Full Press Release Details
Canopy Growth Corporation Reports Fourth Quarter and
Fiscal Year 2018 Financial Results: Driving Readiness for the Canadian Recreational Cannabis Market
Total licensed footprint exceeding 2.4 million sq. ft.;
200,000 clones prepared and shipped from Ontario to jump start cultivation in million sq. ft. greenhouses in British Columbia;
Inventory of approximately 15,700 kilograms
of dry cannabis, 7,000 litres of cannabis oils and 360 kilograms of softgel capsules at quarter end;
Secured deep channels into Canadian recreational market;
multi-year supply agreements, with commitments totaling over 25,000 kg per year, with 5 provinces and territories announced
to date; secured private "brick & mortar" and online cannabis retail licenses in Manitoba, Newfoundland & Labrador
Annual and fourth quarter revenue of $77.9 million and
$22.8 million, representing year over year increase of 95% and 56%, respectively;
Record Germany quarterly sales of $2.3 million;
Approximately $323 million cash on hand at year end to
fund domestic and global expansion.
SMITHS FALLS, ON, June 27, 2018 /CNW/ - Canopy Growth
Corporation (TSX: WEED) (NYSE: CGC) ("Canopy Growth" or "the Company") today released its consolidated financial
results for the fourth quarter and fiscal year ended March 31, 2018. All financial information in this press release is reported
in Canadian dollars, unless otherwise indicated.
"With the recent launch of our Spectrum Softgels, strong
sales in Canada and Germany and the expansion of our global footprint into Africa and further into Europe and Australia, we continue
to drive our global leadership position in medical cannabis forward," said Bruce Linton, Chairman & Chief Executive Officer.
"The efforts of Canopy Growth and Canopy Health Innovations to develop a range of patented, insurance coverage eligible
cannabis-based medicines took a critical step forward with the recent receipt of approval to conduct its first in a planned series
of clinical trials. Believing that combining Canopy Health's growing intellectual property portfolio with our production and advanced
manufacturing platform will speed time to market of disruptive medicines, we made the decision to pursue full ownership of Canopy
Health Innovations."
Added Linton, "For many months, provincial and
territorial agencies have thoroughly evaluated our business, including our product inventory, operational capabilities, IT systems
as well as our cannabis retail and education programs. Being the only company selected by all provinces and territories with
announced supply and retail partners, speaks to our readiness for the adult recreational cannabis market that is expected to open
in less than three months."
Concluded Linton, "Inventories on hand today, which will
be used to fill a nationwide sales channel that does not yet exist, will determine early market share. Producing sites
and distribution capability in place today, not next year or the year after, will keep the channel full, build consumer affinity
and maintain market share. With the largest inventory and capacity today, Canopy Growth is uniquely positioned to go beyond our
current commitments to provincial agencies and cannabis retailers in order to successfully open the regulated recreational cannabis
market in Canada as a producer of choice nationwide."
As Canopy Growth continues to grow and evolve its global management
team, the Company is pleased to announce that Mark Zekulin, current President, has taken on the role of President and Co-CEO. Mark
has been with Canopy Growth since its inception and in the role of President has overseen all Company operations and execution,
with the exception of Finance and IT. The addition of the Co-CEO title reflects Mark's current integration in the strategic operation
of the Company, formalizing the current structure of the organization. Mark will continue to report to Bruce Linton, Chairman and
CEO, who oversees the Company's global strategy and execution, as well as capital markets. Tim Saunders, EVP and CFO will
continue in his current role reporting to Mr. Linton.
Investment for the Canadian Recreational Cannabis Market
The Company continues to invest significant effort, capital
and resources in activities and programs to prepare the Company to participate in and lead the Canadian recreational cannabis market.
These investments cover the Company's entire business operations including production, fulfillment, marketing, sales and general
administration. With the passing of Bill C-45 ("The Cannabis Act") on June 19, 2018 and the roll out of the recreational
market on October 17, 2018, Management believes the prudent investments made in the fourth quarter and to date by the Company will
foster strong demand for the Company's products in the Canadian recreational cannabis market and prepare the Company to supply
very large quantities of cannabis and generate significantly greater revenues beginning in the second quarter of fiscal 2019.
The Company continues to invest in the development of marketing
and branding programs, the development of new or expected product SKUs, the development of recreational product packaging, building
the Company's business to business sales functions, the development of cannabis retail and education programs as well as the ongoing
investment in information technology. The Company made investments in capacity early in order to position itself as an early leader
in terms of cannabis and cannabis oil production. Investments have been made in product development capabilities in the Company's
Dealer's Licence Area for phase two of legalization, which may include ingestibles.
