Registered patients increase 43% during quarter to over
16,500, and over 21,000 today
SMITHS FALLS, ON, Aug. 29, 2016 /CNW/ - Canopy Growth Corporation
(TSX:CGC) ("Canopy Growth" or "the Corporation") today released its
financial results for the first quarter fiscal 2017 ended
June 30, 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").
First Quarter Fiscal 2017 Highlights
- Revenues of $7.0 million,
representing a greater than 300% increase over the three months
ended June 30, 2015 and a 39%
increase over fourth quarter fiscal year 2016
- Over 16,500 registered patients at June
30, 2016 compared to over 3,600 at
June 30, 2015
- Bedrocan began licensed sales of bedro-oils cannabis oil
in June 2016
- Announced partnership with AusCann Group Holdings Ltd. of
Australia to work together in the
Australian and International markets
- Announced creation of joint venture, Bedrocan Brazil, with São
Paulo, Brazil‑based Entourage Phytolab S.A. and local Brazilian
partners
Subsequent to First Quarter Fiscal 2017
- Announced business partnership and receipt of necessary
regulatory approvals to export medical cannabis to Germany for sale to patients
- Listed common shares on the Toronto Stock Exchange
- Closed the previously announced bought deal, including the
over-allotment option by the underwriters, on August 24, 2016 for gross proceeds of
$34.5 million.
"Our business took many important steps forward, in both
Canada and abroad, during the
first quarter," said Bruce Linton,
Chairman & CEO, Canopy Growth. "Continued investment
helped our business deliver its eighth consecutive quarter of
double digit percentage growth in revenue, product sold and
registered patients. During the quarter we brought the
full Tweed Farms greenhouse, all 350,000 square feet, into
production. With close to 600,000 sq. ft. in production across the
corporation, in both low cost greenhouse and indoor growing
facilities, the capability and flexibility that we have to produce
large quantities of high quality dried cannabis and extracts, to
meet potential future market demand, is unmatched in the
sector."
Added Linton "Investment in international development drove
agreements with partners in Australia, Brazil, and Germany. With other
opportunities presenting themselves, the global expansion of our
business has just begun."
First Quarter Fiscal 2017 Revenue Review
Revenue for the fourth quarter was $7.0 million compared to
revenue of $1.7 million in the three
months ended June 30, 2015 and
$5.0 million for the fourth quarter
of fiscal year 2016.
First Quarter Fiscal 2017 Product Sales Review
In the first quarter of fiscal 2017 ended June 30, 2016, the Company sold approximately 984
kilograms and kilogram equivalents at an average price
of $7.09 per gram. In the three-month period ended
June 30, 2015, approximately 215
kilograms were sold at an average price of $7.74 per
gram. The impact of Bedrocan's True Compassionate Pricing
program, introduced in the fourth quarter of fiscal 2016, reduced
the average selling price per gram.
First Quarter Fiscal 2017 Gross Margin Review
The gross margin was $3.4 million, or 49% of revenue, for
the three month period ended June 30, 2016. In the
comparative period last year, the gross margin on the same basis
was $4.1 million or 239% of
revenue.
First Quarter Fiscal 2017 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 first quarter of fiscal
2017 was $4.4 million, or 63% of
revenue. In the comparative period last year, the
Adjusted Product Contribution was $1.0
million, or 60% of revenue.
First Quarter Fiscal 2017 Operating Expense
Review
For the three months ended June 30, 2016, sales and
marketing expenses were $2.3 million, or 32% of revenue (three
months ended June 30, 2015 - $1.0 million, or 59% of
revenue).
The increase in sales and marketing expenses in the three months
ended June 30, 2016 over the comparison period was due to
expansion of the customer care center, launching Tweed's customer
engagement locations, an expanded medical outreach program and
continuing to position the Tweed brand in preparation for a
non-medical market.
General and Administrative ("G&A") expenses were $2.9
million, or 41% of revenue, in the three-month period ended
June 30, 2016 compared to
$1.4 million, or 83% of revenue, in
the same period last year.
The increase in G&A expenses over the comparison period last
year reflects the Company's growth over last year, building
commercial capacity and capability as a public company and meeting
compliance requirements with Health Canada.
