Canopy Growth Corporation (CGC) Reports Third Quarter Fiscal Year 2025 Financial Results PR Newswire

Canopy Growth Reports Third Quarter Fiscal Year 2025 Financial Results
PR Newswire

Canopy Growth Corporation (“Canopy Growth” or the “Company”) (TSX: WEED) (Nasdaq: CGC) today announces its financial results for the third fiscal quarter ended December 31, 2024 (“Q3 FY2025”). All financial information in this press release is reported in Canadian dollars, unless otherwise indicated.

“Canopy Growth’s third quarter highlights that our business has the right ingredients for success, as demonstrated by the continued momentum in our medical cannabis businesses, Storz & Bickel, and the successful introduction of Claybourne infused pre-rolls in Canada. As I step into my role as Chief Executive Officer, I am focused on achieving sustainable profitability while maximizing our ability to create value in the key markets and segments we serve.”

Luc Mongeau, Chief Executive Officer

“The third quarter marked our best Adjusted EBITDA to date, led by strong year-over-year top-line growth in our medical cannabis business and Storz & Bickel, and continued cost discipline. The balance sheet actions taken during the quarter further strengthen our financial position which we believe provides us with flexibility to invest in value creation opportunities.”

Judy Hong, Chief Financial Officer

Third Quarter Fiscal Year 2025 Financial Summary

(in thousands of Canadian
dollars, unaudited)

Net Revenue

Gross margin
percentage

Net loss from
continuing operations

Adjusted
EBITDA2

Free cash
flow3

Reported

$74,761

32 %

$(121,896)

$(3,469)

$(28,181)

vs. Q3 FY2024

(5 %)

(400) bps

47 %

61 %

17 %

Net revenue in Q3 FY2025 decreased 5% compared to the third quarter ended December 31, 2023 (“Q3 FY2024”). Excluding net revenue from businesses divested during the prior fiscal year, net revenue increased 8% driven primarily by growth in Canada medical, international markets and Storz & Bickel.

Gross margin decreased by 400 basis points (“bps”) to 32% in Q3 FY2025 compared to Q3 FY2024 primarily due to the incremental costs related to the Claybourne infused pre-roll launch in Canada, and an increase in indirect costs of Storz & Bickel vaporizer devices partially offset by stronger sales of higher-margin medical cannabis products.

Operating loss from continuing operations was $24MM in Q3 FY2025, representing an improvement of 61% compared to Q3 FY2024. The improvement in Q3 FY2025 was driven primarily by a reduction in operating expenses.

Adjusted EBITDA loss of $3MM in Q3 FY2025, representing a 61% improvement year-over-year, driven primarily by the realized benefit of the Company’s cost savings program.

Free cash flow was an outflow of $28MM in Q3 FY2025, representing a 17% improvement compared to Q3 FY2024, primarily driven by a reduction in cash interest expenses.

Total debt decreased to $442MM at December 31, 2024 from $554MM at September 30, 2024 primarily due to an early prepayment that reduced the Company’s senior secured term loan.

1 Calculated using the Company’s internal proprietary market analysis tool that applies sales data supplied by third-party providers and government agencies.
2 Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Measures” and Schedule 4 for a reconciliation of net loss from continuing operations to adjusted EBITDA.
3 Free cash flow is a non-GAAP measure. See “Non-GAAP Measures” and Schedule 5 for a reconciliation of net cash used in operating activities – continuing operations to free cash flow – continuing operations.

Canada Cannabis Highlights

Canada cannabis net revenue was $41MM in Q3 FY2025, representing an increase of 1% compared to Q3 FY2024. Canada cannabis net revenue in Q3 FY2025 increased 10% sequentially compared to the second fiscal quarter ended September 30, 2024 (“Q2 FY2025”).

Canada medical cannabis net revenue in Q3 FY2025 increased 16% compared to Q3 FY2024 driven primarily by an increase in the average size of medical orders placed by our customers.

Canada adult-use cannabis net revenue in Q3 FY2025 declined 10% compared to Q3 FY2024. Canada adult-use cannabis net revenue in Q3 FY2025 increased 15% sequentially compared to Q2 FY2025 driven by contributions from new product launches as well as bulk cannabis sales.

