Canopy Growth Reports Dramatic Loss Reduction and Strengthened Balance Sheet

Canopy Growth Corporation has unveiled its most robust operational performance in recent memory with the release of its third-quarter fiscal 2026 results on February 6. The Canadian cannabis company showcased a dramatic financial improvement, nearly halving its net loss, posting double-digit growth in its core domestic market, and significantly reinforcing its financial foundation.

Key Financial Highlights for Q3 FY2026:

• The net loss was reduced by 49% to CAD 62.6 million.
• Adjusted EBITDA loss reached a record low of CAD 2.9 million, a 17% improvement.
• Canadian cannabis revenue grew by an average of 11%.
• The company holds a strong cash position of CAD 371 million, with net cash standing at CAD 146 million.
• A completed recapitalization has extended all outstanding debt maturities to 2031.

Operational Performance: A Tale of Two Markets

For the quarter ending December 31, 2025, consolidated net revenue remained stable at CAD 74.5 million, matching the prior-year period. However, a deeper look reveals a significant divergence in performance between geographic segments.

The company’s domestic Canadian operations are driving growth. Medical cannabis sales in Canada increased by 15% to CAD 23 million. Recreational sales also saw an 8% rise, reaching CAD 23 million, fueled primarily by demand for Claybourne Infused Pre-Roll joints and Gassers All-In-One vape products.

In contrast, international cannabis revenues faced headwinds, declining by 31% year-over-year. Management cited supply chain challenges in Europe as a primary factor. The Storz & Bickel division, known for its vaporizers, generated CAD 23 million in revenue. This represents a 9% decrease from the same quarter last year but a notable 45% sequential increase from the previous quarter. The division’s new VEAZY vaporizer has become the most successful product launch in the company’s history.

Should investors sell immediately? Or is it worth buying Canopy Growth?

Cost Discipline Bears Fruit and Margin Pressures Emerge

Canopy Growth’s ongoing cost-reduction initiative is delivering tangible results. Since March 2025, the company has achieved annualized savings of CAD 29 million. Adjusted selling, general, and administrative expenses fell by 12%. Furthermore, the free cash flow outflow showed improvement, narrowing to CAD 19 million from CAD 28 million.

These gains were partially offset by margin compression across the business. The consolidated gross margin contracted from 32% to 29%. Within the cannabis segment specifically, the margin declined from 28% to 25%, attributed to weaker international sales and a shift in product mix. Storz & Bickel’s margin also decreased from 40% to 37%, which the company linked to higher U.S. import tariffs.

Strategic Moves and Forward Outlook

A significant strategic development is the impending acquisition of MTL Cannabis, which the company expects to finalize in the current quarter. CEO Luc Mongeau stated that the transaction is designed to bolster Canopy Growth’s global cannabis platform and enhance its standing in the Canadian medical market.

CFO Tom Stewart expressed confidence in the company’s path to profitability, projecting that Canopy Growth will achieve positive adjusted EBITDA in fiscal year 2027. He identified continued cost discipline and anticipated growth in core businesses as the foundation for this target.

The successful recapitalization completed in January has provided the company with financial runway, having addressed debt obligations through 2031. The coming quarters will determine whether this consolidated strategy can successfully translate operational improvements into sustained profitability.