Canopy Growth Corp.
CGC,
stock fell 16% Thursday after the cannabis company reported a wider-than-expected loss and announced plans to reduce headcount by 800 positions out of 2,244 workers.
The company is relying more on private label suppliers and scaling back some of its cultivation operations to save money.
It will exit its Smith Falls, Ontario facility and consolidating operations at existing cultivation centers in Kincardine, Ontario, and Kelowna, British Columbia.
Canopy Growth also plans to “enhance our offering with a flexible flower sourcing strategy” and outsource non-flower products, the company said.
Canopy Growth CEO David Klein said the layoffs are “difficult but necessary” to move toward profitability, as the company moves toward an “asset-light model.”
The cannabis company, which faces a challenging cannabis market in Canada, said its third-quarter revenue fell 28% from the year-ago period.
Canopy Growth said its loss for the three months ended Dec. 31 increased to C$261.58 million, or 54 cents a share, from a loss of C$108.9 million, or 28 cents a share, in the year-ago quarter.
Net revenue dropped to C$101.2 million from C$141 million.
Analysts expected Canopy Growth to lose 21 cents a share on revenue of C$116.9 million, according to estimates compiled by FactSet.
Canopy Growth said it expects to save C$140 million to C$160 million over the next 12 months as a result of its job cuts.
The cost reduction measures also include exiting cannabis flower cultivation at its Smiths Falls, Ontario, facility; stopping the sourcing of cannabis flower from its Mirabel, Quebec, facility, and moving to third-party sourcing for cannabis beverages, edibles, vapes and extracts, the company said.
Canopy Growth continues effort to win Nasdaq listing for U.S. pot business
Canopy Growth said it continues to “progress” on its effort to establish its Canopy USA (CUSA) listing on the Nasdaq, as unveiled in October.
Canopy Growth said it was prepared to make changes to the structure of its interest in Canopy Growth USA in light of objections from Nasdaq.
It’s unclear whether the Nasdaq will allow the listing because Canopy USA would contain plant-touching business and would thus be off-limits under the current Schedule I classification for cannabis under federal law.
Canopy Growth is backed by U.S.-based spirits giant Constellation Brands
STZ,
Also Read: Canopy Growth stock snaps two-day winning streak after news that Nasdaq objects to plan for U.S. assets