The Company launched the award-winning Claybourne brand in November 2024. Claybourne ascended to #3 market share in the infused pre-roll category in British Columbia and Ontario after 6 weeks in market1.

International Markets Highlights

International markets net revenue was $12MM in Q3 FY2025, representing an increase of 14% over Q3 FY2024, with strong growth in Poland and Germany, partially offset by a decline in Australia medical cannabis sales as well as exiting US CBD sales earlier this fiscal year.

Performance in the German medical market in Q3 FY2025 benefited from expansion of the product portfolio available to patients including new flower under the Tweed brand.

International markets cannabis gross margins increased 100 bps to 41% during Q3 FY2025 compared to Q3 FY2024 primarily due to a shift in sales mix to higher-margin Poland.

Storz & Bickel Highlights

Storz & Bickel delivered net revenue in Q3 FY2025 of $22MM, representing a 19% increase over Q3 FY2024, driven by traditionally strong holiday purchases, robust direct-to-consumer online sales, and continued growth in Germany.

Continued consumer demand drove strong year-over-year growth for Venty during Q3 FY2025.

Canopy USA Highlights

With the completed acquisition of Acreage Holdings, Inc. (“Acreage”) by Canopy USA, LLC (“Canopy USA”) on December 9, 2024, Canopy USA has moved forward with the full integration of Mountain High Products, LLC, Wana Wellness, LLC and The Cima Group, LLC (collectively, “Wana”), Lemurian, Inc. (“Jetty”) and Acreage, with such integration beginning to generate cost savings at Canopy USA.

In January 2025, Canopy USA named Brooks Jorgensen as President. Mr. Jorgensen is an accomplished executive in high‑growth industries including cannabis, wine, and spirits. Most recently, Mr. Jorgensen served as President of Kiva Sales and Service, growing it to the largest full-service distributor of cannabis products in the U.S4.

4 Source: https://www.newswire.ca/news-releases/canopy-usa-announces-appointment-of-mr-m-brooks-jorgensen-as-president-897361493.html

Third Quarter Fiscal 2025 Revenue Review5

(in millions of Canadian dollars, unaudited)

Q3 FY2025

Q3 FY2024

Vs. Q3 FY2024

Canada cannabis

Canadian adult-use cannabis6

$21.2

$23.5

(10 %)

Canada medical cannabis7

$19.6

$16.9

16 %

$40.8

$40.4

1 %

International markets cannabis8

$12.0

$10.5

14 %

Storz & Bickel

$22.0

$18.5

19 %

This Works

$-

$8.2

(100 %)

Other

$-

$0.9

(100 %)

Net revenue

$74.8

$78.5

(5 %)

The Q3 FY2025 and Q3 FY2024 financial results presented in this press release have been prepared in accordance with U.S. GAAP.

Webcast and Conference Call Information

The Company will host a conference call and audio webcast with Luc Mongeau, CEO and Judy Hong, CFO at 10:00 AM Eastern Time on Friday, February 7, 2025.

Webcast Information

A live audio webcast will be available at: https://app.webinar.net/yY1K7LrWq9O.

Replay Information

A replay will be accessible by webcast until 11:59 PM ET on May 8, 2025 at: https://app.webinar.net/yY1K7LrWq9O.

Non-GAAP Measures

Adjusted EBITDA is a non-GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Management believes Adjusted EBITDA is a useful measure for investors because it provides meaningful and useful financial information, as this measure demonstrates the operating performance of businesses. Adjusted EBITDA is calculated as the reported net income (loss), adjusted to exclude income tax recovery (expense); other income (expense), net; loss on equity method investments; share-based compensation expense; depreciation and amortization expense; asset impairment and restructuring costs; restructuring costs recorded in cost of goods sold; and charges related to the flow-through of inventory step-up on business combinations, and further adjusted to remove acquisition, divestiture, and other costs. Asset impairments related to periodic changes to the Company’s supply chain processes are not excluded from Adjusted EBITDA given their occurrence through the normal course of core operational activities. The Adjusted EBITDA reconciliation is presented within this news release and explained in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2024 (the “Form 10-Q”) [to be] filed with the Securities and Exchange Commission (“SEC”).