First Quarter Fiscal 2017 Earnings
Review
The Company reported a net loss of $3.9
million or $0.04 per basic and diluted share for the
first quarter ended June 30, 2016,
compared to net income of $1.0
million or $0.02 per basic and
diluted share in the comparison period last year. The net
loss was inclusive of the non-cash unrealized gain on changes in
fair value of biological assets described above. The non-cash
gain on biological assets more than offset other cost of sales and
operating expenses in the first quarter of last year to produce
positive net income.
First Quarter Fiscal 2017 Balance Sheet and
Cash Flow Review
At June 30, 2016, the
Corporation's cash, comprised of cash and cash equivalents totalled
$19.5 million, representing an
increase of $4.1 million from
March 31, 2016. The increase is
attributable to net proceeds from the April
2016 "bought deal" common share offering in the first
quarter of the fiscal year 2017 and the exercise of options and
warrants together totalling $11.5
million partially offset by cash used to fund operations,
investments in facility enhancements and international development
together totalling $7.4
million. Investments in facility enhancements were
primarily improvements at our Smiths
Falls facility including the conversion of growing rooms, in
the expansion of cannabis oil extract production capacity and in
information technology.
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
Tweed Receives Approval to Begin Export of Medical Cannabis to
Germany
On July 25, 2016, the Corporation
announced that wholly-owned subsidiary Tweed had received the
necessary approvals in Canada and
Germany to begin exporting medical
cannabis for sale to German patients. Working with MedCann GmbH
Pharma and Nutraceuticals ("MedCann"), a privately held
pharmaceutical importer and manufacturer, the transfer marks an
important milestone for the Company and the first known incidence
of dried cannabis being exported from a Canadian licensed producer
to a major G7 country.
Canopy Growth Corporation Announces Graduation to TSX
On July 25, 2016, the Company
announced that is has received final approval for the listing of
the Corporation's common shares (the "Common Shares") on the
Toronto Stock Exchange ("TSX"). The Common Shares commenced trading
on the TSX effective as of the open of the market on July 26, 2016 under the symbol "CGC". The
Corporations shares were delisted from the TSX Venture Exchange
prior to the commencement of trading on July
26, 2016.
Bought Deal Financing
On August 24, 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
9,453,000 common shares in the capital of the Company were sold at
a price of $3.65 per Share, for
aggregate gross proceeds of $34,503,450 ("the Offering"). The Offering was
underwritten by a syndicate of underwriters co-led by Dundee
Securities Ltd. and GMP Securities L.P and including INFOR
Financial Inc. and PI Financial Corp.
Regulatory Change
On August 11, 2016, Health Canada
announced the new Access to Cannabis for Medical Purposes
Regulations (the "ACMPR") which will come into force on
August 24, 2016, replacing the MMPR
as the regulations governing Canada's medical cannabis program. While the
general policy of the ACMPR was disclosed by Health Canada on
August 11, 2016, exact regulations
will not be available until on or about August 24, 2016. The ACMPR is being implemented
as a result of the Federal Court ruling in the case of Allard v.
Canada (the "Allard Decision"). In the Allard Decision the Federal
Court found the MMPR to be unconstitutional and of no force and
effect, but suspended its declaration of invalidity for six months
in order to give the government time to respond. As per Health
Canada's statement and corresponding fact sheet released on
August 11, 2016, the ACMPR will allow
Canadians who have been authorized by their health care
practitioner, and who are registered with Health Canada, to produce
a limited amount of medical marijuana for their own medical
purposes, or to designate someone who is registered with Health
Canada to produce it for them. Starting materials such as plants or
seeds are to be obtained from Licensed Producers only.
On August 24,
2016, the government released legislation to enact the
policy announcement made on August 11,
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.
Webcast and Conference Call Information
Canopy Growth will host a conference call and audio webcast with
Bruce Linton, CEO and Tim Saunders, CFO at 8:30
AM Eastern Time today.
Webcast Information
A live audio webcast will be available at:
http://event.on24.com/r.htm?e=1228175&s=1&k=C0DAE17790A73E74952EDF46ABFED8A0
Calling Information
Toll Free Dial-In Number: 1-888-231-8191
International Dial-In Number (647) 427-7450
Conference ID: 52385525
Replay Information
A replay of the call will be accessible by telephone until
11:59 PM ET on September 19,
2016.
