Canopy Growth Corporation reports fourth quarter and fiscal 2019 results with annual sales of $226.3M

    --  Achieved annual net revenue growth of 191% to $226.3 million. Generated
        $140.5 million of gross revenue from new Canadian recreational channel
        and $78.9 million in global medical sales.
    --  Fourth quarter revenue growth of 13% versus third quarter with
        additional revenue being generated through value-added products,
        extraction services, and clinic partners.
    --  Shipped 24,300 kilograms and kilogram equivalents during the fiscal
        year, including 16,300 kilograms of dry flower and 8,000 kilogram
        equivalents of oil and softgels.
    --  Canadian cannabis harvested expected to increase to approximately 34,000
        kilograms in Q1 fiscal 2020, with further licensed capacity still to
        come; additional capacity is expected to increase finished inventory
        available for sale beginning in Q2 fiscal 2020.
    --  Expansion in Smiths Falls bringing headquarters campus footprint to over
        950,000 square feet of value-add production and logistics space.
    --  $5 billion investment secured from Constellation Brands being deployed
        to accelerate global expansion, including the acquisition of medical
        cannabis device manufacturer, Storz & Bickel. Subsequent to year end,
        the Company acquired Germany-based C³ Cannabinoid Compound Company,
        Europe's largest cannabinoid-based pharmaceutical company and UK-based
        beauty and wellness brand, This Works Products Limited.
    --  Rapid expansion into United States CBD market following passage of new
        Farm Bill; investments and partnerships related to extraction, advanced
        manufacturing, and warehousing/logistics are underway. Seeking to bring
        CBD products to market by the end of fiscal 2020.
    --  Further solidified United States strategy with shareholder approval of
        plan to acquire leading multi-state operator Acreage Holdings, Inc.
        ("Acreage") a deal which gives the Company a path to serve recreational
        and medical markets upon federal permissibility, and licensing structure
        to provide Acreage with brand and product IP to accelerate their United
        States market expansion.
    --  International licences covering over 35 million square feet of
        production now in place across Africa, Europe, and Latin America, with
        new certifications, sales and global partnerships established to
        accelerate sales of medical and CBD products internationally (See Linked
        Monday Press Release).
    --  At March 31, 2019, the Company's cash, cash equivalents available, and
        marketable securities totaled $4.5 billion.

SMITHS FALLS, ON, June 20, 2019 /PRNewswire/ - Canopy Growth Corporation ("Canopy Growth" or the "Company") (TSX: WEED) (NYSE: CGC) today announced its financial results for the fourth quarter and fiscal year ended March 31, 2019. The audited Consolidated Financial Statements and Management's Discussion and Analysis for the twelve months ended March 31, 2019 will be filed on SEDAR after financial markets close on Friday, June 21, 2019 and will be available at www.sedar.com. All financial information in this press release is reported in Canadian dollars, unless otherwise indicated. This press release is intended to be read in conjunction with the Company's Financial Statements and Management Discussion & Analysis, which will be available at www.canopygrowth.com and filed on SEDAR.

Fiscal year 2019 was a year of continued expansion across key markets, including major steps towards completion of the Company's build-out in Canada. Management believes that the strategy of investing early in large-scale, high quality Canadian production assets and significant value-add infrastructure has been validated during the second half of fiscal 2019 as the majority of the Company's production platform became licensed and operational, with further improvements in output expected as full ramp-up of facilities is completed. In the current quarter, Canopy Growth expects to harvest approximately 34,000 kilograms, with further licensed capacity, ramp-up and efficiencies anticipated. The Company's strategy has resulted in, to its knowledge, the largest market share in the Canadian cannabis market.

"The fourth quarter wraps up a historic year with major steps taken in Canada to build-out our national platform while scaling all of our processes to bring cannabis to market. The third quarter of the year benefitted from months of advanced production while the fourth quarter relied more on efficient throughput and a more automated platform," said Bruce Linton, Chairman and Co-CEO of Canopy Growth. "With more product formats coming to the Canadian market later in the year, we are working hard to ensure that we are ready to hit the ground running with products, formats and brands that Canadians trust."



