Canopy Growth Corp Stands Tall at Home … But

Canopy Growth Corporation (TSX:WEED), one of the Canadian marijuana stocks, said its Q3 revenue soared nearly 300% year over year

SmallCapPower | February 19, 2019: Canopy Growth Corporation (TSX:WEED) (NYSE:CGC), one of the Canadian cannabis stocks, late Thursday reported a 283% YoY jump in revenues for its third quarter ended December 31, 2018 to $83 million, fueled by Canadian recreational sales. Recreational sales generated $58 million in net revenues, or 71% of total net sales, selling about 8288 kg while medical cannabis generated about $17 million, or 20% of total net sales, selling 1814 kg. Accessories and clinics represented the remainder of revenues at 9%. Oil sales represented 33% of product revenue during the quarter, up from 23% in the prior-year quarter.

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Canopy Growth Corp ’s recreational sales were about 2.5x higher than that of Aurora Cannabis Inc. (TSX:ACB), which reported its third-quarter results recently and noted its recreational sales represented 20% of overall sales in Canada. Based on this data, Canopy’s share of Canadian recreational sales would be more than 50%.

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Canopy Growth Corp ’s gross margins fell to 15% during the quarter, from 76% in the prior year, due primarily to the cash operating costs of subsidiaries, excise taxes in the medical market and lower average selling price in B2B channels with the provinces in the recreation market. Its operating loss came in at $157 million while adjusted EBITDA was a loss of $75.1 million. However, net income came in at $74.9 million or $0.22 per basic share, due primarily to fair value changes on financial assets and financial liabilities.

International medical cannabis sales, however, came in at just $2.7 million. And, Canopy Growth Corp ’s Canadian and international medical cannabis segments actually saw kilograms sold decrease year over year from 2,329 to 1,815.

Canopy Growth ended the third quarter with a strong cash position of $4.1 billion, aided by the closing of the $5 billion investment by Constellation Brands Inc. during the quarter.

Canopy Growth Corp is a diversified cannabis company, offering distinct brands and curated cannabis varieties in dried, oil and Softgel capsule forms. Canopy Growth is the most valued cannabis company in Canada with a market cap of $21 billion.

Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.

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