Canopy Growth Is Dumping BioSteel: What Does This Mean for Its Business?
BioSteel was once a highly prized asset for cannabis producer Canopy Growth (NASDAQ: CGC). These days, however, it has become a source of frustration for the business. While the sports nutrition company has been generating revenue for Canopy Growth, it has also been saddling it with plenty of expenses and headaches. The situation has gotten so problematic that the company will no longer fund BioSteel as it looks to ditch the business entirely. Does this make Canopy Growth a better buy?
On Sept. 14, Canopy Growth issued a press release on its website saying that it would no longer fund BioSteel. It also intends to sell the brand. The cannabis producer said that BioSteel's operations were "a significant drag" on both its bottom line and its cash flow, noting that 60% of the adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss it reported in the first quarter was due to BioSteel.
In the first quarter, Canopy Growth reported an adjusted EBITDA loss of 58 million Canadian dollars for the period ending June 30, which was better than the CA$79 million loss it incurred a year ago. The company also stated in its most recent earnings release that it expects to generate positive adjusted EBITDA by the end of the current fiscal year in all of its businesses except BioSteel.
Source Fool.com