       
              Fourth Quarter and Fiscal 2019 Operational and Financial Summary




                                                                                    
     Q4        
     Q4        
          %       
     FY         
     FY         
        %
                                                                                           2019        2018   Change               2019         2018   Change

                                                                                                                                                              ---


       Net revenue (millions)                                                            $94.1       $22.8           313%       $226.3        $77.9             191%



       Kilograms and kilogram equivalents sold                                          $9,326      $2,528           269%      $24,320       $8,708             179%





       Average Selling Price per gram - Recreational                                     $7.28                 
          NM        $7.20                  
            NM



       Average Selling Price per gram - Canadian Medical                                 $8.17       $8.00             2%        $8.90        $8.34               7%



       Average Selling Price per gram - International Medical                           $13.91      $13.35             4%       $13.57       $13.16               3%



       Average Selling Price per gram                                                    $7.49       $8.43           -11%        $7.91        $8.24              -4%



       Inventory & Biological Assets (millions)                                           $341        $118           189%         $341         $118             189%



       Kilograms harvested (kilograms)                                                 $14,469      $4,811           201%      $46,927      $22,513             108%



       Cash, cash equivalents and marketable securities (millions)                      $4,515        $323          1298%       $4,515         $323            1298%

    ===



       
                Fourth Quarter and Fiscal 2019 Revenue Highlights




                                                                            
     Q4      
     Q4      
           %       
     FY        
     FY        
          %
                                                                                 2019      2018   Change               2019               Change
                                                                                                                                 2018

                                                                                                                                                 ---


       Canadian Recreational Cannabis Gross Revenue - Business to Business     $57.2             
             NM      $117.4                
             NM



       Canadian Recreational Cannabis Gross Revenue - Business to Consumer     $11.7             
             NM       $23.1                
             NM

    ---


       Canadian Recreational Cannabis Revenue - Subtotal                       $68.9             
             NM      $140.5                
             NM

    ---


       Canadian Medical Cannabis Gross Revenue                                 $11.6     $19.5            -41%       $68.8       $70.6              -3%



       International Medical Cannabis Gross Revenue                             $1.8      $2.4            -25%       $10.1        $3.7             173%

    ---


       Medical Revenue - Subtotal                                              $13.4     $21.9            -39%       $78.9       $74.3               6%

    ---


       Other Revenue                                                           $24.2      $0.9           2589%       $34.0        $3.6             844%

    ---


       
                Total Gross Revenue                                       $106.5     $22.8            367%      $253.4       $77.9             225%



       Less Excise Taxes                                                       $12.4             
             NM       $27.1                
             NM

    ---


       
                Net Revenue                                                $94.1     $22.8            313%      $226.3       $77.9             191%

    ===


       NM = Not Meaningful



       
                Fourth Quarter and Fiscal 2019 Product Sales Highlights





       Product Sales (Kilograms & kilogram equivalents)                     
     Q4      
     Q4       
       %        
     FY         
     FY        
            %
                                                                                                                                          Change
                                                                                  2019       2018 
       Change           2019        2018

    ---                                                                                                                                            ---


       Canadian Recreational Cannabis - Business to Business                   $6,964              
          NM      $14,345                  
             NM



       Canadian Recreational Cannabis - Business to Consumer                     $999              
          NM       $1,905                  
             NM



       Canadian Medical Cannabis                                               $1,233     $2,352         -48%       $7,324      $8,421               -13%



       International Medical Cannabis                                            $130       $176         -26%         $746        $287               160%

    ---


       Total                                                                   $9,326     $2,528         269%      $24,320      $8,708               179%

    ===


       NM = Not Meaningful

Recreational Sales Overview

Gross recreational revenue in fiscal 2019 was $140.5 million, and accounted for 16,250 kilogram and kilogram equivalents, or 67% of total cannabis sold in fiscal 2019. Q4 to Q3, gross recreational sales were largely similar with $68.9 million in gross recreational sales in Q4, down from $71.6 million in gross recreational sales in Q3. As increased brick and mortar stores come online in key provinces of Ontario, Alberta, and British Columbia, the Company will use its increased capacity to meet demand. Through the Company's investments in capacity and automation across many of our processes, we approximately doubled our harvest size from Q3 fiscal 2019 to Q4 fiscal 2019, and expect to do so again from Q4 fiscal 2019 to Q1 fiscal 2020, positioning us to ensure Canadian adult consumers have access to our trusted brand portfolio.

Fiscal 2019 also welcomed our retail strategy, which included securing licenses, rights to license, or permits to operate cannabis retail stores in four provinces - including multi-year licensing agreements in Ontario to enable our partners to open additional retail stores. To date, we have launched (directly or indirectly through licensing agreements) 23 cannabis retail stores in Newfoundland & Labrador, Manitoba, Saskatchewan, and Ontario under the Tweed and Tokyo Smoke banners.

Medical Sales Overview

Total revenue generated from medical cannabis in fiscal 2019 was $78.9 million, representing an increase of 6% over fiscal 2018. Medical cannabis shipments were 8,070 kilogram and kilogram equivalents in fiscal 2019, representing a decrease of 7%.

Canadian medical sales generated revenue of $68.8 million in fiscal 2019 as compared to $70.6 million in fiscal 2018.

