Quarterly Revenues increased 41% over Q2 FY 2016;
increased 5‑fold year over year
SMITHS FALLS, ON, Feb. 25, 2016 /CNW/ - Canopy Growth
Corporation ("Canopy Growth" or "the Company") (TSXV: CGC) today
released its financial results for the third quarter of fiscal year
2016 ended December 31, 2015.
All financial information in this press release is reported
in Canadian dollars, unless otherwise indicated.
Third Quarter Fiscal 2016 Highlights
- Revenues of $3.5 million,
representing a 41% increase over Q2 2016 and a greater than 400%
increase over the three-month period ended December 31, 2014
- 462,000 grams sold, representing an increase of 45% over Q2
2016 and a greater than 430% increase over the three-month period
ended December 31, 2014
- Adjusted Product Contribution1 of $2.4 million or 70% of sales
- Over 8,200 registered patients at December 31, 2015 compared to 6200 at the end of
Q2 2016 and 1,800 at the end of December 31,
2014
- Cash position of $19.7
million
- Completed acquisition of MedCannAccess, providing the Company
three physical community engagement centres in the highly populous
Southern Ontario region
Subsequent to Third Quarter Fiscal 2016
- Tweed Inc. ("Tweed") granted license by Health Canada to
produce and sell Cannabis Oil Extracts
- Tweed launched sale of 10:1 Cannabis OilsTM
"Our diversified client acquisition and best-in-class customer
service helped drive significant growth in active registered
customers and revenue," said Bruce
Linton, Chairman & CEO, Canopy Growth. "Our revenues
reached an important milestone, exceeded one
million dollars per month in the third quarter."
Added Linton, "The intent from day one has been to build a scale
of production and brands that would be of value in medical and
possibly non-medical markets, for when the time came. We are
increasing our focus on brand clarity and market segmentation for
Bedrocan and Tweed."
Revenue Review
Revenue for the third quarter ended December 31, 2015 was $3.5 million,
representing a sequential increase of 41% over the second quarter
ended September 30, 2015. Third quarter 2016
revenues were over 400% higher than the revenues reported in the
three months ended December 31,
2014.
Revenues for the nine months ended December 31, 2015 were $7.7 million.
Product Sales Review
Total product sold in third quarter Fiscal 2016 was
approximately 462,000 grams at an average price of $7.34 per
gram. In comparison, approximately 319,000 grams at an
average price of $7.54 per gram were
sold in the second quarter Fiscal 2016 and approximately 216,000
grams at an average price of $7.74 per gram were sold in the
first quarter of 2016. In the three months ended December 31, 2014, the Company sold approximately
87,000 grams at an average price of $7.04 per gram.
Over the nine months of fiscal 2016 ended December 31, 2015, Canopy Growth has sold almost
1 million grams of Cannabis product.
Gross Margin Review
The gross margin, including the unrealized gain on changes in
fair value of biological assets, in accordance with IFRS,
was $2.8 million, or 79% of sales, for the three-month period
ended December 31, 2015. In the three months
ended December 31, 2014, the reported gross margin on the same
basis was 36% of sales. Year to date, the gross margin, inclusive
of the unrealized gain on changes in fair value of biological
assets was $16.3 million or 213% of
sales, as compared to $1.1 million,
or 45% of sales, last year for the same period.
Adjusted Product Contribution Review
The Company's "Adjusted Product Contribution"1 is a
Non-GAAP metric used by management which adjusts the reported gross
margin by excluding the fair value measurements as required by IFRS
and measures the cost of sales for the grams actually sold in the
period. Management believes this measure provides useful
information as it reflects the gross margin based on the Company's
weighted average cost per gram from seed to sale against the grams
sold. The resulting Adjusted Product Contribution is
$2.4 million, or 70% of sales,
in the third quarter ended December 31,
2015 and $5.0 million, or
65% of sales, on a year to date basis to December 31, 2015.
Third Quarter Fiscal 2016 Operating Expense
Review
For the three-month period ended December 31, 2015, Sales,
branding and medical outreach and education costs were $1.4
million (three months
ended December 31, 2014 - $729,000).
General and Administrative ("G&A") expenses were $2.0
million in the three-month period ended December 31, 2015 compared to $1.0 million in the comparison period ended
December 31, 2014. The increase in
G&A reflects the Company's growth from the early start-up of
last year, building commercial capacity and capability as a public
company and meeting all compliance requirements with Health
Canada.