Free cash flow is a non-GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Management believes that free cash flow presents meaningful information regarding the amount of cash flow required to maintain and organically expand our business, and that the free cash flow measure provides meaningful information regarding the Company’s liquidity requirements. This measure is calculated as net cash provided by (used in) operating activities less purchases of and deposits on property, plant and equipment. The free cash flow reconciliation is presented within this news release and explained in the Form 10-Q [to be] filed with the SEC.

Adjusted gross margin and adjusted gross margin percentage are non-GAAP measures used by management that are not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Management believes that adjusted gross margin and adjusted gross margin percentage present meaningful and useful financial information as these measures provide insights into the gross margin performance of the business. Adjusted gross margin is calculated as gross margin excluding restructuring and other charges recorded in cost of goods sold, and charges related to the flow-through of inventory step-up on business combinations. Adjusted gross margin percentage is calculated as adjusted gross margin divided by net revenue. The adjusted gross margin and adjusted gross margin percentage reconciliation is presented within this news release and explained in the Form 10-Q [to be] filed with the SEC.

5 In Q3 FY2025, we are reporting our financial results for the following four reportable segments: (i) Canada cannabis; (ii) international markets cannabis; (iii) Storz & Bickel; and (iv) This Works. On December 18, 2023, the Company completed the sale of This Works and as of such date, the results of This Works are no longer included in the Company’s financial results.
6 For Q3 FY2025, amount is net of excise taxes of $9.4MM and other revenue adjustments of $0.9MM (Q3 FY2024 – $9.7MM and $1.1MM, respectively).
7 For Q3 FY2025, amount is net of excise taxes of $2.1MM (Q3 FY2024 – $1.8MM).
8 For Q3 FY2025, amount reflects other revenue adjustments of $0.1MM (Q3 FY2024 – $0.3MM).

About Canopy Growth

Canopy Growth is a world leading cannabis company dedicated to unleashing the power of cannabis to improve lives.

Through an unwavering commitment to consumers, Canopy Growth delivers innovative products from owned and licensed brands including Tweed, 7ACRES, DOJA, Deep Space, and Claybourne, as well as category defining vaporization devices by Storz & Bickel. In addition, Canopy Growth serves medical cannabis patients globally with principal operations in Canada, Germany, Poland, and Australia.

Canopy Growth has also established a comprehensive ecosystem to realize the opportunities presented by the U.S. THC market through an unconsolidated, non-controlling interest in Canopy USA. Canopy USA’s portfolio includes ownership of Acreage, a vertically integrated multi‑state cannabis operator with operations throughout the U.S. Northeast and Midwest, as well as ownership of Wana, a leading North American edibles brand, and majority ownership of Jetty, a California-based producer of high-quality cannabis extracts and clean vape technology.

At Canopy Growth, we’re shaping a future where cannabis is embraced for its potential to enhance well-being and improve lives. With high-quality products, a commitment to responsible use, and a focus on enhancing the communities where we live and work, we’re paving the way for a better understanding of all that cannabis can offer.

For more information visit www.canopygrowth.com.

Notice Regarding Forward Looking Statements

This press release contains “forward-looking statements” within the meaning of applicable securities laws, which involve certain known and unknown risks and uncertainties. To the extent any forward-looking statements in this news release constitutes “financial outlooks” within the meaning of applicable Canadian securities laws, the reader is cautioned that this information may not be appropriate for any other purpose and the reader should not place undue reliance on such financial outlooks. Forward-looking statements predict or describe our future operations, business plans, business and investment strategies and the performance of our investments. These forward-looking statements are generally identified by their use of such terms and phrases as “intend,” “goal,” “strategy,” “estimate,” “expect,” “project,” “projections,” “forecasts,” “plans,” “seeks,” “anticipates,” “potential,” “proposed,” “will,” “should,” “could,” “would,” “may,” “likely,” “designed to,” “foreseeable future,” “believe,” “scheduled” and other similar expressions. Our actual results or outcomes may differ materially from those anticipated. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.

