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Canopy Growth (CGC) Q2 Earnings & Revenues Miss Estimates
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Canopy Growth Corporation (CGC - Free Report) incurred loss per share of 82 cents (CDN $1.08) on a GAAP basis in the second quarter of fiscal 2020, which is wider than the year-ago loss of 76 cents (CDN $3.70). Further, the bottom line lagged the Zacks Consensus Estimate of a loss of 27 cents.
The loss per share excludes certain non-recurring expenses like fair value changes in biological assets, share-based compensation expenses, acquisition-related costs, and depreciation and amortization expenses.
Total Revenues
Gross revenues (without considering any returns and pricing adjustments, primarily related to oils and softgels, and certain excise tax) were $89.6 million (CDN $118.3 million), up from the year-ago figure of $17.8 million (CDN $23.3 million).
Canopy Growth Corporation Price, Consensus and EPS Surprise
Net revenues skyrocketed to $58 million (CDN $76.6 million) from the second quarter of fiscal 2019. However, the metric lagged the Zacks Consensus Estimate by 24.7%.
Compared with the fiscal first-quarter figures, company-owned recreational same-store sales growth was 17% and global medical organic growth was 23%. These were fueled by consumer demand for cannabis.
Revenues by Product Categories
The company has two major reporting segments — Canadian cannabis and International medical cannabis.
In the last reported quarter, Canadian cannabis registered gross revenues of $58 million (CDN $76.6 million), up from $15.2 million (CDN $19.9 million) reported a year ago. International medical cannabis revenues were $13.7 million (CDN $18.1 million), up from $1.7 million (CDN $2.2 million) a year ago.
Margin
Inventory production costs expensed to cost of sales were $65.4 million (CDN $86.3 million) in the quarter, reflecting a remarkable improvement from the year-ago figure of $11.9 million (CDN $15.6 million).
Sales and marketing expenses rose year over year to $45.8 million (CDN $60.5 million) due to pre-revenue investments in brand awareness, product marketing and consumer education initiatives. The company incurred these expenses as it is increasingly focusing on the launch of Cannabis 2.0 products in Canada, and the rollout of cannabidiol (“CBD”) products in the United States and other international markets in the coming months.
Canopy Growths’ research and development expenses grew year over year to $9 million (CDN $11.9 million), thanks to an increased focus on new research and development efforts.
The company’s general and administration costs rose year over year to $66.6 million (CDN $87.9 million), fueled by expenses like compliance and litigation costs.
Adjusted operating loss was $128 million (CDN $169.9 million) in the quarter under discussion, wider than $54.7 million (CDN $71.5 million) in the year-ago quarter.
Financial Position
Canopy Growth exited the second quarter of fiscal 2020 with cash and cash equivalents of $833.1 million (CDN $1.1 billion) compared with $328.6 million (CDN $429.4 million) a year-ago.
Year to date, the company used $272.1 million (CDN $359.3 million) in operating activities, compared with $151.6 million (CDN $198.1 million) a year ago.
Our Take
Canopy Growth exited the second quarter of fiscal 2020 on a mixed note as its revenues grew substantially, while loss per share widened. Per the company, it is facing challenges in the Canadian cannabis market as provinces have reduced purchases to lower inventory levels, retail store openings have fallen short of expectations and delay in the launch of Cannabis 2.0 products.
However, Canopy Growth is optimistic about its retail store sales, on both overall and same-store basis. The impressive revenue performance of International medical cannabis, both an organic and inorganic basis, buoys optimism.
However, the continued widening of loss per share and increasing general and administration costs are concerning for the company.
Zacks Rank and Stocks to Consider
Currently, Canopy Growth carries a Zacks Rank #3 (Hold).
Some better-ranked medical device companies, which posted solid results this earnings season, are ResMed Inc (RMD - Free Report) , NuVasive, Inc and Thermo Fisher Scientific Inc (TMO - Free Report) .
ResMed, with a Zacks Rank #2 (Buy), reported first-quarter fiscal 2020 adjusted earnings per share (EPS) of 93 cents, surpassing the Zacks Consensus Estimate by 6.9%. Its revenues of $681.1 million outpaced the consensus mark by 3.7%.
NuVasive’s third-quarter 2019 adjusted EPS of 59 cents surpassed the Zacks Consensus Estimate by 9.3%. Its revenues totaled $290.8 million, which outpaced the consensus estimate by 2.4%. The company currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Thermo Fisher, with a Zacks Rank #2, delivered third-quarter 2019 adjusted EPS of $2.94, beating the Zacks Consensus Estimate by 2.1%. Its revenues of $6.27 billion surpassed the Zacks Consensus Estimate by 1.3%.
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Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”
Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.5% per year. So be sure to give these hand-picked 7 your immediate attention.
