BioSteel Archives - Green Market Report

Adam JacksonNovember 9, 2022
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Shares of Canopy Growth Corporation (TSX: WEED) (NASDAQ: CGC) were popping by over 9% in early Wednesday trading as the company posted results that show rising demand for its non-cannabis ventures, despite burdening debt and uncertainty around its consolidation plans. The stock was lately selling at $3.50. The company released its financial results for the second quarter ending September 30 with net revenue of C$118 million in the second quarter, down 12% versus C$135 million last year, but still a 7% improvement versus the previous quarter’s $110 million.

Total revenue earnings were not immediately available and could not be compared to Yahoo Finance’s average analysts’ estimate of C$83.7 million as of press time, though the posted net revenue is still higher than estimates.

Net loss widened to C$232 million, up C$200 million (625%) versus last year’s C$32 million, though down considerably from the previous quarter’s C$2 billion cash burn. The company said that net loss could be attributed to non-cash fair value changes and an increase in asset impairment and restructuring costs, with improved margins in the mix providing some cushion.

“We delivered solid sequential quarterly net revenue growth and improved margins, led by another record quarter for BioSteel, the stabilization of our Canadian cannabis business, and continued actions to reduce overall costs,” said CFO Judy Hong. “We are pressing forward on our path to profitability in Canada and expect Canopy USA will meaningfully enhance our growth and profitability over time once it closes the announced acquisitions of Acreage, Jetty, and Wana.”

Cash Burn

Canopy noted that the free cash flow in the fiscal second quarter was an outflow of C$135 million, a 34% increase in outflow versus last year’s second quarter. Canopy attributed this to the timing of certain payments in each period. The company said that the year-to-date free cash flow is in line with the prior year period. Investors can remain calm for now as the cash and short-term investments amounted to $1.1 billion on September 30, 2022. However, this does represent a decrease of $229 million from $1,372 million on March 31, 2022, reflecting primarily Adjusted EBITDA losses and interest costs.

BioSteel Boost

The company’s majority stake in hydration drink BioSteel proved to be fruitful, as revenue in the quarter rose 299% versus last year. BioSteel has secured distribution with large retailers and inked a multi-year partnership in July with the National Hockey League and the National Hockey League Players Association as an “official hydration partner.”

Under the accord, BioSteel is given league-wide rink-side marketing and product supply rights, retail activation rights as well as a community engagement platform.

Canopy said that it acquired a manufacturing facility on Tuesday, “which is expected to support ongoing rapid U.S. expansion for the brand and drive gross margin improvement.”

At the same time, the company also announced that it would divest from its vertical retail operations and sell off all of its stores, focusing on the core consumer packaged goods business instead.

Canopy also made headlines on the news that it would trigger hibernating deals to buy three U.S. plant-touching companies under separate holdings umbrella, though the plans face complications that could affect its listing status on the Nasdaq.

Stifel analyst Andrew Carter downgraded the company to a “Sell” rating after the announcement, citing Canopy’s debt versus the company’s valuations on its businesses.

“We weigh C$1.4 million of value against C$240 million of net debt as well as the $750 million term debt’s remaining interest expense included in the make-whole provision,” he wrote in the report.

Canopy reported a gross margin of 3% versus 54% in the same quarter last year.

Adjusted EBITDA loss was $78 million, an $85 million improvement versus the same time last year, due to the improvement in gross margin and reductions in G&A and R&D expenses.

“Our second quarter marks a key inflection-point for Canopy, demonstrating momentum across our key businesses and accelerating our entry into the U.S. cannabis market through the creation of Canopy USA,” said CEO David Klein. Canopy is ideally positioned to capitalize on this once-in-a-generation opportunity and accelerate our path to North American cannabis market leadership.”


Debra BorchardtOctober 2, 2019
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Canopy Growth Corporation  (TSX: WEED) (NYSE: CGC)  has completed an all-cash transaction to purchase a majority stake in sports nutrition company BioSteel Sports Nutrition Inc. The amount of the acquisition was not disclosed. The deal gives Canopy a significant entry into the sports nutrition and hydration category and lays the groundwork for cannabidiol (CBD) products to be sold in the U.S.