Third Quarter Fiscal 2016 Earnings Review
The Company reported a net loss of $3.3
million or $0.04 per basic share for the three months
ended December 31, 2015, compared to a net loss of $2.6
million or $0.07 per basic share in
the comparison quarter last year.
For the nine months ended December 31,
2015, net income was $1.6
million or $0.02 per basic
share, compared to a net loss of $6.2
million or $0.15 per basic
share in the nine months ended December
31, 2014. The net income or loss was inclusive of the
non-cash unrealized gain on changes in fair value of biological
assets described above.
Third Quarter Fiscal 2016 Balance Sheet and Cash Flow
Review
At December 31, 2015, the
Company's cash, comprised of cash and cash equivalents totaled
$19.7 million, representing a
decrease of $1.7 million from
March 31, 2015. The decrease is
attributable to net proceeds from financings, including the "bought
deal" common share offering in Q3 and the exercise of warrants and
options, together totaling $20.6
million, primarily offset by $2.1
million used to repay a loan, $11.1
million used to fund operations, and investments in facility
enhancements totaling $10
million. Investments in facility enhancements include
the build out of our Tweed Farms facility and the installation of
equipment in our Tweed facility, in part required for the
production of cannabis oil extracts.
The Unaudited Condensed Interim Consolidated Financial
Statements and Management's Discussion and Analysis documents have
been filed with SEDAR and are available on www.sedar.com. The
basis of financial reporting in the Unaudited Condensed Interim
Consolidated Financial Statements and Management's Discussion and
Analysis documents has been revised to thousands of Canadian
dollars, unless otherwise indicated.
Subsequent Events
Bedrocan True Compassionate Pricing
Bedrocan Canada ("Bedrocan") took an important step to making
medical cannabis more affordable for all Canadian patients with a
new price structure called True Compassionate Pricing. Under
True Compassionate Pricing, all six
cannabis varieties produced by Bedrocan Canada are priced at
$5 per gram, making it the most
affordable product line in Canada. Many Canadians who medicate
with cannabis are doing so because traditional pharmaceutical drugs
have not been as effective at treating their symptoms or have
undesirable side effects. The decision to consume medical
cannabis is made more complex due to the cost of the medicine.
Bedrocan's production methods have been refined over two decades
to maximize yield and eliminate genetic variance from
harvest to harvest. As a result, Bedrocan is able to produce
standardized varieties efficiently. With Bedrocan's facility
operating at full capacity, Bedrocan is in a position to offer
standardized varieties at a much lower price.
Tweed Cannabis Oil Extracts Supplemental License
On February 23, 2016, Tweed was
granted a supplemental license by Health Canada to sell up to 350
kilograms of Cannabis Oil Extracts during the license period, which
ends January 19, 2017.
Sales of 10:1 Cannabis OilsTM launched
On February 24, 2016, Tweed announced
that the company had launched the sale of high‑quality 10:1
Cannabis Oils made with GMO-free, organic sunflower oil.
Starting with oils made from single strains and slowly introducing
high-quality oil products, Tweed's product line will meet the needs
of Canadians managing a variety of symptoms. Starting with
popular offerings of Argyle, Princeton and Birds Eye, Tweed will introduce
new strain-specific 10:1 Cannabis Oils on an ongoing
basis. The new product line, 10:1 Cannabis Oils,
will be sold in 100ml bottles equivalent to 10 dried grams of the
same dried flower. Each 10 ml will contain the equivalent of 1
gram of the corresponding Tweed dried-flower variety. Creating
a universal equivalency factor between flower and oil is a logical
and simple way to ensure that Tweed customers can manage their
dosing confidently. Tweed chose to balance 10:1 Cannabis
Oils with organic, non-genetically modified sunflower oil
because it is versatile enough to cook or bake with,
hypoallergenic, and even good to ingest on its own.
Federal Court Ruling
On February 24, 2016, the Federal
Court released its decision in the case of Allard et al v. Canada.
This case began as a result of the government's decision to repeal
the Marihuana Medical Access Regulations ("MMAR") and enact the
Marihuana for Medical Purposes Regulations ("MMPR"). This
change overhauled the way that the government provides access to
medical cannabis for patients across the country. The plaintiffs in
the Allard case argued that the MMPR violates their Charter rights
and the court, in a lengthy and detailed judgment, agreed with the
plaintiffs and gave the government six months to amend the MMPR.