Forward-looking statements include, but are not limited to, statements with respect to:

laws and regulations and any amendments thereto applicable to our business and the impact thereof, including uncertainty regarding the application of U.S. state and federal law to cannabis and hemp (including CBD) products and the scope of any regulations by the U.S. Food and Drug Administration, the U.S. Drug Enforcement Administration, the U.S. Federal Trade Commission, the U.S. Patent and Trademark Office, the U.S. Department of Agriculture and any state equivalent regulatory agencies over cannabis and hemp (including CBD) products;

expectations regarding the amount or frequency of impairment losses, including as a result of the write-down of intangible assets, including goodwill;

our ability to refinance debt as and when required on terms favorable to us and comply with covenants contained in our debt facilities and debt instruments;

the impacts of the Company’s strategy to accelerate entry into the U.S. cannabis market through the creation of Canopy USA;

expectations for Canopy USA to capitalize on the opportunity for growth in the United States cannabis sector and the anticipated benefits of such strategy;

the timing and occurrence of the final tranche closing in connection with the acquisition of Jetty pursuant to the exercise of the option to acquire Jetty;

the issuance of additional common shares of the Company (each whole share, a “Canopy Share” or a “Share”) to satisfy any deferred and/or option exercise payments to the shareholders of Wana and Jetty and the issuance of additional non-voting and non-participating shares in the capital of Canopy USA issuable to Canopy Growth from Canopy USA in consideration thereof;

the acquisition of additional Class A shares of Canopy USA in connection with the investment in Canopy USA by the Huneeus 2017 Irrevocable Trust (the “Trust”) in the aggregate amount of up to US$20 million (the “Trust Transaction”), including any warrants of Canopy USA issued to the Trust in accordance with the share purchase agreement entered into by the Trust and Canopy USA;

the potential further extension to the maturity date of the Company’s credit facility and the timing and occurrence of the optional prepayment of such credit facility in connection with the amendment to the credit agreement;

expectations regarding the potential success of, and the costs and benefits associated with, our acquisitions, equity investments and dispositions;

the grant, renewal and impact of any license or supplemental license to conduct activities with cannabis or any amendments thereof;

our international activities, including required regulatory approvals and licensing, anticipated costs and timing, and expected impact;

our ability to successfully create and launch brands and further create, launch and scale products in jurisdictions where such products are legal and that we currently operate in;

the benefits, viability, safety, efficacy, dosing and social acceptance of cannabis, including CBD and other cannabinoids;

our ability to continue as a going concern;

our ability to maintain effective internal control over financial reporting;

expectations regarding the use of proceeds of equity financings;

the legalization of the use of cannabis for medical or adult-use in jurisdictions outside of Canada, the related timing and impact thereof and our intentions to participate in such markets, if and when such use is legalized;

our ability to execute on our strategy and the anticipated benefits of such strategy;

the ongoing impact of the legalization of additional cannabis product types and forms for adult-use in Canada, including federal, provincial, territorial and municipal regulations pertaining thereto, the related timing and impact thereof and our intentions to participate in such markets;

the ongoing impact of developing provincial, state, territorial and municipal regulations pertaining to the sale and distribution of cannabis, the related timing and impact thereof, as well as the restrictions on federally regulated cannabis producers participating in certain retail markets and our intentions to participate in such markets to the extent permissible;

the timing and nature of legislative changes in the U.S. regarding the regulation of cannabis including tetrahydrocannabinol;

the future performance of our business and operations;

our competitive advantages and business strategies;

the competitive conditions of the industry;

the expected growth in the number of customers using our products;

expectations regarding revenues, expenses and anticipated cash needs;

expectations regarding cash flow, liquidity and sources of funding;

expectations regarding capital expenditures;

the expansion of our production and manufacturing, the costs and timing associated therewith and the receipt of applicable production and sale licenses;

expectations with respect to our growing, production and supply chain capacities;

expectations regarding the resolution of litigation and other legal and regulatory proceedings, reviews and investigations;

expectations with respect to future production costs;

expectations with respect to future sales and distribution channels and networks;

the expected methods to be used to distribute and sell our products;

our future product offerings;

the anticipated future gross margins of our operations;

accounting standards and estimates;

expectations regarding our distribution network;

expectations regarding the costs and benefits associated with our contracts and agreements with third parties, including under our third-party supply and manufacturing agreements;

our ability to comply with the listing requirements of the Nasdaq Stock Market LLC and the Toronto Stock Exchange; and

expectations on price changes for products in cannabis markets.