The Company's Canadian online medical store saw a period of major transformation during the fiscal year, with established brands Tweed, DNA Genetics, LBS and certain CraftGrow partners largely transitioning to the recreational channel. This product transition, along with product supply challenges which have since been remedied, led to a decline in the medical channel in the second half of fiscal 2019, with Canadian medical revenue decreasing from $19.5 million in Q4 fiscal 2018 to $11.6 million in Q4 fiscal 2019. Following the re-brand of Spectrum Cannabis, Canopy Health Innovations and C(3) into a singular medically-focused division Spectrum Therapeutics, along with increasing finished goods inventory levels, and corresponding price adjustments of select products, the Company believes that Canadian medical sales under the Spectrum Therapeutics brand will be able to return to previous levels of market-leading customer registrations and sales.

International medical sales generated revenue of $10.1 million in fiscal 2019, 173% growth over the previous fiscal year, driven by German market growth, as well as entry into the Polish and Czech markets. The Company believes that European sales have been negatively impacted by supply challenges from Canada, caused by a focus on serving Canadian patients first, as well as the lengthy export process in Canada. The Company believes there is significant upside potential in Europe, and with its Canadian medical channel fully supplied and Danish production coming online within the calendar year, believes it will see significant increases in Canadian and Danish product availability in this market. The Company has also begun sales in new markets, including Australia.

The Company remains committed to investing in significant clinical research, as well as leading programs to educate healthcare practitioners on the potential benefits of medicinal cannabis in Canada and abroad. This outreach will continue increasing Spectrum Therapeutics brand visibility and is estimated to result in increased patients, both within Canada and internationally as new markets come online.

Other Strategic Revenue

To begin diversifying the Company's business into higher margin cannabis products and to complement intellectual property ("IP") being developed internally for the expected high growth vape category, Canopy Growth acquired medical devices company Storz & Bickel in Q3. Sales of Storz & Bickel vaporizer devices, along with revenue from other strategic sources including extraction services, and clinic partners, resulted in $34 million in other revenue generated in fiscal 2019.

As Storz & Bickel continues to become further and fully integrated within the Canopy Growth ecosystem, the Company anticipates that sales and revenue generated will continue to increase as we expand product availability within our internal and partnered sales channels. Additionally, through this acquisition, the Company gained invaluable access to Storz & Bickel's IP portfolio which has greatly benefited our innovation teams as we look forward to unveiling our own branded vape technology in fiscal 2020.

Gross Margin (before the IFRS fair value impacts in cost of sales)(1) Overview

Gross margin (before the IFRS fair value impacts in cost of sales) for fiscal 2019 grew 35% to $51 million, driven by growth in our medical channel and the launch of the Canadian recreational channel. The gross margin percentage decreased during the year from 48% to 22%, largely driven by the continued expansion work on several of our large-scale greenhouse facilities throughout the year, resulting in under-utilization impact in cost of sales. The impacts of under-utilization continued into Q4, resulting in a gross margin percentage of 16%, which is down from 34% in the corresponding period from the prior year, and 22% in Q3. The impact in Q4 fiscal was primarily attributed to $24 million of operating expenses for facilities not yet cultivating, cultivating but not yet harvesting, or facilities that had under-utilized capacity. Additionally, Q4 incurred some non-recurring costs related to an unusual weather event and other one-time activities. We expect these facilities to be fully operational in the months ahead, resulting in a return to normalized operating costs for our cultivation facilities.

As production ramp-up begins for the next generation of recreational products, there will be costs related to the ramp-up of advanced manufacturing that will impact reported gross margin during the initial start-up phase, but management expects the impact to be less material relative to the size and scale of the revenue related to the new generation of products.

Inventory production costs expensed to cost of sales in fiscal 2019 were $175.4 million, as compared to $40.2 million in fiscal 2018. The impact of changes in the fair value of biological assets in fiscal 2019 was due in large part to the commencement of growing at the Company's facility in Mirabel, Quebec increased utilization at our facilities in Aldergrove and Delta, British Columbia, and 27 new grow rooms at the facility in Smiths Falls, Ontario.



