Canopy Growth Corp. (NYSE: CGC) reported fourth-quarter and fiscal 2020 results before markets opened Friday. The marijuana grower and distributor reported a quarterly net loss per share of C$3.72 (about $2.70) on revenues of C$107.9 million (about $78.4 million), net of excise taxes. In the same period a year ago, the company reported a net loss of C$1.10 on revenue of C$94.1 million. Analysts had estimated a net loss of C$0.40 ($0.29) on sales of C$130.0 million ($94.4 million). The Canadian company is also listed on the Toronto Stock Exchange under the ticker symbol WEED.

For the full year, Canopy reported net revenues of C$398.8 million and a net loss per share of C$3.80, compared with 2019 net revenues of C$226.3 million and a net loss of C$2.76. Analysts were looking for a loss per share of C$5.60 and revenues of C$423.5 million.

In the late summer of 2018, Constellation Brands Inc. (NYSE: STZ) boosted its ownership stake in Canopy by acquiring 104.5 million shares for just over C$5 billion (at the time, about $4 billion in U.S. dollars). On May 1, Constellation exercised an option to purchase 18.9 million common share warrants for C$12.98 per share. The alcoholic beverage maker is likely to have to take a mark-to-market charge on its ownership stake in Canopy.

Canopy’s adjusted gross margin for the quarter was 42%, up by 20 points year over year. For the fiscal year, adjusted gross margin rose by 14 percentage points to 26%. Adjusted margin excluded nearly C$137 million in restructuring and other one-time costs. On a reported basis, gross margin dropped to negative 85% in the fourth quarter of the fiscal year.

Quarterly free cash flow was a negative C$304.7 million, a 15% improvement sequentially and a 22% improvement year over year. For the full fiscal year, free cash flow was negative C$1.5 million.

CEO David Klein commented:

True to key priorities that I have outlined for Canopy, we have taken steps to align our capacity with the current market demand and focus our resources against the core markets with the largest and most tangible near-term profit opportunity.

The announcement of a new strategy, along with organizational changes, was the centerpiece of the press release. Canopy will now focus on transitioning to a “relentlessly consumer-centric organization” in markets with the “highest and most tangible profit opportunities in the near term.” The new 2021 fiscal year is going to be a transition as Canopy “resets its strategic focus, rolls out a new organizational design, and implements a comprehensive operational and supply chain productivity program.”

The company also withdrew previous guidance for fiscal 2021, but it indicated that if circumstances allow, Canopy may provide new guidance for the second half of the fiscal year.

2019 was a transition year for the entire cannabis industry. Unfortunately, the transition shifted from high hopes to dismal results. Investors may have had enough of that kind of transition.

Analysts, however, were not reluctant to estimate a first-quarter net loss per share of C$0.30 ($0.22) on sales of C$135.6 million ($98.5 million). For the full year, the consensus estimates call for a net loss per share of C$1.20 ($0.87) and revenues of C$695.7 million ($505.7 million).

Canopy Growth stock plummeted by 18% in Friday morning trading to $17.83, in a 52-week range of $9.00 to $44.17. The consensus price target on the stock is C$28.71 ($20.86).

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