EBITDA is a measure of core performance that tells us about how a company has done in terms of profitability before any effects of charges such as depreciation (noncash charge) and the impact of interest and tax (cash charges).
During Canopy Growth’s (WEED) earnings call, one of the questions posed to its management was related to the visibility of its EBITDA turning positive in the near future. Given that the company has been heavily investing in growth, its EBITDA has taken a beating, and in the fourth quarter, it reported adjusted EBITDA of -97 million Canadian dollars.
In comparison, Aurora Cannabis (ACB) reported EBITDA of -79 million Canadian dollars in its most recent quarter, Cronos Group (CRON) reported EBITDA of -13.6 million Canadian dollars, and Aphria (APHA) reported EBITDA of -34 million Canadian dollars in its comparable quarter, which ended February 2019.
Canopy Growth’s CEO, Bruce Linton, said that Canopy Growth’s EBITDA is expected to turn positive in fiscal 2021. The company believes that Canopy Growth could achieve this growth on the back of new regulations in Canada—perhaps related to new forms of cannabis-derived products, such as edibles.