Canopy Growth narrows loss 49% as Canada medical cannabis surges
Cannabis company targets positive adjusted EBITDA in fiscal 2027 despite missing quarterly earnings estimates
Canopy Growth Corporation shares fell in early trading Friday after the cannabis producer reported third-quarter results that showed significant operational progress despite missing earnings expectations.
The Smiths Falls, Ontario-based company reported a net loss of C$62.6 million for the quarter ended December 31, 2025, a 49% improvement from the C$121.9 million loss recorded in the same period last year. The stock declined 6.9% to $1.08 in regular trading, giving the company a market capitalization of $473 million.
Revenue of C$75 million topped analyst estimates of C$71 million, according to data compiled by StreetInsider. However, the company missed earnings per share expectations with a loss of 13 to 18 cents per share, wider than the consensus forecast of a 3 to 5 cent loss.
The results highlight Canopy Growth's ongoing turnaround efforts under chief executive officer David Klein, who has pursued a strategy of cost cutting and refocusing on core markets. The company's adjusted EBITDA loss narrowed 17% year-over-year, a metric closely watched by investors as a sign of operational efficiency.
"We continue to execute on our path to profitability," said Canopy Growth's chief financial officer Tom Stewart in the earnings announcement. The company maintains it is on track to achieve positive adjusted EBITDA in fiscal year 2027, driven by strategic cost reductions and anticipated growth in core businesses.
Canada's medical cannabis segment proved a bright spot, with net revenue increasing 15% year-over-year to C$23 million. Adult-use cannabis revenue grew 8% compared to the prior year, demonstrating resilience in a market that has challenged many producers with oversupply and pricing pressure.
Cannabis net revenue overall rose 4% to C$52 million, while consolidated net revenue remained flat compared to the year-ago period. The company's Storz & Bickel vaporizer division contributed to the results, benefiting from seasonal demand and the successful launch of its VEAZY product.
Canopy Growth's balance sheet remains relatively strong for the cannabis sector, with C$371 million in cash and equivalents and a net cash position of C$146 million. The company completed a strategic recapitalization in January 2026 that extended debt maturities to 2031, providing financial flexibility as it works toward profitability.
Analysts remain cautious on the stock. Before earnings, Canopy Growth carried a consensus rating of "Reduce" with two sell ratings and three hold ratings from five covering firms, according to MarketBeat data. Benchmark and Wall Street Zen had recently upgraded their stance from "sell" to "hold."
The average analyst price target of $1.83 implies potential upside of 69% from current levels, though some analysts forecast the company will remain unprofitable over the next three years, with revenue growth projected to lag the broader U.S. cannabis market.
Looking ahead, investors are focused on the expected closure of the MTL Cannabis acquisition in the current quarter, which management says will bolster its global cannabis platform. The company is also navigating a rapidly evolving regulatory landscape, with potential U.S. cannabis reform and possible tax changes in 2026 representing both opportunities and risks for the sector.
The broader cannabis industry faces headwinds including oversupply concerns, price compression, and regulatory uncertainty around hemp-derived products. However, global medical cannabis demand is rising, supported by expanding patient access in Europe, Canada and Australia.
For Canopy Growth, the third-quarter results will likely serve as a "temperature check" on the company's path to profitability, as market observers weigh concerns about long-term dilution and leverage against evidence of improving operational discipline and a fortified balance sheet.