Toll Free Dial-in Number: 1-855-859-2056
Replay Password: 52385525
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 the TSX Exchange nor its
Regulation Services Provider (as that term is defined in policies
of the TSX Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Canopy Growth
Corporation
|
|
|
|
|
|
Condensed interim
consolidated statements of net (loss) income and comprehensive
(loss) income for the
three-months ended June 30, 2016 and 2015
|
(Expressed in CDN
$000's except per share amounts)
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
June
30,
|
|
|
June 30,
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
Revenue
|
$
|
6,984
|
|
$
|
1,710
|
|
|
|
|
|
|
Unrealized gain on
changes in fair value of biological assets
|
|
(6,684)
|
|
|
(5,275)
|
Inventory expensed to
cost of sales
|
|
6,654
|
|
|
1,492
|
Production
costs
|
|
3,569
|
|
|
1,398
|
Cost of sales
(recovery), net of the unrealized gain on changes in fair value of
biological assets
|
|
3,539
|
|
|
(2,385)
|
Gross
margin
|
|
3,445
|
|
|
4,095
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and
marketing
|
|
2,260
|
|
|
1,009
|
Research and
development
|
|
403
|
|
|
38
|
General and
administration
|
|
2,850
|
|
|
1,415
|
Share of loss in
equity investments
|
|
220
|
|
|
-
|
Share-based
compensation expense
|
|
888
|
|
|
372
|
Depreciation and
amortization
|
|
911
|
|
|
268
|
|
|
7,532
|
|
|
3,102
|
(Loss) income from
operations
|
|
(4,087)
|
|
|
993
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
(expense), net
|
|
(47)
|
|
|
19
|
(Increase) decrease
in fair value of acquisiton consideration related
liabilities
|
|
(12)
|
|
|
-
|
|
|
(59)
|
|
|
19
|
Net (loss) income and
comprehensive (loss) income before income taxes
|
|
(4,146)
|
|
|
1,012
|
|
|
|
|
|
|
Income tax
recovery
|
|
197
|
|
|
-
|
Net (loss) income and
comprehensive (loss) income after income taxes
|
$
|
(3,949)
|
|
$
|
1,012
|
|
|
|
|
|
|
Net (loss) income per
share, basic:
|
$
|
(0.04)
|
|
$
|
0.02
|
|
|
|
|
|
|
Weighted average
number of outstanding common shares, basic:
|
|
103,663,724
|
|
|
50,875,433
|
|
|
|
|
|
|
Net (loss) income per
share, diluted:
|
$
|
(0.04)
|
|
$
|
0.02
|
|
|
|
|
|
|
Weighted average
number of outstanding common shares, diluted:
|
|
103,663,724
|
|
|
56,260,530
|
|
|
|
|
|
|
Canopy Growth
Corporation
|
|
|
|
Condensed interim
consolidated statements of financial position
|
(Expressed in CDN
$000's)
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
|
March 31,
|
|
|
|
|
2016
|
|
|
2016
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
19,527
|
|
$
|
15,397
|
|
Restricted
short-term investment
|
|
250
|
|
|
-
|
|
Accounts
receivable
|
|
|
1,410
|
|
|
1,110
|
|
HST
recoverable
|
|
|
272
|
|
|
376
|
|
Biological
assets
|
|
|
4,049
|
|
|
5,321
|
|
Inventory
|
|
|
24,237
|
|
|
22,153
|
|
Prepaid
expenses and other assets
|
|
630
|
|
|
489
|
|
|
|
|
50,375
|
|
|
44,846
|
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
46,119
|
|
|
44,581
|
Leasehold
construction in process
|
|
2,576
|
|
|
403
|
Restricted
investment
|
|
|
-
|
|
|
246
|
Goodwill
|
|
|
20,867
|
|
|
20,867
|
Intangible
assets
|
|
|
31,787
|
|
|
31,861
|
Other
assets
|
|
|
509
|
|
|
557
|
|
|
|
$
|
152,233
|
|
$
|
143,361
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
$
|
6,785
|
|
$
|
6,107
|
|
Deferred
revenue
|
|
|
216
|
|
|
533
|
|
Current
portion of long-term debt
|
|
639
|
|
|
553
|
|
|
|
|
7,640
|
|
|
7,193
|
|
Long-term
debt
|
|
|
3,489
|
|
|
3,469
|
|
Acquisition
consideration related liabilities