       
                Operating Expense Summary




                                               
     Q4      
     Q4       
      %        
     FY        
     FY        
           %
                                                    2019      2018                                        Change
                                                                   
      Change          2019        2018

                                                                                                                  ---


       Sales and Marketing Expenses               $53.2     $14.8         259%      $154.4       $38.2              304%



       General and Administration Expenses        $65.6     $16.9         288%      $168.5       $43.8              285%



       Research and Development Expenses           $7.3      $0.5        1360%       $15.2        $1.5              913%



       Acquisition-related Expenses               $13.8      $0.9        1433%       $23.4        $3.4              588%



       Share-based Compensation Expenses          $93.1     $20.2         361%      $283.0       $49.1              476%



       Depreciation and Amortization Expenses      $9.9      $2.9         241%       $21.5       $12.9               67%

    ---


       Total                                     $242.9     $56.2         332%      $666.0      $148.9              347%

    ===

Canopy Growth continues to make significant investments to scale our business in Canada and globally, including investments building our corporate capabilities, developing our production infrastructure, investing in the marketing and development of new value-added consumer products for the Canadian recreational cannabis market as well as the global CBD market. Work is underway to bring these new consumer products to these markets towards the end of fiscal 2020. Additionally, the Company continues to invest in the development and expansion of medical cannabis operations in jurisdictions outside of Canada including Colombia, Spain, Germany, Denmark, Lesotho, South Africa and Australia. In addition, we are investing in the research and development of cannabis-based medical therapies, including in required clinical trials, in advance of potential future commercialization. We believe it is necessary to make these investments, many of them made pre-revenue, to position the company for long-term success.

Sales and marketing increased from $38.2 million in fiscal 2018 to $154.4 million in fiscal 2019, reflecting investments in brand-building, consumer marketing, and promotional campaigns focused on our Tweed, Tokyo Smoke, Spectrum Therapeutics, active partner brands, as well as the development of cannabis and CBD consumer products and brands expected to be launched towards the end of fiscal 2020. In addition, staffing costs increased in marketing and sales functions, our customer care centre, cannabis retail and education programs, and our medical outreach program.

General and administrative expenses in fiscal 2019 were $168.5 million, reflecting our ongoing investments in building commercial capacity, governance and public company compliance costs associated with TSX and NYSE listings, legal and professional services in expanding operations, enhancing our information technology capabilities, scaling efforts ahead of market expansion, compliance costs associated with meeting Health Canada regulatory requirements, and employee compensation costs associated with the above.

Research and development expenses incurred in fiscal 2019 were $15.2 million. This is primarily attributable to our R&D team conducting research into a variety of innovation and intellectual property opportunities, as we prepare for new format introductions in fiscal 2020.

Acquisition-related expenses were $23.4 million in fiscal 2019, with Canopy Growth closing on several transactions in the year including the acquisition of HIKU Brands Company Ltd., ebbu, Inc., Storz & Bickel GmbH & Co. KG, and Canopy Health Innovations Inc. Acquisitions announced subsequent to fiscal 2019 - including This Works Products Limited, Canamo y Fibras Naturales, S.L. ("Cafina"), and the future acquisition of Acreage - incurred related expenses throughout fiscal 2019 as well.

Share-based compensation, a non-cash expense, was $182.8 million in fiscal 2019, up from $29.6 million in fiscal 2018 with $74.7 million accounted for in Q4, representing an increase from $11.9 million in Q4 fiscal 2018. The increase is primarily due to increased number of employees granted stock options as headcount increased to 3,200 employees from 1,000 year-over-year and accounting for the increase in fair value of stock options granted considering the 80% increase in the Company's share price that occurred over fiscal 2019.

Balance Sheet Highlights

At March 31, 2019, the Company's cash and cash equivalents available and marketable securities totaled $4.5 billion, representing an increase of $4.2 billion from March 31, 2018. The increase is principally due to the investment of approximately $5 billion dollars by Constellation Brands, Inc. ("Constellation Brands") on November 1, 2018 and the issuance of convertible senior notes with an aggregate principal amount of $600 million. This increase was partially offset by $644 million invested in the expansion of our cannabis production, distribution, and physical retail store assets, $380 million invested in the acquisition of subsidiaries, and investments made in operations including those related to strengthening corporate capabilities, developing and executing recreational cannabis brand-related campaigns, developing and preparing to launch value-added cannabis products in fiscal 2020 and conducting research and development into cannabis-based medical therapies.

Inventory at March 31, 2019 amounted to $262.1 million (March 31, 2018 - $101.6 million), including $38 million in finished goods and $165.5 million of work-in-progress. In addition, biological assets amounted to $79 million, which together with inventory totaled $341.1 million. The Company has scaled production and increased automation capacity and expects to achieve a Q1 fiscal 2020 harvest of approximately 34,000 kilograms which is expected to be available for sale in all channels starting in Q2 fiscal 2020.

Fourth Quarter and Fiscal Year 2019 Adjusted EBITDA summary(2)

Adjusted EBITDA amounted to a loss of $257.0 million in fiscal 2019, as compared to a loss of $36.1 million in fiscal 2018. The year-over-year loss is largely reflective of the investments made in fiscal 2019 sales and marketing, and general and administration costs as described above.

