Fiscal year revenues increased 4-fold and licensed production space doubled year over year

SMITHS FALLS, ON, June 27, 2016 /CNW/ - Canopy Growth Corporation ("Canopy Growth" or "the Company") (TSX.V: CGC) today released its financial results for the fourth quarter and fiscal year 2016 ended March 31, 2016.  All financial information in this press release is reported in Canadian dollars, unless otherwise indicated.

Consolidated financial results include the accounts of the Company and its wholly-owned subsidiaries Tweed Inc. ("Tweed"), Tweed Farms Inc. ("Tweed Farms") and Bedrocan Canada Inc. ("Bedrocan Canada").

Fourth Quarter Fiscal 2016 Highlights

• Revenues of $5.0 million, representing a greater than 300% increase over the three month period ended March 31, 2015 and a 45% increase over Q3, fiscal year 2016
• Sale of Tweed 10:1 Cannabis Oil began on February 25, 2016
• Supported two Canadian licensed producers through the sale of wholesale product during the fourth quarter
• Over 11,000 registered patients at March 31, 2016 compared to 2,800 at March 31, 2015, and compared to over 8,200 at December 31, 2015, and greater than 16,000 as of today's date
• Tweed entered into a business partnership with entertainment and cannabis icon, Snoop Dogg
• Tweed Farms' full 375,000 ft.² facility licensed to produce, possess and ship dried marijuana
• Bedrocan launches True Compassionate Pricing program, all six standardized Bedrocan varieties priced at $5.00 per gram for all clients

Fiscal Year 2016 Highlights

• Revenues of $12.7 million, representing a greater than 430% increase over the fiscal year ended March 31, 2015
• Acquired Licensed Producer Bedrocan Canada
• Total licensed production space more than doubled to greater than 550,000 sq. ft.
• Acquired Licensed Producer applicant MedCannAccess and introduced industry first in-person service through Tweed Main Street locations
• Cash position of $15.4 million at March 31, 2016

Subsequent to Fourth Quarter and Fiscal Year 2016

• Completed $11.5 million bought deal
• Announced partnership with AusCann Group Holdings Ltd. of Australia to work together in the Australian and International markets
• Received conditional approval to list common shares on the Toronto Stock Exchange. Listing anticipated Q2 2017

"Fiscal 2016 was another year of dramatic change and growth in our business," said Bruce Linton, Chairman & CEO, Canopy Growth. "Investments made across our business, including in our production capacity, in the diversification of our product offering and in our award winning customer service, helped deliver a four-fold increase in revenue, a three-fold increase in registered patients and doubled our licensed production space."

Added Linton "With the prospect of a legal recreational marijuana market in Canada on the horizon and many exciting international business opportunities, we are committed to building on our strong start.  We will continue to make prudent investments in our business to increase our market share, diversify our product offering, grow our production capacity in Canada, vertically integrate up the value chain of permissible products and drive international growth."   

Fourth Quarter and Fiscal Year 2016 Revenue Review

Revenue for the fourth quarter was $5.0 million compared to revenue of $1.2 million in the three months ended March 31, 2015 and $3.5 million for the third quarter of fiscal year 2016.

Revenues for the twelve month fiscal year ended March 31, 2016 were $12.7 million.  In comparison, revenues in the fifteen month period ended March 31, 2015 were $2.4 million.   

Fourth Quarter and Fiscal Year 2016 Product Sales Review

In the fourth quarter of fiscal year 2016, the Company sold approximately 700 kilograms and kilogram equivalents at an average price of $7.16 per gram.  In the three month period ended March 31, 2015, last year, approximately 167 kilograms were sold at an average price of $7.24 per gram. 

Approximately 1,700 kilograms and kilogram equivalents were sold in the fiscal year ended March 31, 2016, representing a greater than 400% increase over the prior fiscal year.

Fourth Quarter and Fiscal Year 2016 Gross Margin Review

The gross margin, including the unrealized gain on changes in fair value of biological assets, in accordance with IFRS, was $2.7 million, or 53% of sales, for the three-month period ended March 31, 2016.  In the comparison period last year, the gross margin on the same basis was $2.4 million or 197% of sales.

In the twelve month period ended March 31, 2016, the gross margin, inclusive of the unrealized gain on changes in fair value of biological assets was $19.0 million or 150% of sales, as compared to $2.8 million, or 119% of sales during the fifteen month period ended March 31, 2015. 

Fourth Quarter and Fiscal Year 2016 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 Adjusted Product Contribution in the fourth quarter of fiscal 2016 was $3.2 million, or 63% of sales.  The Adjusted Product Contribution in the twelve month period ended March 31, 2016 was $8.1 million, or 64% of sales.   

Fourth Quarter and Fiscal Year 2016 Operating Expense Review

For the three-month period ended March 31, 2016, sales and marketing expenses were $2.4 million (three months ended March 31, 2015 - $0.7 million).   