|
|
1,270
|
|
|
1,258
|
|
Deferred tax
liability
|
|
|
7,216
|
|
|
7,413
|
|
Other
long-term liabilities
|
|
237
|
|
|
243
|
|
|
|
|
19,852
|
|
|
19,576
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
|
|
|
Share
capital
|
|
|
143,184
|
|
|
131,080
|
|
Share-based
reserve
|
|
|
6,921
|
|
|
5,804
|
|
Warrants
|
|
|
-
|
|
|
676
|
|
Deficit
|
|
|
(17,724)
|
|
|
(13,775)
|
|
|
|
|
132,381
|
|
|
123,785
|
|
|
|
$
|
152,233
|
|
$
|
143,361
|
|
|
|
|
|
|
|
|
Canopy Growth
Corporation
|
|
|
|
|
Condensed interim
consolidated statements of cash flows for the three-months ended June 30, 2016 and
2015
|
(Expressed in CDN
$000's)
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
June
30,
|
|
June 30,
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
Operating
|
|
|
|
|
|
Net income
(loss)
|
$
|
(3,949)
|
|
1,012
|
|
Items not affecting
cash:
|
|
|
|
|
|
|
Depreciation of
property, plant and equipment
|
|
837
|
|
265
|
|
|
Amortization of
intangible assets
|
|
74
|
|
3
|
|
|
Share of loss in
equity investments
|
|
220
|
|
-
|
|
|
Unrealized gain on
change in fair value of biological assets
|
|
(6,684)
|
|
(5,275)
|
|
|
Share-based
compensation
|
|
975
|
|
372
|
|
|
Income tax
recovery
|
|
(197)
|
|
-
|
|
|
Decrease in fair
value of acquisition consideration related liabilities
|
|
12
|
|
-
|
|
Changes in non-cash
operating working capital items
|
|
4,405
|
|
326
|
Net cash used in
operating activities
|
|
(3,766)
|
|
(3,297)
|
|
|
|
|
|
|
|
Financing
|
|
|
|
|
|
Proceeds from
issuance of common shares
|
|
11,506
|
|
-
|
|
Proceeds from
exercise of stock options
|
|
659
|
|
-
|
|
Proceeds from
exercise of warrants
|
|
126
|
|
126
|
|
Payment of share
issue costs
|
|
(790)
|
|
(189)
|
|
Issuance (repayment)
of long-term debt
|
|
260
|
|
-
|
|
Increase in other
long-term liabilities
|
|
(6)
|
|
27
|
Net cash provided
by (used in) financing activities
|
|
11,602
|
|
(98)
|
|
|
|
|
|
|
|
Investing
|
|
|
|
|
|
Purchases of
property, plant and equipment
|
|
(2,531)
|
|
(1,410)
|
|
Purchases of
leasehold construction in process
|
|
(1,175)
|
|
(1,186)
|
|
Purchases of
restricted investments
|
|
-
|
|
(286)
|
Net cash used in
investing activities
|
|
(3,706)
|
|
(2,882)
|
|
|
|
|
|
|
|
Net cash inflow
(outflow)
|
|
4,130
|
|
(6,277)
|
Cash and cash
equivalents, beginning of period
|
|
15,397
|
|
21,446
|
Cash and cash
equivalents, end of period
|
$
|
19,527
|
$
|
15,169
|
Unaudited Non-GAAP
Measure (In CDN$000's, except gram amounts)
|
Three Months
Ended
June 30,
2016
|
|
Three Months
Ended
June 30,
2015
|
Adjusted Product
Contribution1
|
|
|
|
|
|
|
|
|
Weighed average
cost per gram
|
$
|
2.66
|
|
$
|
3.16
|
Grams sold in the
period
|
|
984,334
|
|
|
215,929
|
|
|
|
|
|
|
|
Revenue
|
$
|
6,984
|
|
$
|
1,710
|
|
Adjusted cost of
sales2
|
|
(2,618)
|
|
|
(682)
|
Adjusted Product
Contribution
|
$
|
4,366
|
|
$
|
1,028
|
Adjusted Product
Contribution percentage of sales
|
|
62.5%
|
|
|
60.1%
|
|
|
|
|
|
|
|
As compared to the
Gross Margin per IFRS:
|
|
|
|
|
|
Gross
margin
|
$
|
3,445
|
|
$
|
4,095
|
|
Gross margin
percentage of sales
|
|
49.3%
|
|
|
239.5%
|
|
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Notes:
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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.
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2 Based on the
weighted average of cost per gram from seed to sale of $2.66 per
gram in the first quarter.
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SOURCE Canopy Growth Corporation