Canopy Growth (NYSE: CGC) Wednesday said its first-quarter revenues more than tripled, aided by solid harvest. However, the cannabis firm reported a wider-than-expected net loss for the quarter, which included a significant one-time charge. The stock lost sharply during the after-hours trading session as the bottom-line missed analysts’ forecast.
Revenues of the Canada-based firm surged to CAD 90.5 million from CAD 25.9 million in the first quarter of 2019 but missed the market’s expectations. The top-line growth was driven by a 94% increase in dried cannabis sales in the Canadian recreational market. During the quarter, the company harvested a record 40,960 kg of cannabis, exceeding expectations. International medical cannabis revenue nearly tripled.
Canopy Growth reported a net loss of CAD 1.28 billion or CAD 3.70 per share for the first quarter, compared to a loss of CAD 91 million or CAD 0.40 per share a year earlier.
The deterioration is attributable to a one-time charge of more than CAD 1 billion, related to the extinguishment of warrants. The bottom-line was also negatively impacted by an increase in operating expenses to CAD 229.2 million. Analysts were looking for a narrower loss.
The management said it is on track to unveil a portfolio of value-added higher-margin products in various forms in the second quarter and to bring CBD products to the US market by end of fiscal 2020. The main growth initiatives include investments in developing intellectual property, building brands and ensuring scaled production capability.
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“Fiscal 2020 is going to be another exciting time for the cannabis industry as we close in on the launch of new product formats. Our recent harvests are proof that our focus on operational excellence is working, and we look forward to showing both our Canadian and U.S. customers what we’ve been working on behind the scenes to prepare for the next wave of products coming later this year,” said CEO Mark Zekulin.
Canopy Growth shares plunged more than 10% Wednesday evening, following the earnings report. The stock is currently trading broadly at the levels seen twelve months ago. Since the beginning of the year, it gained about 10%.