In the twelve month fiscal year ended March 31, 2016, sales and marketing expenses were $5.7 million. In comparison, in the fifteen month period ended March 31, 2015, these expenses were $2.7 million.  

The increase in sales and marketing expenses in the three and twelve month periods ending March 31, 2016 over the comparison periods was invested in refreshing Bedrocan Canada post-acquisition, launching Tweed's customer engagement locations and continuing to position the Tweed brand in preparation for a non-medical market.

General and Administrative ("G&A") expenses were $2.6 million in the three-month period ended March 31, 2016 compared to $1.5 million in the same period last year.

In the twelve month period ended March 31, 2016, G&A expenses were $8.2 million. In comparison, in the fifteen month period ended March 31, 2015, G&A expenses were $4.9 million.

The increase in G&A expenses over the comparison periods last year reflects the Company's growth from the early start-up of last year, building commercial capacity and capability as a public company and meeting compliance requirements with Health Canada. 

Fourth Quarter and Fiscal Year 2016 Earnings Review

The Company reported a net loss of $5.1 million or $0.05 per basic and diluted share for the fourth quarter ended March 31, 2016, compared to a net loss of $0.4 million or $0.01 per basic and diluted share in the comparison period last year.

For the twelve months ended March 31, 2016, the net loss amounted to $3.5 million or $0.05 per basic and diluted share, compared to a net loss of $9.3 million or $0.29 per basic and diluted share in the fifteen months ended March 31, 2015.  The net loss was inclusive of the non-cash unrealized gain on changes in fair value of biological assets described above.

Fourth Quarter and Fiscal Year 2016 Balance Sheet and Cash Flow Review

At March 31, 2016, the Company's cash, comprised of cash and cash equivalents totalled $15.4 million, representing a decrease of $9.0 million from March 31, 2015. The decrease is attributable to $12.4 million used to fund operations, investments in facility enhancements totalling $13.1 million, and $2.1 million used to repay a loan, partially offset by net proceeds from financings, including the "bought deal" common share offering in the third quarter of fiscal year 2016 and the exercise of warrants and options, together totalling $20.6 million.  Investments in facility enhancements include the build out of our Tweed Farms facility and improvements at our Tweed facility, in part required for the production of cannabis oil extracts and refinements to production processes.

The Audited 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

Bought Deal Financing

On April 15, 2016, the Company announced that it had closed its previously announced short-form prospectus offering, on a bought deal basis, including the exercise in full of the underwriters' over-allotment option. A total of 5,002,500 common shares in the capital of the Company were sold at a price of $2.30 per share, for aggregate gross proceeds of $11,505,750 (the "Offering").  The Offering was underwritten by a syndicate of underwriters led by Dundee Securities Ltd and including GMP Securities L.P.

Canopy Growth and AusCann Group Holdings Ltd. Partnership

Canopy Growth announced a partnership with AusCann Group Holdings Ltd. ("AusCann"), an early leader in the nascent Australian medical cannabis industry, in which Canopy Growth will offer the expertise of Tweed and Tweed Farms in a number of areas including production, quality assurance and operations, and provide strategic advisory services to AusCann in exchange for an initial 15% ownership stake in AusCann, as well as future options.  AusCann and Canopy Growth will also aim to work together in Australian and international markets in a preferential but non-exclusive arrangement.

Canopy Growth Corporation Received Conditional Approval from the TSX

On June 8, 2016, the Company announced it had received conditional approval from the Toronto Stock Exchange (TSX) to list its common shares once it had satisfied certain conditions. Canopy Growth will be the first cannabis producer to list on Canada's most prestigious securities exchange. CGC expects to meet all conditions of approval and commence trading on the TSX in the second quarter of fiscal year 2017, the three-month period ending September 30, 2016.

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 and audio webcast with Bruce Linton, CEO and Tim Saunders, CFO at 8:30 AM Eastern Time, June 27, 2016.  

Webcast Information
A live audio webcast will be available at:
http://event.on24.com/r.htm?e=1169137&s=1&k=9465B1E57BBFDE8C19CCC91D5134D10D

Calling Information
Toll Free Dial-In Number: 1-888-231-8191
International Dial-In Number (647) 427-7450
Conference ID: 86544060

Replay Information
A replay of the call will be accessible by telephone until 11:59 PM ET on July 18, 2016.
Toll Free Dial-in Number: 1-855-859-2056
Replay Password: 86544060

About Canopy Growth Corporation
Canopy Growth is a world-leading diversified cannabis company, offering diverse brands and curated cannabis strain varieties in dried and oil extract forms.  Through its wholly‑owned subsidiaries, Tweed, Tweed Farms, and Bedrocan Canada, Canopy Growth operates three state-of-the-art production facilities with over half a million square feet of indoor and greenhouse production capacity.  Canopy Growth has established partnerships with leading sector names in Canada and abroad.  For more information, 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.

SOURCE Canopy Growth Corporation