Canopy Growth (CGC 3.27%), a leading Canadian cannabis grower, reported fourth-quarter and full-year results for fiscal 2019 after the market closed on Thursday.

Shares of the largest cannabis stock by market cap dropped 8.1% on Friday. We can attribute the market's reaction to a net loss that widened more than Wall Street was expecting. 

Here's how the quarter worked out for Canopy and its investors.

A cannabis leaf in a vertical position pointing up with hazy blue and orange background.

Image source: Getty Images.

Canopy Growth's results: The raw numbers

All monetary figures are in Canadian dollars.


Fiscal Q4 2019

Fiscal Q4 2018

Year-Over-Year Change

Net revenue

CA$94.1 million

CA$22.8 million


Operating income

(CA$174.5 million)*

(CA$51.0 million)

Loss widened by 242%

Net income

(CA$323.4 million)

(CA$54.4 million)

Loss widened by 494% 

Earnings per share (EPS)



Loss widened by 216% 

Data source: Canopy Growth. Results based on International Financial Reporting Standards (IFRS). *Operating loss would have been even greater if fair value changes of biological assets and unrealized losses/gains on these assets were excluded, as they would be if Canopy were a U.S. company and using generally accepted accounting principles (GAAP). 

On a sequential basis, Q4 revenue increased 13%, with Canopy attributing this growth from Q3 to "additional revenue being generated through value-added products, extraction services, and clinic partners."

Wall Street was modeling for a quarterly loss of CA$0.22, so Canopy fell far short of this projection. Revenue came in on target. 

In Q4, gross margin before the IFRS fair value impacts was 16% of net revenue, down from 34% of net revenue in the year-ago period. This decline was primarily due to "operating expenses for facilities not yet cultivating or facilities that had underutilized capacity," CFO Mike Lee said on the earnings call. 

For full-year fiscal 2019, net revenue soared 191% year over year to CA$226.3 million, operating loss expanded 601% to CA$577 million, and the net loss widened by more than 12 times to CA$670.1 million. On a per-share basis, the company lost CA$2.57, compared with a net loss of CA$0.40 last fiscal year. 

At the end of the period, Canopy had CA$4.5 billion in cash and cash equivalents. The company has the biggest cash pile by far among its peers, thanks to its partnership with Corona and Modelo beer maker Constellation Brands (STZ -0.17%). Canopy received $4 billion (in U.S. dollars) last fall, when the alcoholic-beverage giant raised its stake in it to 38%. 

Product results


Gross Revenue Fiscal Q4 2019

Gross Revenue Fiscal Q4 2018

Year-Over-Year Change

Canadian recreational cannabis-business to business

CA$57.2 million



Canadian recreational cannabis-business to consumer

CA$11.7 million


Canadian medical cannabis 

CA$11.6 million

CA$19.5 million

International medical cannabis

CA$1.8 million

CA$2.4 million

Other revenue

CA$24.2 million

CA$0.9 million

Total gross revenue CA$106.5 million CA$22.8 million 367%
(Less excise tax) (CA$12.4 million) -- --
Net revenue CA$94.1 million CA$22.8 million 313%

Data source: Canopy Growth.

Slicing and dicing revenue a few other ways:

  • Total gross marijuana revenue was 84% from recreational sales and 16% from medical sales.
  • International marijuana sales comprised just 2.2% of total gross marijuana revenue. 
  • Total gross marijuana sales accounted for about 77% of the company's total revenue, while "other revenue" contributed the remaining 23%. 

Recreational cannabis sales

In Q4, recreational marijuana sales increased 100% over the year-ago quarter because adult-use cannabis has only been legal in Canada since October. Sales edged down 3.8% from Q3, which investors shouldn't be concerned about as the Canadian distribution system is a work-in-progress, as are the supply chains of Canopy and its peers. The slight sequential decline isn't due to a demand issue.

Canadian medical cannabis sales

In both the fourth quarter and full year, Canadian medical marijuana sales declined year over year, but that wasn't unexpected. Here's Canopy's explanation:

The Company's Canadian online medical store saw a period of major transformation during the fiscal year, with established brands ... transitioning to the recreational channel. This product transition, along with product supply challenges, which have since been remedied, led to a decline in the medical channel in the second half of fiscal 2019. ... Following the rebrand of Spectrum Cannabis, Canopy Health Innovations and C3 into a singular medically focused division Spectrum Therapeutics ... the Company believes that Canadian medical sales ... will be able to return to previous levels.