Canopy Growth's preliminary interpretation of the decision is
as follows: i) the decision reaffirms the right of Canadians to
access marijuana for medical purposes; ii) the decision stipulates
that the MMPR, under which Canopy Growth subsidiaries Tweed, Tweed
Farms and Bedrocan Canada are licensed producers, does not provide
sufficient access to cannabis; iii) the decision gives the Canadian
Federal Government a period of six months to determine how existing
regulations should be amended to ensure that patients have the
access to medical marijuana that they need; and iv) the current
MMPR regulations remain in force. Based on this preliminary
interpretation, management does not believe the Allard decision
will materially impact Canopy Growth.
Note 1: The Adjusted Product Contribution is a non-GAAP
financial measure that does not have any standardized meaning
prescribed by IFRS and may not be comparable to similar measures
presented by other companies. The Adjusted Product
Contribution is reconciled and explained in Management's Discussion
& Analysis under "Adjusted Product Contribution (Non-GAAP
Measure)", a copy of which has been filed today
on www.sedar.com.
Conference Call Details
Canopy Growth will host a conference call with Bruce Linton, CEO and Tim Saunders, CFO at 8:30 AM Eastern Time
on February 25, 2016.
Calling Information
Toll Free Dial-In Number: 1-888-231-8191
International Dial-In Number (647) 427-7450
Conference ID: 55227314
Replay Information
A replay of the call will be accessible by telephone until
11:59 PM ET on March 24, 2016.
Toll Free Dial-in Number: 1-855-859-2056
Replay Password: 55227314
About Canopy Growth Corporation
Canopy Growth
is Canada's first publicly traded medical marijuana
company and the first geographically diversified producer with dual
licenses under the Marihuana for Medical Purposes Regulations.
Through its wholly owned subsidiaries, Tweed, Tweed Farms, and
Bedrocan, the Company operates three state-of-the-art production
facilities in Ontario and distributes marijuana across
the country to Canadian patients managing a host of medical
conditions. The Company is dedicated to educating healthcare
practitioners, providing consistent access to high quality
medication, conducting robust clinical research, and furthering the
public's understanding of how marijuana is used for medical
purposes. www.canopygrowth.com
Notice Regarding Forward Looking Statements
This
news release contains forward-looking statements. Often, but not
always, forward-looking statements can be identified by the use of
words such as "plans", "expects" or "does not expect", "is
expected", "estimates", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases
or state that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Canopy Growth Corporation, Tweed
Inc., Tweed Farms Inc. or Bedrocan Canada Inc. to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Examples of
such statements include future operational and production capacity,
the impact of enhanced infrastructure and production capabilities,
and forecasted available product selection. The
forward-looking statements included in this news release are made
as of the date of this news release and Canopy Growth Corp. does
not undertake an obligation to publicly update such forward-looking
statements to reflect new information, subsequent events or
otherwise unless required by applicable securities legislation.
Neither TSX Venture Exchange nor its Regulation Services Provider
(as that term is defined in policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this
release.
Canopy Growth
Corporation
|
|
|
|
|
Condensed
consolidated statements of comprehensive (loss) income for the three and nine-month periods ended December
31, 2015 and 2014
|
(Expressed in CDN