Beginning in the third quarter and through the fourth quarter
of fiscal 2018, the Company began implementing a series of changes to its operations, primarily at its facility in Smiths Falls,
Ontario, to better prepare the Company to become a trusted supplier to the Canadian recreational market. These changes included:
These operational changes, which decreased the amount of cannabis
that the Company harvested, combined with higher overheads in the fourth quarter of fiscal 2018, led to decreased gross margins
in the fourth quarter of fiscal 2018.
The Company will no longer report on the weighted average
cost per gram metric. There are three reasons for this. First, a gram is a measurement of the weight of the plant only. Management
believes it will be more meaningful in the future to consider milligrams of THC or CBD cannabinoids representing ingredients to
new, evolving product formats as they are introduced beyond the traditional cannabis flower, including oils and capsules. Second,
management believes other key performance indicators will evolve as the legal recreational and retail market takes hold in Canada.
Lastly, there is no industry standard for cost per gram components or classification to draw a meaningful comparison.
Fourth Quarter 2018 Highlights
| Q4 2018 | Q3 2018 | % Change | Q4 2017 | % Change | |
| Active registered patients | 74,000 | 69,000 | 7% | 55,000 | 35% |
| Kilograms and kilogram equivalents sold | 2,528 | 2,330 | 8% | 1,740 | 45% |
| Kilograms harvested | 4,811 | 7,961 | -40% | 1,980 | 143% |
| Inventory & Biological Assets (millions) | $118 | $108 | 9% | $61 | 93% |
| Revenues (millions) | $22.8 | $21.7 | 5% | $14.7 | 55% |
| Average selling price per gram | $8.43 | $8.30 | 2% | $8.03 | 5% |
| Cash and Cash Equivalents (millions) | $323 | $238 | 36% | $93 | 247% |
Fiscal Year 2018 Highlights
| FY 2018 | FY 2017 | % Change | |
| Kilograms and kilogram equivalents sold | 8,708 | 5,139 | 70% |
| Kilograms harvested | 22,513 | 10,837 | 107% |
| Revenues (millions) | $77.90 | $39.9 | 95% |
| Average selling price per gram | $8.24 | $7.40 | 11% |
Subsequent to Fiscal Year 2018
Fourth Quarter and Fiscal Year 2018 Revenue Review
Revenue for the fourth quarter fiscal 2018 was a record $22.8
million, representing an increase of 55% over the prior year's quarter in which revenue was $14.7 million. In the three months
ended March 31, 2018 and 2017, oils, including the Company's Softgel capsules, accounted for 23% and 23%, respectively, of the
product revenue for each period.
Revenue in the fiscal year ended March 31, 2018 totaled $77.9
million representing an increase of 95% over revenue of $39.9 million in the same period last year.
Fourth Quarter and Fiscal Year 2018 Product Sales Review
During the fourth quarter of fiscal 2018, Canopy Growth sold
2,528 kilograms and kilogram equivalents at an average price of $8.43 per gram, up from 1,740 kilograms and kilogram equivalents
at an average price of $8.03 per gram during the prior year period. The higher average price was due to changes in the mix of product
sold and increasing sales in Germany by wholly-owned subsidiary Spektrum Cannabis GmbH ("Spektrum Cannabis").
Oil sales, including gel caps, accounted for 23% of fourth
quarter product revenue (reported revenue net of merchandise revenue, clinic revenue and shipping fees). Oil sales in the fourth
quarter accounted for 2,152 litres (or approximately 268 kilogram equivalents) of the kilogram and kilogram equivalents sold. Spektrum
Cannabis sold 175 kilograms in Germany, all sourced from Canadian domestic production, at an average price of $13.35 per gram.
In fiscal year 2018, the Company sold 8,708 kilograms and
kilogram equivalents at an average price of $8.24 per gram compared to 5,139 kilograms at an average price of $7.40 per gram in
the fiscal year ended March 31, 2017, representing an increase of 70% and 11%, respectively.
Fourth Quarter and Fiscal Year 2018 Gross Margin Summary1
The cost of sales includes the impact of cash operating costs
of subsidiaries not yet cultivating or selling cannabis, such as BC Tweed and Vert Mirabel and higher overheads incurred while
preparing operations for the legalization of recreational cannabis. Excluding the costs associated with non-cultivating subsidiaries
totaling $5.9 million, the gross margin before the fair value impacts in cost of sales and other inventory charges would have been
$14.4 million or 63% of sales.