Certain of the forward-looking statements contained herein concerning the industries in which we conduct our business are based on estimates prepared by us using data from publicly available governmental sources, market research, industry analysis and on assumptions based on data and knowledge of these industries, which we believe to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise. The industries in which we conduct our business involve risks and uncertainties that are subject to change based on various factors, which are described further below.

The forward-looking statements contained herein are based upon certain material assumptions , including: (i) management’s perceptions of historical trends, current conditions and expected future developments; (ii) our ability to generate cash flow from operations; (iii) general economic, financial market, regulatory and political conditions in which we operate; (iv) the production and manufacturing capabilities and output from our facilities, strategic alliances and equity investments; (v) consumer interest in our products; (vi) competition; (vii) anticipated and unanticipated costs; (viii) government regulation of our activities and products including but not limited to the areas of taxation and environmental protection; (ix) the timely receipt of any required regulatory authorizations, approvals, consents, permits and/or licenses; * our ability to obtain qualified staff, equipment and services in a timely and cost-efficient manner; (xi) our ability to conduct operations in a safe, efficient and effective manner; (xii) our ability to realize anticipated benefits, synergies or generate revenue, profits or value from our recent acquisitions into our existing operations; and (xiii) other considerations that management believes to be appropriate in the circumstances. While our management considers these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct. Financial outlooks, as with forward-looking statements generally, are, without limitation, based on the assumptions and subject to various risks as set out herein. Our actual financial position and results of operations may differ materially from management’s current expectations.

By their nature, forward-looking statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the forward-looking statements in this press release and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf. Such factors include, without limitation, our limited operating history; our ability to continue as a going concern; risks that we may be required to write down intangible assets, including goodwill, due to impairment; the adequacy of our capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute our business plan (either within the expected timeframe or at all); our ability to maintain an effective system of internal control; the diversion of management time on matters related to Canopy USA; the risks that the Trust’s future ownership interest in Canopy USA is not quantifiable, and the Trust may have significant ownership and influence over Canopy USA; the risks related to the financial statements of Acreage expressing doubt about its ability to continue as a going concern; the risks in the event that Acreage cannot satisfy its debt obligations as they become due; volatility in and/or degradation of general economic, market, industry or business conditions; risks relating to the overall macroeconomic environment, which may impact customer spending, our costs and our margins, including tariffs (and related retaliatory measures), the levels of inflation, and interest rates; risks relating to our current and future operations in emerging markets; compliance with applicable environmental, economic, health and safety, energy and other policies and regulations and in particular health concerns with respect to vaping and the use of cannabis products in vaping devices; risks and uncertainty regarding future product development; changes in regulatory requirements in relation to our business and products; our reliance on licenses issued by and contractual arrangements with various federal, state and provincial governmental authorities; inherent uncertainty associated with projections; future levels of revenues and the impact of increasing levels of competition; third-party manufacturing risks; third-party transportation risks; our exposure to risks related to an agricultural business, including wholesale price volatility and variable product quality; changes in laws, regulations and guidelines and our compliance with such laws, regulations and guidelines; risks relating to inventory write downs; risks relating to our ability to refinance debt as and when required on terms favorable to us and to comply with covenants contained in our debt facilities and debt instruments; risks associated with jointly owned investments; our ability to manage disruptions in credit markets or changes to our credit ratings; the success or timing of completion of ongoing or anticipated capital or maintenance projects; risks related to the integration of acquired businesses; the timing and manner of the legalization of cannabis in the United States; business strategies, growth opportunities and expected investment; counterparty risks and liquidity risks that may impact our ability to obtain loans and other credit facilities on favorable terms; the potential effects of judicial, regulatory or other proceedings, litigation or threatened litigation or proceedings, or reviews or investigations, on our business, financial condition, results of operations and cash flows; risks associated with divestment and restructuring; the anticipated effects of actions of third parties such as competitors, activist investors or federal, state, provincial, territorial or local regulatory authorities, self-regulatory organizations, plaintiffs in litigation or persons threatening litigation; consumer demand for cannabis and hemp products; the implementation and effectiveness of key personnel changes; risks related to stock exchange restrictions; risks related to the protection and enforcement of our intellectual property rights; the risks related to our exchangeable shares (the “Exchangeable Shares”) having different rights from our common shares and there may never be a trading market for the Exchangeable Shares; future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses; and the factors discussed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024 and in Item 1A of Part II of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2024 [to be] filed with the SEC. Readers are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements.