$000's except per share amounts)
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Three months
ended
|
Nine months
ended
|
|
December
31,
|
December
31,
|
December
31,
|
December
31,
|
|
2015
|
2014
|
2015
|
2014
|
|
$
|
$
|
$
|
$
|
|
|
|
|
|
Revenue
|
3,481
|
641
|
7,657
|
1,146
|
|
|
|
|
|
|
Unrealized gain on
changes in fair value of biological assets
|
(9,013)
|
(939)
|
(26,768)
|
(3,196)
|
|
Inventory expensed to
cost of sales
|
3,784
|
239
|
7,954
|
629
|
|
Production
costs
|
5,954
|
1,111
|
10,173
|
3,197
|
Cost of sales, net of
the unrealized gain on changes in fair value of biological
assets
|
725
|
411
|
(8,641)
|
630
|
Gross margin,
including the unrealized gain on changes in fair value of
biological assets
|
2,756
|
230
|
16,298
|
516
|
|
|
|
|
|
Sales and
marketing
|
1,372
|
729
|
3,253
|
1,880
|
Research and
development
|
192
|
41
|
441
|
160
|
General and
administration
|
1,962
|
1,035
|
5,619
|
2,286
|
Acquisition
costs
|
16
|
-
|
1,155
|
-
|
Share-based
compensation expense
|
1,162
|
908
|
2,107
|
2,080
|
Amortization
|
755
|
173
|
1,475
|
356
|
|
5,459
|
2,886
|
14,050
|
6,762
|
(Loss) income from
operations
|
(2,703)
|
(2,656)
|
2,248
|
(6,246)
|
|
|
|
|
|
Interest
income/(expense)
|
(102)
|
18
|
(111)
|
71
|
Change in fair value
of acquisiton consideration related liabilities
|
(741)
|
-
|
(741)
|
-
|
|
(843)
|
18
|
(852)
|
71
|
(Loss) income and
comprehensive (loss) income before taxes
|
(3,546)
|
(2,638)
|
1,396
|
(6,175)
|
|
|
|
|
|
Income tax
recovery
|
230
|
-
|
230
|
-
|
Net (loss) income and
comprehensive (loss) income after taxes
|
(3,316)
|
(2,638)
|
1,626
|
(6,175)
|
|
|
|
|
|
Net (loss) income per
share, basic:
|
$(0.04)
|
$(0.07)
|
$0.02
|
$(0.15)
|
|
|
|
|
|
Weighted average
number of outstanding common shares:
|
|
|
|
|
Basic
|
93,355,021
|
40,320,097
|
69,356,439
|
39,859,805
|
|
|
|
|
|
Net (loss) income per
share, diluted:
|
$(0.04)
|
$(0.07)
|
$0.02
|
$(0.15)
|
|
|
|
|
|
Weighted average
number of outstanding common shares:
|
|
|
|
|
Diluted
|
93,355,021
|
40,320,097
|
76,688,213
|
39,859,805
|
Canopy Growth
Corporation
|
Condensed
consolidated statements of financial position as at December 31, 2015 and March 31,
2015
|
(Expressed in CDN
$000's)
|
(Unaudited)
|
|
December
31,
|
March 31,
|
|
2015
|
2015
|
|
$
|
$
|
|
|
|
Assets
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
19,719
|
21,446
|
|
Restricted short-term
investment
|
296
|
10
|
|
Accounts
receivable
|
833
|
342
|
|
HST
recoverable
|
618
|
431
|
|
Biological
assets
|
2,887
|
2,028
|
|
Inventory
|
22,808
|
4,355
|
|
Prepaid
expenses
|
995
|
764
|
|
48,156
|
29,376
|
|
|
|
Property, plant and
equipment
|
39,614
|
17,745
|
Leasehold
construction in process
|
3,725
|
615
|
Intangible
assets
|
58,051
|
38
|
|
149,546
|
47,774
|
|
|
|
Liabilities
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
4,487
|
4,278
|
|
Current portion of
long-term debt
|
364
|
247
|
|
4,851
|
4,525
|
|
Long-term
debt
|
3,610
|
1,669
|
|
Deferred tax
liability
|
7,204
|
-
|
|
Acquisition
consideration related liabilities
|
1,636
|
-
|
|
Other long-term
liabilities
|
198
|
171
|
|
17,499
|
6,365
|
|
|
|
Shareholders'
equity
|
|
|
|
Share
capital
|
137,301
|
49,826
|
|
Share-based
reserve
|
3,331
|
1,724
|
|
Warrants
|
69
|
138
|
|
Deficit
|
(8,654)
|
(10,279)
|
|
132,047
|
41,409
|
|
149,546
|
47,774
|
Canopy Growth
Corporation
|
Condensed
consolidated statements of cash flows for
the three and nine-month periods ended December 31, 2015 and
2014
|
(Expressed in CDN
$000's)
|
(Unaudited)
|
|
Three months
ended
|
Nine months
ended
|
|
December
31,
|
December
31,
|
December
31,
|
December
31,
|
|
2015
|
2014
|
2015
|
2014
|
|
$
|
$
|
$
|
$
|
Net inflow (outflow)
of cash related to the following activities:
|
|
|
|
|
|
|
|
|
|
|
