Another quarter, another loss for Canopy Growth — and ‘misstatements’ in BioSteel sales

Net sales fell to C$87.5 million, compared with C$101.8 million in the prior-year quarter. The decision to offload a cannabis-compound company helped drag sales lower. However, the company said that the cannabis business in Canada had “stabilized” exiting the fiscal year.

Analysts polled by FactSet expected a 20-cent per-share loss, on revenue of C$95.1 million.

Shares fell 3.7% after hours on Thursday.

The results marked yet another difficult round of results for Canopy, which like other Canadian producers has tried to retrench after it grew far more weed than people wanted, ran up against too much competition and found itself without a steady avenue for growth as federal cannabis reform stalled in the U.S. Canopy Growth
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in recent months has rid itself of its fleet of pot shops, tried to shrink its debt and is on track to close nearly a dozen production sites over the past three years in an effort to reach profitability.

The company on Thursday also said it found “material misstatements” related to some sales in its BioSteel sports-drink segment — which has partnerships with star athletes like the NFL’s Patrick Mahomes and the NBA’s Luka Doncic — as well as “material weaknesses” in its financial reporting protocols. That led to a decrease of roughly C$14 million in sales over the nine months ended Dec. 31, or roughly 4% of total company sales.

Canopy said it was making management changes and “appropriate personnel actions” as a result. It also said it was “considering all legal options that may be available in connection with the associated overpayment made in FY2023 to the minority shareholders of BioSteel as a result of the overstatement of revenues.”

Canopy also said it had taken other steps to boost the bottom line at BioSteel, including exiting its international business, cutting costs and redirecting resources toward Canada and the U.S.

Shares of Canopy Growth are down 82% over the past 12 months.