International medical cannabis sales

In Q4, international medical marijuana sales declined 25% year over year to CA$1.8 million. The decline was primarily due to supply constraints, CFO Lee said on the earnings call. This issue should soon be behind the company, given its Canadian medical channel is fully supplied and its Danish production capacity is due to come online this calendar year.

For the full fiscal year, international medical cannabis revenue jumped 173% to CA$10.1 million, driven by growth in Germany and the company's launch in the Polish and Czech markets.

Other revenue 

The "other revenue" category primary includes sales of vaporizers made by Storz & Bickel, which Canopy acquired in Q3, along with revenue from extraction services, clinic partners, and merchandise.

Cannabis plants with blue sky in background.

Image source: Getty Images.

Operational stats: Quantities harvested and sold, and price per gram realized


Fiscal Q4 2019

Fiscal Q4 2018

Year-Over-Year Change

Kilograms and kilogram equivalents sold 9,326 2,528 269%
Average selling price per gram-recreational CA$7.28 -- --
Average selling price per gram-Canadian medical CA$8.17 CA$8.00 2%
Average selling price per gram-international medical


CA$13.4 4%
Average selling price per gram-overall CA$7.49 CA$8.43 (11%)
Quantity harvested  14,469 kilograms* 4,811 Kilograms 201%

Data source: Canopy Growth. *1 kilogram = about 2.2 pounds.  

The 11% year-over-year decrease in overall average selling price per gram of marijuana was due to the opening of the Canadian recreational market in October and the company's shift toward more business to business sales. 

In the quarter, sales of oil and soft gel capsules accounted for 40% of total gross marijuana revenue, up considerably from 21% in the year-ago period, while dried flower comprised the remainder. This boosted average selling prices, as these are value-added products.

Notable acquisitions and big news soon after the quarter ended

Soon after the fiscal year ended, Canopy acquired Germany-based C3 Cannabinoid Compound Company, Europe's largest cannabinoid-based pharmaceutical company, and This Works Products, a UK-based beauty and wellness brand. These acquisitions reflect the company's aim to expand globally. 

In mid-April, Canopy announced that it was buying the rights to acquire Acreage Holdings (ACRGF), a U.S.-based cannabis producer. The deal has Canopy paying $300 million up front for the right to acquire Acreage for $3.4 billion if the U.S. federal government legalizes marijuana. Last week, shareholders of Canopy and Acreage approved the transaction. 

What management had to say

Here's what founder and Co-CEO Bruce Linton had to say in the earnings release:

The fourth quarter wraps up a historic year with major steps taken in Canada to build out our national platform while scaling all of our processes to bring cannabis to market. The third quarter of the year benefited from months of advanced production while the fourth quarter relied more on efficient throughput and a more automated platform. With more product formats coming to the Canadian market later in the year, we are working hard to ensure that we are ready to hit the ground running with products, formats and brands that Canadians trust.

Looking ahead: 2 new revenue streams should come online in fiscal 2020

Canopy is investing heavily for growth, so investors shouldn't be concerned at this point with its widening net loss.

The company has countless catalysts for growth on the horizon. In Q1 of fiscal 2020, it expects its Canadian cannabis harvest to increase to about 34,000 kilograms. That represents a 135% jump from the just-reported quarter. The ramped-up capacity is expected to increase finished inventory available for sale beginning in Q2.

Moreover, fiscal 2020 should get a boost from two new revenue sources that Canopy expects to come online later in the fiscal year: 

  1. Edibles, vapes, and cannabis-infused beverages are expected to get the green light in Canada later this calendar year. The company currently anticipates that it will be able to start selling these products in mid-December. The beverages are being developed with partner Constellation Brands.
  2. Hemp-derived cannabidiol (CBD) products are anticipated to be brought to market in the United States by the end of fiscal 2020. (CBD is a nonpsychoactive chemical that's been linked to various medicinal benefits.) This market opened up because of the enactment of the U.S. Farm Bill on Jan. 1.