Depreciation and amortization, a non-cash expense, increased $4.9 million from Q3 fiscal 2019, due to the depreciation expense recorded on assets put into operation during Q4 fiscal 2019. These assets largely related to production and warehouse equipment.

Other expense, net, increased $368.3 million from Q3 2019, primarily related to non-cash fair value changes on our senior convertible notes which have been recorded through the statement of operations. These fair value changes are due to the increase in Canopy Growth's stock price from December 31, 2018 to March 31, 2019.

Events Subsequent to Fiscal Year 2019

    --  In April, Canopy Growth and Acreage announced that they entered into an
        agreement granting Canopy Growth the right to acquire 100% of Acreage's
        shares, once the production and sale of cannabis becomes federally
        permissible in the United States. On June 19, Acreage and Canopy Growth
        shareholders voted to approve the agreement. Initial implementation of
        the transaction is subject to approval by the Supreme Court of British
        Columbia and satisfaction of certain other closing conditions. Canopy
        Growth and Acreage expect the transaction to be implemented on or about
        June 27, 2019. Upon approval of certain modifications to the investor
        rights agreement with Constellation Brands, as well as terms of existing
        warrants, Canopy Growth will record a material, non-cash charge during
        the first quarter of fiscal year 2020. We expect this non-cash charge to
        have a materially negative impact on net income in the first quarter of
        fiscal 2020.

The audited Consolidated Financial Statements and Management's Discussion and Analysis for the twelve months ended March 31, 2019 will be filed on SEDAR after financial markets close on Friday, June 21, 2019, and will be available at www.sedar.com. The basis of financial reporting in the Audited Condensed Consolidated Financial Statements and Management's Discussion and Analysis is in thousands of Canadian dollars, unless otherwise indicated.

Note 1: Gross margin (before the IFRS fair value impacts in cost of sales) is a key operational metric that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. This measure is calculated as net revenue less inventory production costs expensed to cost of sales and may be computed from the consolidated statements of operations presented within this news release.

Note 2: Adjusted EBITDA is a non-IFRS financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. The Adjusted EBITDA reconciliation is presented within this news release and explained in Management's Discussion & Analysis under "Adjusted EBITDA (Non-IFRS Measure)", a copy of which will be filed on SEDAR after financial markets close on Friday, June 21, 2019.

Webcast Information
A live audio webcast will be available at:
https://event.on24.com/wcc/r/1971998/A4F8AB6B82EDF157155CC39603685130

Calling Information
Toll Free Dial-In Number: 1-888-231-8191
International Dial-In Number: (647) 427-7450
Conference ID: 4338214

Replay Information
A replay of the call will be accessible by telephone until 11:59 PM ET on September 21, 2019.
Toll Free Dial-in Number: 1-855-859-2056
Replay Password: 4338214

About Canopy Growth Corporation
Canopy Growth (TSX:WEED, NYSE:CGC) is a world-leading diversified cannabis, hemp and cannabis device company, offering distinct brands and curated cannabis varieties in dried, oil and Softgel capsule forms, as well as medical devices through the Company's subsidiary, Storz & Bickel GMbH & Co. KG. From product and process innovation to market execution, Canopy Growth is driven by a passion for leadership and a commitment to building a world-class cannabis company one product, site and country at a time. The Company has operations in over a dozen countries across five continents.

The Company's medical division, Spectrum Therapeutics is proudly dedicated to educating healthcare practitioners, conducting robust clinical research, and furthering the public's understanding of cannabis, and has devoted millions of dollars toward cutting edge, commercializable research and IP development. Spectrum Therapeutics sells a range of full-spectrum products using its colour-coded classification Spectrum system as well as single cannabinoid Dronabinol under the brand Bionorica Ethics.

The Company operates retail stores across Canada under its award-winning Tweed and Tokyo Smoke banners. Tweed is a globally recognized cannabis brand which has built a large and loyal following by focusing on quality products and meaningful customer relationships.

From our historic public listing on the Toronto Stock Exchange and New York Stock Exchange to our continued international expansion, pride in advancing shareholder value through leadership is engrained in all we do at Canopy Growth. Canopy Growth has established partnerships with leading sector names including cannabis icons Snoop Dogg and Seth Rogen, breeding legends DNA Genetics and Green House Seeds, and Fortune 500 alcohol leader Constellation Brands, to name but a few. Canopy Growth operates eleven licensed cannabis production sites with over 4.7 million square feet of production capacity, including over one million square feet of GMP certified production space. For more information visit www.canopygrowth.com.

