(Bloomberg) -- Canopy Growth Corp. fell 6.4% in pre-market trading after the world’s biggest cannabis company reported a steeper-than-expected loss and weak gross margins.
The Smiths Falls, Ontario-based company reported adjusted gross margin of 16% for the fiscal fourth quarter ended March 31. That was well below the consensus analyst estimate of 24% and a decline from 22% in the prior quarter. Its loss before interest, taxes, depreciation and amortization was C$98 million ($74 million), much wider than the expected C$64 million loss.
The results “included a beat on top-line results, but a significant miss on gross margin,†and adjusted earnings expectations, Eight Capital analyst Graeme Kreindler wrote in a note Friday.
Canopy shares slid 6.4% to $40.85 in U.S. pre-market trading.
Revenue of C$94 million was ahead of the consensus estimate of C$92 million but core cannabis revenue declined 7.4% to C$70 million from C$76 million in the previous quarter, according to Canaccord Genuity analyst Matt Bottomley.
“As the company continues to ramp up its infrastructure, operating losses fell a bit shy of our expectations,†Bottomley wrote. “But given that the industry is still in a rather steep ramp-up phase and with C$4.5 billion of cash on its balance sheet, we are not overly concerned with profitability for the quarter.â€
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