Canopy Growth (CGC) Lifts ‘Going Concern’ Doubts as Cash Tops Debt; Q2 FY2026 Shows 30% Canada Adult‑Use Growth

Canopy Growth Corporation (NASDAQ: CGC; TSX: WEED) reported second‑quarter fiscal 2026 results today that highlight improving operations, tighter cost control, and a stronger balance sheet. The company ended the quarter with C$298 million in cash and cash equivalents, exceeding total debt by C$70 million—and said the conditions that had previously raised “substantial doubt” about its ability to continue as a going concern have been resolved. 1

Market reaction

Investors initially cheered the update: CGC rose ~19% in premarket trading after the release. Shares have since been volatile through the session. 2

By the numbers (Q2 FY2026, quarter ended Sept. 30, 2025)

• Consolidated net revenue:C$66.7M, up 6% year over year. 1
• Cannabis net revenue:C$50.9M, up 12% YoY.
  • Canada adult‑use:C$23.9M, up 30% YoY, driven by infused pre‑rolls and new all‑in‑one vapes (Tweed, 7ACRES).
  • Canada medical:C$21.8M, up 17% YoY.
  • International:C$5.1M, down 39% YoY on Europe supply chain challenges. 1
• Storz & Bickel devices revenue:C$15.8M, down 10% YoY (lapping strong prior‑year sales; new VEAZY™ launch occurred in September). 1
• Gross margin:33% (‑200 bps YoY; +800 bps sequential vs. Q1). 1
• SG&A: down 13% YoY; C$21M in annualized savings captured since Mar. 1, 2025. 1
• Operating loss (continuing ops):C$17M, an improvement of 63% YoY. 1
• Adjusted EBITDA:–C$3.0M vs. –C$6.0M a year ago. 1
• Net loss (continuing ops):–C$1.64M (EPS –C$0.01); basic weighted‑average shares 274.0M. 1
• Year‑to‑date free cash flow:–C$31M vs. –C$112M a year ago. 1
• Debt reduction:US$50M prepaid against senior secured term loan in Q2. 1
• Liquidity & going concern:C$298M cash; net cash position vs. debt; prior going‑concern flag lifted. 1

What changed this quarter

Canada executed. Growth was concentrated in infused pre‑rolls and all‑in‑one vapes, where the company says tighter retailer alignment and a focused innovation pipeline are paying off. Medical cannabis also posted double‑digit growth, boosted by more insured patients and larger order sizes. 1

International lagged. European supply chain issues weighed on exports, producing a 39% YoY decline in international cannabis revenue. Management says improvements are underway and expects operations to stabilize as fiscal 2026 closes. 1

Devices set up for Q3. The Storz & Bickel segment dipped year over year, but Canopy expects sequential growth in Q3 on a full quarter of VEAZY™ sales and seasonal demand (partially offset by tariff pressures in some markets). The VEAZY device launched in September as the brand’s most compact, accessible vaporizer to date. 1

Balance sheet strengthened. Cash now exceeds debt, with prepayments on the term loan and significantly improved free cash outflow. Management directly linked the improved liquidity to the removal of the going‑concern uncertainty. 1

How results stacked up against expectations

Early reads from analyst services framed the quarter as an EPS beat with a revenue miss versus consensus. Zacks cited an EPS surprise of +90.9% (–C$0.01 actual vs. –C$0.11 expected) alongside a ~7.5% revenue shortfall. A Refinitiv note echoed the revenue miss and pointed to Europe‑related supply constraints. 3

Management commentary & near‑term outlook

• Profit path: CFO Tom Stewart said ongoing cost reductions, margin expansion and a stronger balance sheet are improving the path to profitability. CEO Luc Mongeau cited continued momentum in Canada adult‑use and medical. (Statements summarized from the press release.) 1
• Operational focus: The company is “mobilizing a dedicated effort” to fix European supply chain execution and sees sequential device growth in Q3 from Storz & Bickel, supported by VEAZY and holiday seasonality. 1
• Conference call: Canopy is hosting its earnings call today at 10:00 a.m. ET; a replay will be available via the investor relations site. 1

Policy backdrop to watch

Canopy’s release flags the Government of Canada’s 2025 federal budget, tabled November 4, which proposes to reduce reimbursement caps for the RCMP and Veterans Affairs medical‑cannabis benefit to C$6/gram (from C$8.50). Changes like these can influence patient behavior and medical‑segment economics across the sector. 4

Bottom line

Canopy delivered broad‑based operational progress—notably in Canada—while de‑risking liquidity and removing the going‑concern overhang. Persistent European headwinds and a softer devices quarter tempered the print, and headline revenue missed some estimates. But stronger cash, shrinking losses, and improving margins give Canopy a clearer runway into the second half of FY2026. 1

This article is for informational purposes only and does not constitute investment advice.