Notice Regarding Forward Looking Statements
This news release contains "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian securities legislation. Often, but not always, forward-looking statements and information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements or information involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Canopy Growth or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements or information contained in this news release. Examples of such statements include statements with respect to the Company's expectations with respect to the Q1 fiscal 2020 harvest, the Company's expectation for additional finished inventory available for sale in Q2 fiscal 2020, bringing CBD products to market by the end of fiscal 2020, the accelerated market expansion for Acreage, the anticipated benefits of the rebranding of Spectrum Therapeutics on the Company's market share, the potential opportunity for cannabis products in Europe and the anticipated Increase in Canadian and Danish product availability, the anticipated increased sales from Storz & Bickel, the expectation that facilities will be fully operational in the months ahead, the launch of new CBD consumer products and brands in fiscal 2020, the timing for implementation of the transaction with Acreage. Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information, including changes in laws, regulations and guidelines; compliance with laws; international laws; operational, regulatory and other risks; execution of business strategy; management of growth; difficulty to forecast; reliance on licences; risks inherent in an agricultural business; contracts with provincial and territorial governments; constraints on marketing products; risks inherent in acquisitions and investments; expansion into foreign jurisdictions; governmental regulations; cannabis is a controlled substance in the United States; Farm Bill risks; assumptions as to the ability of the parties to receive, in a timely manner and on satisfactory terms, the necessary regulatory and court approvals for the transaction with Acreage; and such risks contained in the Company's management information circular of the Company dated May 17, 2019 and in the annual information form dated June 27, 2018 and filed with Canadian securities regulators and available on the Company's issuer profile on SEDAR at www.sedar.com. Readers are cautioned that the foregoing list of factors is not exhaustive. Although the Company believes that the assumptions and factors used in preparing the forward-looking information or forward-looking statements in this news release are reasonable, undue reliance should not be placed on such information and no assurance can be given that such events will occur in the disclosed time frames or at all. The forward-looking information and forward-looking statements included in this news release are made as of the date of this news release and the Company does not undertake an obligation to publicly update such forward-looking information or forward-looking information to reflect new information, subsequent events or otherwise unless required by applicable securities laws.





       
                CANOPY GROWTH CORPORATION

    ===


       CONSOLIDATED STATEMENTS OF FINANCIAL POSITION


                                                         March 31,                      
     March 31,


       (Expressed in CDN $000's)                             2019                              2018

    ---




       
                Assets



       Current assets



       Cash and cash equivalents                                  $
       
         2,480,830                $
          322,560



       Marketable securities                                               2,034,133



       Amounts receivable                                                    106,974                         21,425



       Biological assets                                                      78,975                         16,348



       Inventory                                                             262,105                        101,607



       Prepaid expenses and other current assets                             107,123                         19,837

    ---

                                                                            5,070,140                        481,777





       Investments in equity method investees                                112,385                         63,106



       Other financial assets                                                363,427                        163,463



       Property, plant and equipment                                       1,096,340                        303,682



       Intangible assets                                                     519,556                        101,526



       Goodwill                                                            1,544,055                        314,923



       Other long-term assets                                                 25,902                          8,340

    ---



                                                                   $
       
         8,731,805              $
          1,436,817

                                                                                                                  ---




       
                Liabilities



       Current liabilities



       Accounts payable and accrued liabilities                     $
       
         226,533                 $
          89,571



       Current portion of long-term debt                                     103,716                          1,557



       Other current liabilities                                              81,414                            900

    ---

                                                                              411,663                         92,028





       Long-term debt                                                        842,259                          6,865



       Deferred tax liability                                                 96,031                         33,536



       Other long-term liabilities                                           140,404                         61,150

    ---



                                                                            1,490,357                        193,579






       
                Shareholders' equity



       Share capital                                                       6,026,618                      1,076,838



       Other reserves                                                      1,673,472                        127,418



       Accumulated other comprehensive income                                 28,630                         46,166



       Deficit                                                             (777,087)                      (91,649)

    ---




       Equity attributable to Canopy Growth Corporation                    6,951,633                      1,158,773

    ---




       Non-controlling interests                                             289,815                         84,465

    ---




       Total equity                                                        7,241,448                      1,243,238

    ---



                                                                   $
       
         8,731,805              $
          1,436,817

                                                                                                                  ---





       
                CANOPY GROWTH CORPORATION

    ===


       CONSOLIDATED STATEMENTS OF OPERATIONS



       
                FOR THE THREE AND TWELVE MONTHS ENDED MARCH 31, 2019 AND 2018


                                                                                                                           
          Three months ended                                    
       Twelve months ended



                                                                                                       
     
     March 31,                             
       March 31,                      
     
       March 31,                                
     March 31,


       (Expressed in CDN $000's except share amounts)                                                          2019                                       2018                                  2019                                        2018









       Revenue                                                                                                        $
         
            106,485                     $
            22,806                       $
           
           253,431                    $
            77,948



       Excise taxes                                                                                          12,435                                                                          27,090

