Canopy Growth Corporation (TSX: WEED) (NASDAQ: CGC) announced its financial results for the second quarter fiscal 2022 ending September 30, 2021 as total revenue fell 3% to $131 million, missing estimates by $10 million. Furthermore, Canopy noted that excluding the impact from the company’s acquired businesses, net revenue declined 13% and cannabis revenue declined 14% versus last year’s second fiscal quarter.
Canopy blamed the decline in flower sales on an insufficient supply of flower with in-demand attributes, including higher THC, in the premium and mainstream categories as well heightened competition focused on single strain offerings in the value flower category. Canopy said that it managed to keep its number one market share in the premium flower category but conceded that it fell by 310 bps quarter over quarter. The value flower category maintained its number two market share, but that also dropped by 540 bps from the first quarter. The company said it expects to bring additional flower and pre-roll products to market over the coming months including new strains across all categories with DOJA 91K, Tweed Powdered Donuts, Twd. Garlic Jelly flower shipped in the current quarter.
Canopy reported net earnings in the quarter with a loss of $16 million, which is an $80 million improvement over last year’s second quarter. Canopy said this was driven primarily by other income totaling $196 million during the quarter mostly attributable to non-cash fair value changes of $233 million.
CEO David Klein said, “In new industries where the potential is immense, progress is rarely a straight line. With a focused strategy, a foundation for growth, and our burgeoning U.S. ecosystem, Canopy is uniquely positioned to win as the industry matures.”
Storz & Bickel vaporizer revenue decreased 34% sequentially, which the company blamed on strong comparison during the year-ago period, as well as shipping restrictions and production shortages caused by global supply chain difficulties. In addition to that, recreational B2C net sales in decreased 11% sequentially, which Canopy blamed on the rapid increase in third-party retail locations across provinces.
Medical net revenue in Q2 FY2022 decreased 6% from Q2 FY2021 driven primarily by higher average order sizes offset by a fewer number of orders.