The woes of Canopy Growth continue with a write-down of $1.18 billion on its Constellation deal, following the loss of Bruce Linton and now the impending departure of his successor Mark Zekulin.
While reporting a sales rise of almost 300 per cent to Canadian $103 million, and a record harvest, shares in the world’s largest cannabis company have fallen by 25% to around $35 since the release of its first quarter results, earlier this month.
The Constellation write down led the company to an overall loss of C$1.28 billion in the quarter, up to June 30, saying it is concerned with ‘warrants related to the deal’, reported Canopy in its market announcement. Canopy fired Co-Chief Executive Bruce Linton in June, this year, not long after its previous earnings report, and new CEO Mark Zekulin told a first quarter conference call he expects to ‘exit once a new leader is found’.
During the call Mr Zekulin outlined Canopy’s two main objectives, amid speculation the company is under increasing pressure to improve its bottom line from drinks giant Constellation, which has a 38% stake in the business.
The first of these is to continue to lay the foundation for ‘dominance in the global market place’, and secondly, to move from ‘builders to operators’ – effectively, to start making money in its domestic market. Canopy’s overseas ambitions have been demonstrated with a number of European deals this year.
In February, Canopy bought Germany-based C3, Europe’s largest cannabinoid-based pharmaceuticals company. Two months later it purchased Spanish licensed cannabis producer Cáñamo y Fibras Naturales; one of the three Spanish companies authorised to cultivate, distribute and export medical cannabis. In May, it followed this up with the purchase of U.K firm the This Works – natural skincare and sleep solutions provider.
The acquisitions of C3 and This Works cost the business $430.9 million the company said in its latest result’s announcement, adding ‘that it will solidify its status as a truly global leader in cannabinoid research’. Its overseas ambitions were demonstrated further earlier this month with the purchase medical cannabis researcher Beckley Canopy Therapeutics, and its U.K. offshoot Spectrum Biomedical UK,
Mr Zekulin, said this deal ‘will allow Spectrum to continue expanding its medical cannabis leadership around the world, strengthening its foothold in the UK and more broadly across Europe’.