    ---




       
                Net revenue                                                                                                      94,050                               22,806                                        226,341                              77,948





       Inventory production costs expensed to cost of sales                                                                          79,076                               15,140                                        175,425                              40,213

    ---




       Gross margin before the undernoted                                                                                            14,974                                7,666                                         50,916                              37,735





       Fair value changes in biological assets included in inventory sold and other inventory charges                                23,547                               20,025                                        129,536                              67,861



       Unrealized gain on changes in fair value of biological assets                                                               (77,050)                            (17,500)                                     (167,550)                           (96,721)

    ---




       
                Gross margin                                                                                                     68,477                                5,141                                         88,930                              66,595

    ---




       Sales and marketing                                                                                                           53,184                               14,751                                        154,392                              38,203



       Research and development                                                                                                       7,274                                  539                                         15,238                               1,453



       General and administration                                                                                                    65,657                               16,883                                        168,434                              43,819



       Acquisition-related costs                                                                                                     13,788                                  915                                         23,394                               3,406



       Share-based compensation expense                                                                                              74,678                               11,923                                        182,837                              29,631



       Share-based compensation expense related to acquisition milestones                                                            18,490                                8,247                                        100,164                              19,475



       Depreciation and amortization                                                                                                  9,870                                2,915                                         21,510                              12,889

    ---




       Operating expenses                                                                                                           242,941                               56,173                                        665,969                             148,876

    ---




       
                Loss from operations                                                                                          (174,464)                            (51,032)                                     (577,039)                           (82,281)

    ---




       Share of loss on equity investments                                                                                          (1,731)                             (1,303)                                      (10,752)                            (1,473)



       Other (expense) income, net                                                                                                (133,451)                            (10,068)                                      (69,985)                             31,213

    ---


       
                Total other (expense) income, net                                                                             (135,182)                            (11,371)                                      (80,737)                             29,740

    ---




       
                Loss before income taxes                                                                                      (309,646)                            (62,403)                                     (657,776)                           (52,541)

    ---




       Income tax (expense) recovery                                                                                               (13,716)                               8,042                                       (12,318)                            (1,593)

    ---




       
                Net loss                                                                                        $
         
            (323,362)                  $
            (54,361)                    $
            
          (670,094)                 $
            (54,134)

    ---                                                                                                                                                                                                                                                         ---




       
                Net (loss) income attributable to:



       Canopy Growth Corporation                                                                                    $
         
            (335,607)                  $
            (61,544)                    $
            
          (685,438)                 $
            (70,353)



       Non-controlling interests                                                                                                     12,245                                7,183                                         15,344                              16,219

    ---

                                                                                                                     $
         
            (323,362)                  $
            (54,361)                    $
            
          (670,094)                 $
            (54,134)

                                                                                                                                                                                                                                                                ---




       
                Net loss per share, basic and diluted



       Net loss per share:                                                                                             $
         
            (0.98)                    $
            (0.31)                       $
           
           (2.57)                   $
            (0.40)



       Weighted average number of outstanding common shares:                                                                    343,877,591                          196,571,715                                    266,997,406                         177,301,767





       
                CANOPY GROWTH CORPORATION

    ===


       CONSOLIDATED STATEMENTS OF CASH FLOWS



       
                FOR THE THREE AND TWELVE MONTHS ENDED MARCH 31, 2019 AND 2018


                                                                                                               Three months ended                                 Twelve months ended



                                                                                               March 31,                      
       March 31,                     March 31,                                 
     March 31,


       (Expressed in CDN $000's)                                                                   2019                                2018                           2019                                         2018

    ---






       Net inflow (outflow) of cash related to the following activities:





       
                Operating



       Net income (loss)                                                                                $
     
         (323,362)                  $
         (54,361)                $
            
           (670,094)                 $
           (54,134)



       Adjustments for:



       Depreciation of property, plant and equipment                                                              14,359                             2,365                                      30,062                              8,725



       Amortization of intangible assets                                                                           8,987                             2,586                                      16,856                             11,761



       Share of loss on equity investments                                                                         1,731                             1,303                                      10,752                              1,473



       Fair value changes in biological assets included in inventory sold and other charges                       23,547                            20,025                                     129,536                             67,861



       Unrealized gain on changes in fair value of biological assets                                            (77,050)                         (17,500)                                  (167,550)                          (96,721)



       Share-based compensation                                                                                   93,096                            20,928                                     287,782                             51,177



       Other assets                                                                                              (2,451)                               79                                    (19,359)                           (1,853)



       Other liabilities                                                                         54,345                                                            54,345



       Other income and expense                                                                                  120,262                             2,925                                      75,786                           (37,494)