By their nature, forward-looking statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the forward-looking statements in this press release and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf. Such factors include, without limitation, our limited operating history; risks that we may be required to write down intangible assets, including goodwill, due to impairment; the adequacy of our capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute our business plan (either within the expected timeframe or at all); our ability to maintain an effective system of internal control; the diversion of management time on matters related to Canopy USA; the risks that the Trust’s future ownership interest in Canopy USA is not quantifiable, and the Trust may have significant ownership and influence over Canopy USA; the risks relating to the conditions set forth in the Floating Share Arrangement Agreement and the Existing Acreage Arrangement Agreement not being satisfied or waived; the risks related to Acreage’s financial statements expressing doubt about its ability to continue as a going concern; the risks in the event that Acreage cannot satisfy its debt obligations as they become due; volatility in and/or degradation of general economic, market, industry or business conditions; risks relating to our current and future operations in emerging markets; compliance with applicable environmental, economic, health and safety, energy and other policies and regulations and in particular health concerns with respect to vaping and the use of cannabis products in vaping devices; risks and uncertainty regarding future product development; changes in regulatory requirements in relation to our business and products; our reliance on licenses issued by and contractual arrangements with various federal, state and provincial governmental authorities; inherent uncertainty associated with projections; future levels of revenues and the impact of increasing levels of competition; third-party manufacturing risks; third-party transportation risks; our exposure to risks related to an agricultural business, including wholesale price volatility and variable product quality; changes in laws, regulations and guidelines and our compliance with such laws, regulations and guidelines; risks relating to inventory write downs; risks relating to our ability to refinance debt as and when required on terms favorable to us and to comply with covenants contained in our debt facilities and debt instruments; risks associated with jointly owned investments; our ability to manage disruptions in credit markets or changes to our credit ratings; the success or timing of completion of ongoing or anticipated capital or maintenance projects; risks related to the integration of acquired businesses; the timing and manner of the legalization of cannabis in the United States; business strategies, growth opportunities and expected investment; counterparty risks and liquidity risks that may impact our ability to obtain loans and other credit facilities on favorable terms; the potential effects of judicial, regulatory or other proceedings, litigation or threatened litigation or proceedings, or reviews or investigations, on our business, financial condition, results of operations and cash flows; risks associated with divestment and restructuring; the anticipated effects of actions of third parties such as competitors, activist investors or federal, state, provincial, territorial or local regulatory authorities, self-regulatory organizations, plaintiffs in litigation or persons threatening litigation; consumer demand for cannabis and hemp products; the implementation and effectiveness of key personnel changes; risks related to stock exchange restrictions; risks related to the protection and enforcement of our intellectual property rights; the risks related to our exchangeable shares (the “Exchangeable Shares”) having different rights from our common shares and there may never be a trading market for the Exchangeable Shares; future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses; and the factors discussed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024 and in Item 1A of Part II of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2024 to be filed with the SEC. Readers are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements.

Forward-looking statements are provided for the purposes of assisting the reader in understanding our financial performance, financial position and cash flows as of and for periods ended on certain dates and to present information about management’s current expectations and plans relating to the future, and the reader is cautioned that the forward-looking statements may not be appropriate for any other purpose. While we believe that the assumptions and expectations reflected in the forward-looking statements are reasonable based on information currently available to management, there is no assurance that such assumptions and expectations will prove to have been correct. Forward-looking statements are made as of the date they are made and are based on the beliefs, estimates, expectations and opinions of management on that date. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such forward-looking statements, except as required by law. The forward-looking statements contained in this press release and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf are expressly qualified in their entirety by these cautionary statements.

