Canopy Growth Corp

Last modified by Asif Farooqui on 2024/02/23 05:59

Contents

Summary
Recent Developments
Financial Highlights
Company Overview
- Canopy USA
- Brands and Products
  - Products
  - Brand Portfolio
References

Summary

Canopy Growth is a leading North American cannabis and consumer packaged goods company.
Canopy Growth focus on premium and mainstream cannabis brands including Doja, 7ACRES, Tweed, and Deep Space.
Canopy USA strategy is expected to fast track entry into the U.S. cannabis market.

Canopy Growth (Nasdaq: CGC, TSX: WEED) is a leading North American cannabis and consumer packaged goods company. Canopy Growth focus on premium and mainstream cannabis brands including Doja, 7ACRES, Tweed, and Deep Space. Canopy Growth’s CPG portfolio includes gourmet wellness products by Martha Stewart CBD, and category defining vaporizer technology made in Germany by Storz & Bickel.

Recent Developments

Canopy Growth announced New Products From Tweed, 7acres, And Spectrum Therapeutics¹

January 24, 2024 – Canopy Growth Corporation announced the introduction of new product offerings across the Company’s adult use and medical cannabis portfolio, including new Tweed softgels and oils featuring minor cannabinoids, a large format flower offering from Tweed, as well as new medical exclusive pre-roll products from 7ACRES and Spectrum Therapeutics.

Tweed Lemon Meringue Pie flower
7ACRES Jack Haze pre-rolls
Spectrum Reserve pre-rolls
Tweed CBD:CBG 4:1 Oil
Tweed CBD:CBG 6:1 Softgels

Canopy Growth Announces Completed Sale of This Works²

December 18th, 2023 – Canopy Growth Corporation announced that the Company has completed the divestiture of its This Works skincare and wellness brand to Inspirit Capital, a London-based investment firm.

Headquartered in London, England, This Works offers a range of high-quality natural skincare and sleep solution products to consumers around the world. In accordance with the completed sale agreement, This Works’ leadership, staff, and intellectual property will transfer to Inspirit Capital.

The transaction is valued at up to £9.3MM ($15.9MM CAD) including cash. Canopy Growth will receive an upfront consideration of £2.7 MM ($4.6 MM CAD) in cash and in other consideration, a loan note issued by the buyer, and a contingent earn-out.

Canopy Growth Announces Completed Sale of Biosteel Business³

December 1, 2023 – Canopy Growth Corporation provided an update that pursuant to the proceedings under the Companies’ Creditors Arrangement Act (the “CCAA”) involving BioSteel Sports Nutrition Inc. (“BioSteel Canada”), that two sale transactions transferring the assets of BioSteel Canada and BioSteel Manufacturing, LLC (“BioSteel Manufacturing”) have been completed for aggregate gross proceeds of $30.4 million.

Pursuant to the CCAA court-ordered sale and investment solicitation process, a sale of substantially all of the assets of BioSteel Canada to the Coachwood Group as contemplated by an asset purchase agreement dated November 9, 2023, and a sale of all or substantially all of the assets of BioSteel Manufacturing to another third party as contemplated by an asset purchase agreement dated November 9, 2023, have been completed. A portion of proceeds realized from the two transactions will be used to repay debt, which is expected to further reduce interest expense.

Financial Highlights

Third Quarter Fiscal Year 2024 Results

February 9, 2024; Canopy Growth announces its financial results for the third quarter ended December 31, 2023.⁴

Consolidated gross margins of 36% in Q3 FY2024, with Canada cannabis gross margins increasing to 28% in Q3 FY2024, up from (11)% in Q3 FY2023.

Excluding the impact of the divestiture of the Canada national retail business in Q3 FY2023, Q3 FY2024 consolidated net revenue grew by 6% year-over-year. Delivered Q3 FY2024 consolidated net revenue of $79MM representing a decline of 7% year-over-year.

Rest-of-World cannabis revenue in Q3 FY2024 increased 81% year-over-year, led by continued strong growth in Australia, return to growth in Europe driven by new products and improved sales execution, and lapping negative revenue impacts in non-core markets during the prior year.

Storz & Bickel® net revenue in Q3 FY2024 increased 54% sequentially driven by strong sales of the new VENTY portable vaporizer, traditionally strong seasonal sales, including the most successful Black Friday sales event in the brand’s 20-year history.

Free cash flow from continuing operations of $(34)MM in Q3 FY2024, representing a 57% improvement year-over-year.

Cash and short-term investments balance of $186MM as at December 31, 2023. Reduced overall debt by $69MM during Q3 FY2024.

Management reaffirms expectation to achieve positive Adjusted EBITDA in each business unit exiting FY2024.

Company Overview

Canopy Growth is a pioneer in the cannabis space. Canopy Growth was among the first companies to be permitted to cultivate and sell legal cannabis in Canada. Today, the company supply high-quality medical cannabis products to patients in Canada, Germany, Poland and Australia, and through agreements with established distributors.⁵

The company's distinct cannabis brands include Tweed, 7ACRES, DOJA, Vert, HiWay and Deep Space in the adult-use channel, while its primary medical brand is Spectrum Therapeutics. The company's cannabis product formats include dried flower, oil, softgel capsules, edibles, vapes and beverages as well as a wide range of cannabis accessories.

Canopy USA

On October 25, 2022, the company announced the creation of a U.S. cannabis ecosystem to be held through Canopy USA, a special purpose vehicle. Canopy Growth currently owns more than 99% of the outstanding shares of Canopy USA.

The Company expects to reduce its annual operating expenditures through a more streamlined and singular approach to its U.S. strategy. In the near term, Canopy USA is expected to generate revenue and cost synergies by leveraging its brand portfolio, routes to market and operations of the full U.S. cannabis ecosystem while eliminating redundancies and the public company reporting costs of Acreage, all of which are expected to be realized while cannabis remains federally illegal in the United States.

Canopy USA, LLC (“CUSA”) holds conditional interests of its U.S. cannabis investments, including, among others, Acreage Holdings, Inc. (“Acreage”), Mountain High Products, LLC, Wana Wellness, LLC and The Cima Group, LLC (collectively, “Wana”), Lemurian, Inc. (“Jetty”), and TerrAscend Corp. (“TerrAscend”),

Brands and Products

The company produce and sell various cannabis products, including dried cannabis flower, extracts and concentrates, beverages, gummies and vapes in Canada and other locations where legally permissible to do so.

Products

cannabis products include:

Dried Flower: The company pride itself on growing high-quality cannabis, which is packaged for sale as dried flower and pre-rolled joints. The company sell dried flower in both the medical and adult-use markets.

Extracts and Concentrates: This category includes softgel capsules which offer a convenient, precise, and discrete dosing solution for those interested in consuming their cannabis in pill form and are available in a variety of concentrates, from micro to full doses.
Cannabis Beverages: The company offer its beverages in a variety of flavors and sizes under the Deep Space, Tweed and Ace Valley brands. The company believe that cannabis-infused beverages that offer sophisticated taste and measured doses with a rapid onset and shorter duration can be tailored to meet specific outcomes across a variety of consumption occasions.
Cannabis Gummies: Cannabis-infused gummies are made using sativa and/or indica-dominant cannabis distillate, various minor cannabinoids and other simple ingredients. Current products offer a discreet and dosable cannabis experience. The company offer its gummies in a variety of flavors and sizes.
Cannabis Vapes: The company's vapes are designed to bring effective and reliable technology to the vaping category. The company's “510” vape concentrate cartridges are available in a variety of Tweed and DOJA strains, with a range of THC and CBD levels.