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Canopy Growth (CGC) Q2 Earnings & Revenues Miss Estimates
Canopy Growth Corporation (CGC - Free Report) incurred loss per share of 82 cents (CDN $1.08) on a GAAP basis in the second quarter of fiscal 2020, which is wider than the year-ago loss of 76 cents (CDN $3.70). Further, the bottom line lagged the Zacks Consensus Estimate of a loss of 27 cents.
The loss per share excludes certain non-recurring expenses like fair value changes in biological assets, share-based compensation expenses, acquisition-related costs, and depreciation and amortization expenses.
Total Revenues
Gross revenues (without considering any returns and pricing adjustments, primarily related to oils and softgels, and certain excise tax) were $89.6 million (CDN $118.3 million), up from the year-ago figure of $17.8 million (CDN $23.3 million).
Canopy Growth Corporation Price, Consensus and EPS Surprise
Canopy Growth Corporation price-consensus-eps-surprise-chart | Canopy Growth Corporation Quote
Net revenues skyrocketed to $58 million (CDN $76.6 million) from the second quarter of fiscal 2019. However, the metric lagged the Zacks Consensus Estimate by 24.7%.
Compared with the fiscal first-quarter figures, company-owned recreational same-store sales growth was 17% and global medical organic growth was 23%. These were fueled by consumer demand for cannabis.
Revenues by Product Categories
The company has two major reporting segments — Canadian cannabis and International medical cannabis.
In the last reported quarter, Canadian cannabis registered gross revenues of $58 million (CDN $76.6 million), up from $15.2 million (CDN $19.9 million) reported a year ago. International medical cannabis revenues were $13.7 million (CDN $18.1 million), up from $1.7 million (CDN $2.2 million) a year ago.
Margin
Inventory production costs expensed to cost of sales were $65.4 million (CDN $86.3 million) in the quarter, reflecting a remarkable improvement from the year-ago figure of $11.9 million (CDN $15.6 million).
Sales and marketing expenses rose year over year to $45.8 million (CDN $60.5 million) due to pre-revenue investments in brand awareness, product marketing and consumer education initiatives. The company incurred these expenses as it is increasingly focusing on the launch of Cannabis 2.0 products in Canada, and the rollout of cannabidiol (“CBD”) products in the United States and other international markets in the coming months.
Canopy Growths’ research and development expenses grew year over year to $9 million (CDN $11.9 million), thanks to an increased focus on new research and development efforts.
The company’s general and administration costs rose year over year to $66.6 million (CDN $87.9 million), fueled by expenses like compliance and litigation costs.
Adjusted operating loss was $128 million (CDN $169.9 million) in the quarter under discussion, wider than $54.7 million (CDN $71.5 million) in the year-ago quarter.
Financial Position
Canopy Growth exited the second quarter of fiscal 2020 with cash and cash equivalents of $833.1 million (CDN $1.1 billion) compared with $328.6 million (CDN $429.4 million) a year-ago.
Year to date, the company used $272.1 million (CDN $359.3 million) in operating activities, compared with $151.6 million (CDN $198.1 million) a year ago.
Our Take
Canopy Growth exited the second quarter of fiscal 2020 on a mixed note as its revenues grew substantially, while loss per share widened. Per the company, it is facing challenges in the Canadian cannabis market as provinces have reduced purchases to lower inventory levels, retail store openings have fallen short of expectations and delay in the launch of Cannabis 2.0 products.
However, Canopy Growth is optimistic about its retail store sales, on both overall and same-store basis. The impressive revenue performance of International medical cannabis, both an organic and inorganic basis, buoys optimism.
However, the continued widening of loss per share and increasing general and administration costs are concerning for the company.
Zacks Rank and Stocks to Consider
Currently, Canopy Growth carries a Zacks Rank #3 (Hold).
Some better-ranked medical device companies, which posted solid results this earnings season, are ResMed Inc (RMD - Free Report) , NuVasive, Inc and Thermo Fisher Scientific Inc (TMO - Free Report) .
ResMed, with a Zacks Rank #2 (Buy), reported first-quarter fiscal 2020 adjusted earnings per share (EPS) of 93 cents, surpassing the Zacks Consensus Estimate by 6.9%. Its revenues of $681.1 million outpaced the consensus mark by 3.7%.
NuVasive’s third-quarter 2019 adjusted EPS of 59 cents surpassed the Zacks Consensus Estimate by 9.3%. Its revenues totaled $290.8 million, which outpaced the consensus estimate by 2.4%. The company currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Thermo Fisher, with a Zacks Rank #2, delivered third-quarter 2019 adjusted EPS of $2.94, beating the Zacks Consensus Estimate by 2.1%. Its revenues of $6.27 billion surpassed the Zacks Consensus Estimate by 1.3%.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”
Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.5% per year. So be sure to give these hand-picked 7 your immediate attention.
See them now >>