BioSteel was founded in 2009 and focuses on premium natural ingredients with a reputation for being the hydration beverage of choice for high-performance athletes. According to the company statement, BioSteel products have been purchased by over 70% of the teams in North America’s four major sports leagues and ambassadors of the brand include: Ezekiel Elliott, of the Dallas Cowboys; Connor McDavid, of the Edmonton Oilers; WTA player, Eugenie BouchardAndrew Wiggins with the Minnesota Timberwolves; Tyler Seguin with the Dallas Stars; Jalen Ramsey, with the Jacksonville Jaguars; NHL Hall of Famer, Wayne Gretzky; Gleyber Torres, with the New York Yankees; and Smiths Falls very own, LPGA golfer Brooke Henderson. In particular, Elliott’s agreement with BioSteel allows them to activate the star running back as the leading endorser of CBD products once permitted by the NFL. To date no active player has been able to do so.

“BioSteel has a reputation for being a best-in-class provider of natural sports nutrition products and all of its products are well positioned to benefit from the increasing trend of plant-based and all-natural products, preferred not only by professional athletes, but active consumers as well,” commented Mark Zekulin, CEO, Canopy Growth. “This acquisition allows us to enter the sports nutrition space with a strong and growing brand as we continue towards a regulated market of food and beverage products that contain cannabis. We view the adoption of CBD in future BioSteel offerings as a potentially significant and disruptive growth driver for our business.”

“The use and acceptance of CBD-based products in the professional sports landscape has changed. We have witnessed the negative effects of prescription painkillers and athletes are looking for healthier alternatives,” said Michael Cammalleri, Co-Founder and Co-CEO, BioSteel Sports Nutrition. “Its presence is already commonplace amongst NHL players and as a regular CBD user myself, I couldn’t be more proud to champion BioSteel’s evolution and leadership in this space.”

In addition, BioSteel has national organizational partnerships with USA Hockey, Canada Basketball, Athletics Canada and the Professional Hockey Players Association. The company has 10,000+ points of distribution in Canada and the U.S. and continues to expand in both markets and into Europe.

Canopy Rivers

Venture capital firm Canopy Rivers Inc.  (TSX: RIV)(OTC: CNPOF) completed a $10 million investment ( in TerrAscend Canada Inc., a subsidiary of its portfolio company TerrAscend Corp. (CSE: TER)(OTCQX: TRSSF). The investment includes the purchase of 13,243 units, with each unit consisting of: (i) one unsecured convertible debenture of TerrAscend Canada with a principal amount of CA $1,000, and (ii) 25.2 common share purchase warrants of TerrAscend exercisable until October 2, 2024.

“We think TerrAscend is uniquely positioned to meet the evolving consumer demands in the three largest cannabis markets worldwide,” said Narbe Alexandrian, President & CEO of Canopy Rivers. “We strongly believe in TerrAscend’s ability to execute on its global strategy, market a diversified brand portfolio, and build on its recent acquisitions, and this additional investment is an affirmation of that belief.”

“We are privileged to have the continued confidence and support of Canopy Rivers, one of the preeminent investment firms specializing in cannabis,” said Michael Nashat, CEO of TerrAscend. “This growth capital enables us to accelerate our organic and acquisition-driven investments in our key markets across the globe, as we execute our strategic vision of being a truly global cannabinoid company.”

Canopy Rivers, along with Canopy Growth Corporation, first invested in TerrAscend in November 2017. In October 2018, both parties restructured their investment in TerrAscend. This restructuring enabled TerrAscend to pursue strategic international transactions in the cannabis space while ensuring all parties remained compliant with industry and securities regulations.

The investment was part of a larger raise of approximately $25 million through the issuance of units of each of TerrAscend and TerrAscend Canada Inc. The first tranche of the Canadian Offering was the $10 million lead order from Canopy Rivers Inc. The company expects to close on additional tranches by mid-October 2019


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