Canopy Growth shares fell to their lowest level this year on Thursday after quarterly results that suggested the cannabis producer lost market share and an announcement that its CEO plans to leave the company, just weeks after his co-CEO was pushed out.

Canopy Growth shares were down $5.55 or 13.01 per cent at $37.03 by early afternoon on the Toronto Stock Exchange after it released first-quarter financial results that missed analyst expectations after the markets closed Wednesday.

“It appears Canopy is losing market share,” John Chu, an analyst with Desjardins, wrote in a note. Canopy reported net sales of $90 million, which fell short of Desjardins’s $125-million estimate.

Compared with the quarter before, sales were down by about $4 million.

CEO Mark Zekulin said Thursday that Canopy was successful when recreational cannabis became legal in Canada in October and that allowed it to grab 25 per cent to 33 per cent of the market.

“Our competitors have now began to ramp up their own supply,” he said, adding that the company has had to retrofit some of its facilities.

“We are still within that one quarter to on third market share,” he said, but now towards the lower end of that band.

Still, Zekulin says the company expects to maintain and increase its market share and as the market grows that will mean increasing revenues.

The quarterly report came just six weeks co-CEO and board member Bruce Linton was pushed out on July 3. The move came in the wake of a statement from shareholder Constellation Brands Inc., which invested $5 billion last November, that it was “not pleased” with Canopy’s year-end results.

At the time, Zekulin said he would work with the board to begin a search to find a new leader to guide the company in its next phase.

Canopy has hired a U.S. recruitment firm, Zekulin said, and the CEO search is well underway with “several exceptional candidates” already identified.

Canopy expects to have the executive post transition completed within the next several months, said Zekulin, who did not disclose his future plans.

The Smith Falls, Ont.-based company reported a $1.28-billion loss or $3.70 per share for the three months ended June 30 compared with a $91-million loss or 40 cents a share in the same quarter the previous year.

The big loss is mainly due to a non-cash loss of $1.18 billion on the extinguishment of warrants held by Constellation Brands.

Analysts had predicted the company would book a loss of 70 cents per share on $107.1 in revenue, according to financial data firm Refinitiv.

The company generated $90.5 million in net revenues, up from $25.9 million a year earlier, before recreational marijuana was legal in Canada.

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Aleksandra Sagan, The Canadian Press


Featured Image: THE CANADIAN PRESS/Sean Kilpatrick