Operating
|
|
|
|
|
|
|
Net income
(loss)
|
(3,316)
|
(2,638)
|
1,626
|
(6,175)
|
|
|
Items not affecting
cash:
|
|
|
|
|
|
|
|
Amortization of
property, plant and equipment
|
619
|
171
|
1,334
|
348
|
|
|
|
Amortization of
intangible assets
|
136
|
2
|
141
|
8
|
|
|
|
Unrealized gain on
change in fair value of biological assets
|
(9,013)
|
(939)
|
(26,768)
|
(3,196)
|
|
|
|
Share-based
compensation
|
1,162
|
908
|
2,107
|
2,080
|
|
|
|
Income tax
recovery
|
(230)
|
-
|
(230)
|
-
|
|
|
|
Change in fair value
of acquisition consideration related liabilities
|
741
|
-
|
741
|
-
|
|
|
|
Listing
expense
|
-
|
-
|
-
|
30
|
|
|
Changes in non-cash
operating working capital items
|
5,728
|
436
|
9,907
|
728
|
|
(4,173)
|
(2,060)
|
(11,142)
|
(6,177)
|
|
|
|
|
|
|
Financing
|
|
|
|
|
|
|
Increase in other
long-term liabilities
|
-
|
-
|
27
|
-
|
|
|
Issuance of common
shares from financing round
|
14,376
|
-
|
14,376
|
15,000
|
|
|
Exercise of stock
options
|
235
|
215
|
242
|
325
|
|
|
Exercise of
warrants
|
6,858
|
-
|
7,418
|
-
|
|
|
Share issue
costs
|
(1,267)
|
7
|
(1,457)
|
(1,518)
|
|
|
(Repayment)/issuance
of long-term debt
|
(1,925)
|
1,875
|
(1,985)
|
1,835
|
|
18,277
|
2,097
|
18,621
|
15,642
|
|
|
|
|
|
|
Investing
|
|
|
|
|
|
|
Increase in
restricted short-term investment
|
-
|
-
|
(286)
|
-
|
|
|
Purchase of leasehold
construction in process
|
(964)
|
(2,311)
|
(5,525)
|
(6,200)
|
|
|
Purchase of
intangible assets
|
-
|
(7)
|
-
|
(21)
|
|
|
Tweed Farms purchase
liability
|
-
|
-
|
-
|
(1,500)
|
|
|
Purchase of property,
plant and equipment
|
(1,301)
|
(302)
|
(4,449)
|
(3,670)
|
|
|
Acquisition of
subsidiaries
|
154
|
-
|
1,054
|
-
|
|
(2,111)
|
(2,620)
|
(9,206)
|
(11,391)
|
|
|
|
|
|
Net cash inflow,
(outflow)
|
11,993
|
(2,583)
|
(1,727)
|
(1,926)
|
Cash and cash
equivalents, beginning of period
|
7,726
|
8,357
|
21,446
|
7,700
|
Cash and cash
equivalents, end of period
|
19,719
|
5,774
|
19,719
|
5,774
|
Canopy Growth
Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measure (In
CDN$000's, except gram amounts)
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
Adjusted Product
Contribution1
|
|
June 30,
|
|
September
30,
|
|
December
31,
|
|
December
31,
|
|
|
2015
|
|
2015
|
|
2015
|
|
2015
|
|
|
|
|
|
|
|
|
|
Weighed average cost
per gram
|
$
|
3.16
|
$
|
$2.92
|
$
|
2.29
|
$
|
2.68
|
Grams sold in the
period
|
|
215,929
|
|
318,572
|
|
461,544
|
|
996,045
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
1,710
|
$
|
2,466
|
$
|
3,481
|
$
|
7,657
|
|
Adjusted cost of
sales2
|
|
(682)
|
|
(931)
|
|
(1,059)
|
|
(2,672)
|
Adjusted Product
Contribution
|
$
|
1,028
|
$
|
1,535
|
$
|
2,422
|
$
|
4,985
|
Adjusted Product
Contribution percentage of sales
|
|
60.1%
|
|
62.2%
|
|
69.6%
|
|
65.1%
|
|
|
|
|
|
|
|
|
|
As compared to the
Gross Margin per IFRS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin,
including the unrealized gain on changes in fair value of
biological assets as reported on the Statements of Comprehensive
Loss
|
$
|
4,095
|
$
|
9,447
|
$
|
2,756
|
$
|
16,298
|
|
|
|
|
|
|
|
|
|
Gross margin
percentage of sales, including the unrealized gain on changes in
fair value of biological assets as reported on the Statement of
Comprehensive Loss
|
|
239.5%
|
|
383.1%
|
|
79.2%
|
|
212.9%
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
|
1
|
The Adjusted
Product Contribution removes the fair value measurements required
under IFRS and recognizes the cost of sales based on the weighted
average cost per gram to produce and sell product in the
period.
|
2
|
Based on the
weighted average of cost per gram from seed to sale of $2.29 per
gram in the third quarter and $2.68 per gram for the year to date
and applied to the number of grams sold in the
period.
|
SOURCE Canopy Growth Corporation