Canopy Growth Corp (OTCMKTS:TWMJF) is the talk of the cannabis industry at the moment. The company has recently succeeded in raising massive capital to trigger its organic expansion while still following through its acquisition strategy. This has led to massive revenue boosts which in turn has gotten the attention of the market. Canopy growth is clearly ahead of all other industry players.
Take a look at the stock price movement in the last year:
Canopy Growth Corporation was established by Bruce Linton in August 2009 and its head office is located in Smith Falls, Canada. The firm is reputed to be major global diversified cannabis company. The firm operates a collection of different brands along with a curated strain variety, which supported by over a 0.5 million square feet of greenhouse and indoor production capacity and has established collaborations with some major industry players.
Canopy Growth Corp. delivers a high selection of quality medical marijuana products. Its merchandise is used in treating symptoms ranging from loss of appetite, seizures, muscle spasms, chronic pain, and nausea.
To get more information on the company, check out our previous post here.
Canopy Growth Corp. reputed to the largest medical marijuana stock globally by market cap, has stepped up its operations to a higher gear, in its bid to rake as large as a market share as possible in the recreational and medicinal spaces. The firm announced during the release of its operating results for the third quarter that it has commenced the development of cannabis growing facilities on a 3.7 million square feet plot located in British Columbia. This is being done besides the seven growing facilities the firm already had which consisted of no less than 665,000 square feet.
Although the company has remained silent on its production target for the year, it is estimated that the firm could be generating between 0.3 million to 0.4 million kilograms of dried cannabis per year.
Besides its plans to grow its production capacity internally, the firm has also been very active on the collaboration front, by establishing partnerships as well as business acquisitions.
In the fourth quarter of the previous period, Constellation Brands, producer of Corona and a number of other alcoholic beverages, announced that it would be acquiring a 9.9% stake in Canopy for payments as high as $190 million. This cash injection was required to trigger Canopy’s expansion of its growing capacity, while still ensuring that Canopy Growth has a working relationship with a well-proven and experienced distribution partner.
Then in January 2017, Canopy acquired Mettrum Health in what could possibly be one of the biggest marijuana acquisitions in recent times. This was done with an aim to add new growing facilities and increase medical cannabis customer base.
Recently, there has been news regarding the firm’s interest in the acquisition of Alcaliber, a forty-five-year-old Spanish pharmaceutical company which manufactures and sells thebaine as well as morphine. Based on analyst estimation, the final acquisition price for Alcaliber could go as high $248 million to $341 million.
In 2017, the firm recorded revenues of $39.9 million, a whopping increase of 214% from the revenues of the last year. Remarkably, this is the not highest revenue increase in the last two years, as there was a jump of over 500% between 2015 and 2016, continuing a period which has seen a continued trend of increasing revenues for the last few years. With this positive increase, it is anticipated that the market will begin to recognize Canopy Growth’s vast potential and that the firm will continue to increase and generate revenues from the sale of its products.
However, the firm only recorded cost of sales of $1.2 million, which is only 3% of the revenues for the year. A pointer that the firm may have introduced adequate efficiency to its sales operations given that the massive scale-up occurred within a year.
In line with the above line items, research and development expenses jumped by 39%, With no major additional income while there were increases in sales and administrative costs and other costs, operating loss for the year was recorded at $6.7 million, more than double of the previous year’s $1.3 million. Net loss for the year was $7.57 million.
The statement of financial position reveals that the firm is not too highly geared. On its books, its total debt is worth an estimated $63 million, leading to debt to equity ratio of 0.1. It also has a very high liquidity ratio of 10.12, which may be considered acceptable for its industry.
TWMJF has remained consistent in its pursuit of stakeholder value and its premium products and revenue results are proof of this.
Disclosure: We have no position in TWMJF and have not been compensated for this article.