Schedule 1

CANOPY GROWTH CORPORATION
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars, except number of shares and per share data, unaudited)

December 31,
2024

March 31,
2024

ASSETS

Current assets:

Cash and cash equivalents

$

161,909

$

170,300

Short-term investments

16,435

33,161

Restricted short-term investments

7,108

7,310

Amounts receivable, net

49,058

51,847

Inventory

90,753

77,292

Assets of discontinued operations

–

8,038

Prepaid expenses and other assets

15,822

23,232

Total current assets

341,085

371,180

Equity method investments

49,834

–

Other financial assets

321,368

437,629

Property, plant and equipment

299,604

320,103

Intangible assets

89,791

104,053

Goodwill

44,093

43,239

Other assets

18,444

24,126

Total assets

$

1,164,219

$

1,300,330

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

28,918

$

28,673

Other accrued expenses and liabilities

37,191

54,039

Current portion of long-term debt

3,167

103,935

Other liabilities

27,740

48,068

Total current liabilities

97,016

234,715

Long-term debt

438,404

493,294

Other liabilities

37,324

71,814

Total liabilities

572,744

799,823

Commitments and contingencies

Canopy Growth Corporation shareholders’ equity:

Share capital
Common shares – $nil par value; Authorized – unlimited; Issued and
outstanding – 129,153,014 shares and 91,115,501 shares, respectively.
Exchangeable shares – $nil par value; Authorized – unlimited; Issued
and outstanding – 26,261,474 shares and nil shares, respectively.

8,670,494

8,244,301

Additional paid-in capital

2,637,337

2,602,148

Accumulated other comprehensive loss

(8,999)

(16,051)

Deficit

(10,707,357)

(10,330,030)

Total Canopy Growth Corporation shareholders’ equity

591,475

500,368

Noncontrolling interests

–

139

Total shareholders’ equity

591,475

500,507

Total liabilities and shareholders’ equity

$

1,164,219

$

1,300,330

Schedule 2

CANOPY GROWTH CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of Canadian dollars, except number of shares and per share data, unaudited)

Three months ended December 31,

2024

2023

Revenue

$

86,244

$

90,061

Excise taxes

11,483

11,556

Net revenue

74,761

78,505

Cost of goods sold

50,663

50,279

Gross margin

24,098

28,226

Operating expenses

Selling, general and administrative expenses

41,476

54,436

Share-based compensation

5,159

3,693

Loss on asset impairment and restructuring

1,285

30,413

Total operating expenses

47,920

88,542

Operating loss from continuing operations

(23,822)

(60,316)

Other income (expense), net

(97,758)

(171,037)

Loss from continuing operations before income taxes

(121,580)

(231,353)

Income tax (expense) recovery

(316)

1,077

Net loss from continuing operations

(121,896)

(230,276)

Discontinued operations, net of income tax

–

13,479

Net loss

(121,896)

(216,797)

Net loss attributable to Canopy Growth Corporation

$

(121,896)

$

(216,797)

Basic and diluted loss per share

Continuing operations

$

(1.11)

$

(2.78)

Discontinued operations

–

0.16

Basic and diluted loss per share

$

(1.11)

$

(2.62)

Basic and diluted weighted average common shares
outstanding

110,306,430

82,919,190

Schedule 3

CANOPY GROWTH CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of Canadian dollars, unaudited)

Nine months ended December 31,

2024

2023

Cash flows from operating activities:

Net loss

$

(377,327)

$

(583,458)

Gain (loss) from discontinued operations, net of income tax

5,310

(194,451)

Net loss from continuing operations

(382,637)

(389,007)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation of property, plant and equipment

15,570

22,485

Amortization of intangible assets

16,081

19,396

Share-based compensation

14,531

10,127

Loss (gain) on asset impairment and restructuring

18,971

(816)

Income tax expense

6,812

13,762

Non-cash fair value adjustments and charges related to
settlement of long-term debt

223,591

188,452

Change in operating assets and liabilities, net of effects from
purchases of businesses:

Amounts receivable

(3,163)

(14,460)

