Canopy Growth Reports Narrowed Losses Amid Diverging Market Performance

Canopy Growth CA1380351009

The Canadian cannabis producer Canopy Growth has released financial results for the third quarter of its 2026 fiscal year, revealing a significant reduction in its net loss. Operational improvements are becoming evident, particularly in its domestic market, though challenges with profitability and international sales persist. The figures suggest a company in transition, striving for a sustainable financial turnaround.

Financial Highlights at a Glance
* Consolidated Revenue: Remained virtually flat year-over-year at CAD 74.5 million.
* Net Loss: Contracted by 49% compared to the same period last year.
* Adjusted EBITDA: Loss improved to approximately CAD 3 million, marking the third consecutive quarter of progress.
* Gross Margin: Declined to 29% from 32% in the prior year.

The company's most encouraging signals originated in Canada. Revenue from the Canadian medical cannabis segment grew 15% year-over-year to CAD 23 million. Management attributed this growth to an increase in registered insured patients and larger average order sizes.

The recreational business in Canada also showed strength, with revenue advancing 8% to reach CAD 23 million. This performance was reportedly driven by robust demand for infused pre-rolls and new all-in-one vape products under the Tweed, 7ACRES, and Claybourne brands. In total, cannabis revenue reached CAD 52 million, representing a 4% overall increase.

International Segment Shows Sequential Improvement

Performance outside Canada presented a contrast, with international cannabis revenue declining 31% to CAD 6 million. The company cited ongoing supply chain disruptions in Europe as the primary cause.

However, a sequential comparison offers a glimpse of potential stabilization. International revenue rose by 22% compared to the second quarter of fiscal 2026, indicating that recent adjustments to the supply chain are beginning to yield results.

Margin Compression and Balance Sheet Strength

The company faced continued pressure on profitability. The consolidated gross margin fell to 29%, while the margin specifically for cannabis business decreased to 25% from 28%. For the Storz & Bickel segment, the margin retreated to 37% from 40%, partly due to higher U.S. import duties.

On the cost side, Canopy Growth highlighted CAD 29 million in annualized savings realized since March 2025. Selling, general, and administrative (SG&A) expenses, excluding costs related to acquisitions, decreased by 12% year-over-year.

Financially, the company strengthened its position, ending the quarter with CAD 371 million in cash and cash equivalents. Its net cash position stood at CAD 146 million. A recapitalization completed in January extended all debt maturities to 2031.

Path Forward

Looking ahead, Canopy Growth anticipates closing its acquisition of MTL Cannabis within the current quarter. Management also reaffirmed its target of achieving a positive Adjusted EBITDA during the 2027 fiscal year, underscoring its commitment to reaching operational profitability.