Canopy Growth Corp. (CGC) - Get Report shares traded sharply lower Friday after the Canadian cannabis group posted a wider-than-expected fourth quarter loss and said recreational sales slowed from the previous three month period.
Canopy Growth said its loss for the three months ending in March came in at C$0.98 per share, well shy of the C$0.32 loss expected by analysts that cover the cannabis growing group, taking its full-year loss to C$670 million ($507.87 million). Group revenues, however, rose 191% to C$226.3 million for the full year, the company said, with the fourth quarter tally coming in at $94.1 million, just ahead of the Street's C$92.6 million forecast.
Canopy also cautioned that its recently approved deal to acquire rights for U.S. based Acreage Holdings will lead to a charge that will have "a materially negative impact on net income in the first quarter of fiscal 2020."
"The fourth quarter wraps up a historic year with major steps taken in Canada to build-out our national platform while scaling all of our processes to bring cannabis to market. The third quarter of the year benefitted from months of advanced production while the fourth quarter relied more on efficient throughput and a more automated platform," said CEO Bruce Linton. "With more product formats coming to the Canadian market later in the year, we are working hard to ensure that we are ready to hit the ground running with products, formats and brands that Canadians trust."
Canopy Growth's U.S.-listed shares were down 7.55% to $40.41, a move that would still leave the stock with a year-to-date gain of more than 50%.
The company said the material non-cash charge it anticipates taking will occur "upon approval of certain modifications of the investor rights agreement with Constellation Brands, as well as terms of existing warrants."
Constellation Brands (STZ) - Get Report took a CA$5 billion ($4 billion) stake in Canopy last year, to help fund the company's expansion in Canada, where marijuana use was legalized last year, and in other countries around the world where restrictions on its use are relaxing.
Recreational cannabis sales in Canada, which became the world's second country to legalize use of the drug in October of last year, slowed 3.8% to C$68.9 million, the company said. Medical marijuana sales in Canada also slowed over the three months ending in March by 2.5% to C$68.8 million.