Canopy Growth Corp. shares fell to a 2019 low on Thursday after quarterly results suggested the cannabis producer lost market share and an announcement that its interim chief executive plans to leave the company, just weeks after his co-CEO was pushed out.
The Smiths Falls, Ont.-based company shares closed down $6.16 or 14.47 per cent at $36.41 on the Toronto Stock Exchange.
Canopy reported a $1.28-billion loss or $3.70 per share for the three months ended June 30, compared with a loss of $91 million, or 40 cents a share, in the same quarter the previous year. Analysts had predicted the company would book a loss of 70 cents per share on $107.1 in revenue, according to financial data firm Refinitiv.
Quarterly revenues in what was the company's fiscal first quarter of 2020 fell short of those expectations at $90.5 million, up from $25.9 million a year earlier, before recreational marijuana was legal in Canada. Compared with the quarter before, sales were down by about $4 million.
Medical cannabis revenues decreased five per cent year-over-year, with a 39 per cent drop in Canada offset by a large increase in international sales.
"It appears Canopy is losing market share," John Chu, an analyst with Desjardins, wrote in a note. Canopy's net sales of $90 million fell short of Desjardins's $125-million estimate.
CEO Mark Zekulin said Thursday that Canopy was successful when recreational cannabis became legal in Canada in October and that allowed it to grab 25 per cent to 33 per cent of the market.
"Our competitors have now began to ramp up their own supply," he said, adding that the company has had to retrofit some of its facilities.
"We are still within that one quarter to one-third market share," though it's now towards the lower end of that band, Zekulin said.
Still, he added, the company expects to maintain and increase its market share and as the market grows that will mean increasing revenues.
Zekulin announced on the call that he has decided to leave the company "once a suitable CEO is found."
The news came just six weeks after co-CEO and board member Bruce Linton was abruptly ousted in the wake of a statement from shareholder Constellation Brands Inc., which invested $5 billion last November, that it was "not pleased" with Canopy's year-end results.
At the time, Zekulin said he will work with the board to begin a search to find a new leader to guide the company in its next phase.
Canopy has hired a U.S. recruitment firm, Zekulin said, and the CEO search is well underway with "several exceptional candidates" already identified.
It expects to have the executive post transition completed within the next several months, said Zekulin, who did not disclose his future plans.