Inventory

(12,924)

(8,047)

Prepaid expenses and other assets

(641)

(843)

Accounts payable and accrued liabilities

(17,000)

891

Other, including non-cash foreign currency

(11,789)

(47,901)

Net cash used in operating activities – continuing operations

(132,598)

(205,961)

Net cash used in operating activities – discontinued operations

–

(53,930)

Net cash used in operating activities

(132,598)

(259,891)

Cash flows from investing activities:

Purchases of and deposits on property, plant and equipment

(7,724)

(3,200)

Purchases of intangible assets

(409)

(716)

Proceeds on sale of property, plant and equipment

4,932

153,753

Redemption of short-term investments

16,950

68,294

Net cash outflow on sale or deconsolidation of subsidiaries

(6,968)

(3,719)

Net cash inflow on loan receivable

28,353

1,279

Investment in other financial assets

(95,335)

(472)

Other investing activities

–

(10,513)

Net cash (used in) provided by investing activities – continuing operations

(60,201)

204,706

Net cash provided by (used in) investing activities – discontinued operations

13,414

(2,600)

Net cash (used in) provided by investing activities

(46,787)

202,106

Cash flows from financing activities:

Proceeds from issuance of common shares and warrants

255,989

33,795

Proceeds from exercise of stock options

112

–

Proceeds from exercise of warrants

8,454

–

Issuance of long-term debt and convertible debentures

68,255

–

Repayment of long-term debt

(148,249)

(480,080)

Other financing activities

(19,943)

(27,239)

Net cash provided by (used in) financing activities

164,618

(473,524)

Effect of exchange rate changes on cash and cash equivalents

6,376

(2,953)

Net decrease in cash and cash equivalents

(8,391)

(534,262)

Cash and cash equivalents, beginning of period1

170,300

677,007

Cash and cash equivalents, end of period2

$

161,909

$

142,745

1 Includes cash of our discontinued operations of $nil and $9,314 for March 31, 2024 and 2023, respectively.

2 Includes cash of our discontinued operations of $nil and $nil for December 31, 2024 and 2023, respectively.

Schedule 4

Adjusted EBITDA1 Reconciliation (Non-GAAP Measure)

Three months ended December 31,

(in thousands of Canadian dollars, unaudited)

2024

2023

Net loss from continuing operations

$

(121,896)

$

(230,276)

Income tax expense (recovery)

316

(1,077)

Other (income) expense, net

97,758

171,037

Share-based compensation

5,159

3,693

Acquisition, divestiture, and other costs

3,595

4,981

Depreciation and amortization

10,314

12,240

Loss on asset impairment and restructuring

1,285

30,413

Adjusted EBITDA1

$

(3,469)

$

(8,989)

1Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Measures”.

Schedule 5

Free Cash Flow1 Reconciliation (Non-GAAP Measure)

Three months ended December 31,

(in thousands of Canadian dollars, unaudited)

2024

2023

Net cash used in operating activities – continuing operations

$

(26,966)

$

(33,348)

Purchases of and deposits on property, plant and equipment
– continuing operations

(1,215)

(564)

Free cash flow1 – continuing operations

$

(28,181)

$

(33,912)

1Free cash flow is a non-GAAP measure. See “Non-GAAP Measures”.

Schedule 6

Segmented Gross Margin Reconciliation

Three months ended December 31,

(in thousands of Canadian dollars except where indicated; unaudited)

2024

2023

Canada cannabis segment

Net revenue

$

40,728

$

40,384

Gross margin

10,181

11,306

Gross margin percentage

25

%

28

%

.

International markets cannabis segment

Revenue

$

12,024

$

10,527

Gross margin

4,932

4,192

Gross margin percentage

41

%

40

%

Storz & Bickel segment

Revenue

$

22,009

$

18,453

Gross margin

8,985

9,449

Gross margin percentage

41

%

51

%

This Works segment

Revenue

$

–

$

8,165

Gross margin

–

4,253

Gross margin percentage

0

%

52

%

Other

Revenue

$

–

$

976

Gross margin

–

(974)

Gross margin percentage

0

%

(100)

%

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SOURCE Canopy Growth Corporation

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