Canopy Growth(CGC) - 2025 Q4 - Annual Report

Financial Performance - Canopy Growth reported net revenue of CAD 268.995 million for the year ended March 31, 2025, a decrease of 9% from CAD 297.146 million in 2024 [449]. - The gross margin percentage improved to 30% in fiscal 2025, up from 27% in fiscal 2024, reflecting strategic changes and cost savings initiatives [458]. - Net loss from continuing operations increased to CAD 604.138 million in fiscal 2025, compared to CAD 483.682 million in 2024, representing a 25% increase in losses [449]. - Canadian adult-use cannabis revenue decreased by 15% to CAD 78.828 million in fiscal 2025, primarily due to lower sales volumes and increased price competition [451][453]. - Canadian medical cannabis revenue increased by 16% to CAD 77.032 million in fiscal 2025, driven by a higher average order size and a larger product assortment [451][454]. - International markets cannabis revenue decreased by 4% to CAD 39.734 million in fiscal 2025, attributed to declines in the Australian market and U.S. CBD business [451][455]. - Revenue from Storz & Bickel increased by 4% to CAD 73.401 million in fiscal 2025, supported by strong sales growth in Germany and the UK [451][456]. - The divestiture of This Works on December 18, 2023, resulted in a complete revenue loss from this segment, which was CAD 21.256 million in fiscal 2024 [451][457]. - Cost of goods sold decreased by 12% to CAD 189.484 million in fiscal 2025, contributing to the improved gross margin [458]. - Canopy Growth's weighted average number of outstanding common shares increased to 107,553,729 in fiscal 2025, up from 74,787,521 in fiscal 2024 [449]. Operating Expenses - Total operating expenses decreased to $196.7 million in fiscal 2025, down 36$309.6 million in fiscal 2024 [465]. - General and administrative expenses were $65.1 million in fiscal 2025, a 28$90.3 million in fiscal 2024 [467]. - Sales and marketing expenses dropped to $60.9 million in fiscal 2025, down 20$76.1 million in fiscal 2024 [468]. - The company incurred acquisition-related costs of $19.5 million in fiscal 2025, down from$34.8 million in fiscal 2024, reflecting ongoing restructuring efforts [469]. - Total restructuring, asset impairments, and related costs in fiscal 2025 amounted to $33.2 million, down from$65.0 million in fiscal 2024 [482][484]. Cash Flow and Liquidity - Cash used in operating activities for fiscal 2025 was $165.8 million, a decrease from$282.0 million in fiscal 2024, primarily due to reduced operating losses and lower cash interest payments [547]. - Cash used in investing activities totaled $47.8 million in fiscal 2025, with$10.8 million for property, plant, and equipment improvements and $95.3 million for strategic investments, including the acquisition of Acreage's debt [549]. - Cash provided by financing activities was$148.7 million in fiscal 2025, driven by $385.4 million from common share issuances under ATM Programs, offset by$289.0 million in long-term debt repayments [552]. - Free cash flow for fiscal 2025 was an outflow of $176.6 million, an improvement from an outflow of$231.9 million in fiscal 2024, reflecting decreased cash used in operating activities [557]. - The company reported a net decrease in cash and cash equivalents of $56.5 million for fiscal 2025, compared to a decrease of$506.7 million in fiscal 2024 [545]. Debt and Financing - Total debt outstanding as of March 31, 2025, was $304.1 million, down from$597.2 million as of March 31, 2024, representing a decrease of approximately 49% [559]. - The total principal amount owing as of March 31, 2025, was $315.5 million, a reduction from$622.0 million at March 31, 2024, indicating a decrease of about 49% [559]. - The company entered into a Credit Agreement providing for a Credit Facility in the aggregate principal amount of US$750.0 million on March 18, 2021 [560]. - The company made an Optional Prepayment resulting in an aggregate principal reduction of$143.9 million (US$100.0 million) for a cash payment of$140.3 million (US$97.5 million) on March 31, 2025 [571]. - The company repurchased additional outstanding principal amounts under the Credit Facility resulting in an aggregate principal reduction of$73.3 million (US$54.5 million) for a cash payment of$69.6 million (US$51.8 million) on August 11, 2023, and September 14, 2023 [564]. Impairments and Restructuring - The company recognized a goodwill impairment loss totaling$1.7 billion for the cannabis operations reporting unit in the first quarter of fiscal 2023 [603]. - The company recognized a non-cash impairment of divestiture-related assets and employee restructuring costs contributing to the total restructuring costs [482]. - Impairment charges in fiscal 2024 totaled $79.5 million, including$42.1 million in goodwill impairment losses related to the Storz & Bickel reporting unit [527]. - The company recognized fair value changes on Canopy USA related assets resulting in increased expenses of $237.3 million in fiscal 2025 [490]. Strategic Initiatives - The company completed the acquisition of Acreage, owning 100$250 million of Canopy Shares [429].