       Income tax (recovery) expense                                                                              13,716                           (8,042)                                     12,318                              1,593



       Non-cash foreign currency                                                                                (20,170)                            (201)                                   (18,776)                             (201)



       Changes in non-cash operating working capital items                                                     (132,621)                          (7,018)                                  (262,168)                          (33,693)

    ---




       Net cash used in operating activities                                                                   (225,611)                         (36,911)                                  (520,510)                          (81,506)

    ---




       
                Investing



       Purchases and deposits of property, plant and equipment                                                 (149,220)                         (89,930)                                  (644,456)                         (176,037)



       Purchases of intangible assets                                                                              1,850                           (1,099)                                   (38,290)                           (2,132)



       Proceeds on disposals of property and equipment                                                                                                                                                            75



       Purchases of marketable securities                                                   (1,227,565)                                                      (2,029,812)                                       (118)



       Proceeds on assets classified as held for sale                                                                                                                                                          7,000



       Investments in equity method investees                                                   (9,695)                                                         (36,896)                                    (26,179)



       Investments in other financial assets                                                                    (17,266)                          (2,062)                                   (91,337)                          (22,439)



       Net cash outflow on acquisition of NCI                                                   (4,716)                                                          (6,712)



       Net cash outflow on acquisition of subsidiaries                                                          (36,010)                            (153)                                  (380,482)                           (3,753)

    ---




       
                Net cash used in investing activities                                                    (1,442,622)                         (93,244)                                (3,227,985)                         (223,583)

    ---




       
                Financing



       Payment of share issue costs                                                                              (3,029)                          (8,663)                                   (21,646)                          (10,008)



       Proceeds from issuance of common shares and warrants                                                                        200,680                      5,072,500                                      470,670



       Proceeds from issuance of shares by Canopy Rivers                                                          63,758                            19,763                                     154,976                             54,876



       Proceeds from exercise of stock options                                                                    19,429                             3,509                                      48,159                             11,053



       Proceeds from exercise of warrants                                                                            106                                89                                      18,790                                770



       Issuance of long-term debt                                                                                                                                600,000



       Payment of long-term debt issue costs                                                                                                                    (16,380)



       Payment of interest on long-term debt                                                   (11,793)                                                         (14,521)



       Repayment of long-term debt                                                                               (1,181)                            (371)                                    (4,680)                           (1,512)

    ---




       
                Net cash provided by financing activities                                                     67,290                           215,007                                   5,837,198                            525,849

    ---




       Effect of exchange rate changes on cash and cash equivalents                            (34,097)                                                           69,567

    ---




       Net cash inflow                                                                                       (1,635,040)                           84,852                                   2,158,270                            220,760



       Cash and cash equivalents, beginning of period                                                          4,115,870                           237,708                                     322,560                            101,800

    ---




       
                Cash and cash equivalents, end of period                                            $
     
         2,480,830                    $
         322,560                 $
            
           2,480,830                  $
            322,560

    ===                                                                                                                                                                                                                               ===



       
                Adjusted EBITDA(1) Non-IFRS Measure                                            Three months ended                      Year ended




       
                (In CDN$000's)                                                                      March 31,      
         March 31,                  March 31,     
         March 31,
                                                                                                                  2019                 2018                      2019                   2018

    ===

                                                                                                                       
         (Restated)                               
         (Restated)



       
                
                  Adjusted EBITDA(1) Reconciliation

    ---


       
                Loss from operations - as reported                                      $
      
               (174,464)    $
          (51,032)   $
            
      (577,039)      $
          (82,281)






       
                IFRS fair value accounting related to biological assets and inventory



       Fair value changes in biological assets included in inventory sold and other charges                    23,547               20,025                   129,536                 67,861



       Unrealized gain on changes in fair value of biological assets                                         (77,050)            (17,500)                (167,550)              (96,721)



                                                                                                              (53,503)               2,525                  (38,014)              (28,860)



       Share-based compensation expense (per statement of cash flows)                                          93,096               20,928                   287,782                 51,177



       Acquisition-related costs                                                                               13,788                  915                    23,394                  3,406



       Depreciation and amortization (per statement of cash flows)                                             23,346                4,951                    46,918                 20,486



                                                                                                               130,230               26,794                   358,094                 75,069




       
                Adjusted EBITDA                                                          $
      
               (97,737)    $
          (21,713)   $
            
      (256,959)      $
          (36,072)




                            (1)Adjusted EBITDA is earnings
                             before interest, tax, depreciation
                             and amortization, share-based
                             compensation expense, fair value
                             changes and other non-cash items,
                             and further adjusted to remove
                             acquisition-related costs.

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SOURCE Canopy Growth Corporation