more of an investor focus, it is likely to cause concern."

Canopy's recreational cannabis revenues for the quarter, both wholesale and retail, amounted to $68.9 million, after Canada legalized adult-use pot in October.

Medical cannabis gross revenue in Canada for the quarter totalled $11.6 million, down from $19.5 million a year earlier.

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