Canopy Growth Corporation

Good morning. My name is Joanna. I will be your conference operator today. I would like to welcome you to Canopy Growth's fourth quarter and fiscal year 2025 financial results conference call. Currently, all participants are in a listen-only mode. I will now turn the call over to Tyler Burns, Director, Investor Relations. Tyler, you may begin the conference call.

Good morning, and thank you for joining us. On our call today, we have Canopy Growth's Chief Executive Officer, Luke Mongeau, and Chief Financial Officer, Judy Hong. Before financial markets open today, Canopy Growth issued a news release announcing the financial results for our fourth quarter and fiscal year 2025 ended March 31st, 2025. The news release and financial statements have been filed on EDGAR and CDAR and will be available on our website under the investor tab. Before we begin, I would like to remind you that our discussion during this call will include forward-looking statements that are based on management's current views and assumptions and that this discussion is qualified in its entirety by the cautionary note regarding forward-looking statements included at the end of the news release issued today. Please review today's earnings release and Canopy Growth's reports filed with the SEC and CDAR for various factors that could cause actual results to differ materially from projections. In addition, reconciliations between any non-GAAP measures to their closest reported gap measures are included in our earnings release. Please note that all financial information is provided in Canadian dollars unless otherwise stated. Following remarks by Luke and Judy, we will conduct a question and answer session where we will take questions from analysts. With that, I will turn the call over to Luke.

Thank you, Tyler. Good morning, everyone, and thank you for joining us today. It is a pleasure to be back with you as we review the fourth quarter in fiscal year 25 and look ahead to the path forward. Today, after almost five months at the helm, I want to share my observations about the business and share a series of actions that are already underway to drive performance in fiscal 26 and beyond. Judy will then speak to our financial results and give an update on Canopy USA. Since joining Canopy, I've worked closely with our teams across every business function and region. And what's clear to me is that Canopy has the key ingredients to become a winning operator in both the Canadian adult use and in the Canadian and global medical cannabis markets. and to strengthen our leadership within the global premium vaporizer category. We have strong brands and products, the right capabilities, and a highly talented team. But like many companies in evolving industries, we face challenges, a lack of focus combined with too many priorities, suboptimal alignment, and a lack of cross-functional synchronization, shifting regulations, and a lack of consistent execution at scale. We have started taking key steps to focus, streamline, and synchronize the organization, and to create the space within the P&L and balance sheet for more impactful actions. We're focusing our teams on the core category fundamentals, growing high quality cannabis efficiently, converting that cannabis into desirable products, and keeping these products in stock at the right price and with attractive margins. We're setting clear strategic priorities and supporting them with a lean organizational structure, strong operational planning, and disciplined execution. It's about simplification, synchronization, and executional excellence. That's the core of our plan going forward. And we're acting with urgency to reduce costs, improve margins, and create financial flexibility. Now let me walk you through some of the actions we've already taken. Starting with structure and focus. As part of our transformation, we restructure all lines of business to improve synchronization between our supply chain and our commercial teams to drive shopper execution across the company. First, We've unified our global medical cannabis businesses across Canada, Europe, and Australia into a single structure, reporting directly to me, a single structure to improve speed, scalability, and market responsiveness. Building of the strength of our profitable Canadian medical business, which grew at plus 13% in fiscal 25, this action reinforces our commitment to global medical cannabis by improving product availability, enhancing the healthcare provider and patient experience, and positioning us for expansion in key European markets over the next 12 to 18 months. We've also reprioritized our Spectrum Therapeutics red, yellow, and blue product lines in Germany and Poland to simplify the prescribing and purchasing journey. We strongly believe this focus will help drive consistent supply, patient retention, and reinforces our branded leadership in the European medical market. Our existing medical sales are also now complemented by integrated bulk cannabis sales into select European markets. All these action combines are already showing early signs of success. Second, we're significantly refocusing and streamlining our Canadian adult use business to gain share profitably, particularly in the product segments with greatest profit potential, including iPotency flour, pre-rolls, and vapes. We completed skew rationalization in Q4, removing about a third of our lowest performing SKUs and shifting focus to higher velocity, higher margin products and categories. This tighter, more targeted portfolio is focused on high-demand formats that we can supply consistently. This, combined with tighter joint planning processes, is already straightening our relationships with boards and key accounts. This focus is allowing us to bring innovation to market in a faster and more impactful way as well. This quarter, we introduce advanced C-cell all-in-one vapes to the Canadian market under the Tweed and Seven Acres brands and launch an expanded lineup of clayboard-infused pre-rolls. Early consumer response has been positive with encouraging signs of market share and growth rankings. Third, we've established a dedicated centralized global operation function reporting directly to me, expanding its scope beyond Canada to support all cannabis markets. The structure is designed to improve supply and demand planning, enable smarter product allocation to high margin, high opportunity market, and strengthen execution across every line of business. A key mandate of this function is enhancing our sales and operations planning process in collaboration with each business. These improvements are already showing up in higher fill rates, which have risen from the mid-80s range that we saw at the time during fiscal 26 to the mid-90s this past March and April, driven by better forecasting, planning, and coordination. We're taking a disciplined approach to improving the efficiency of our operations. A recent upgrade to our German medical facility is expected to materially improve pharmacy order fulfillment. We're also investing in automation enhancements to lower production costs across our Canadian manufacturing operations. Lastly, we've introduced a new stage-gate process for product development and commercialization. Fared with a more focused portfolio strategy, this will help ensure new products are competitively positioned and margin and creative at launch. At Storz & Bickel, We're focusing on streamlining the operation and increasing our ability to bring key innovations to market to broaden the brand reach and strengthen our global leadership position. We've also taken steps to drive more financial efficiency. With a new structure in place, we're focused on reducing costs and ensuring financial discipline across the organization. We've already undertaken a company-wide cost review to identify these efficiencies in our business. We initiated this action during the fourth quarter and we're on track to reduce operating expenses on an annual basis by at least $20 million over the next 12 to 18 months. Roughly 80% of the targeted savings have already been identified and over 50% have already been executed. Additionally, at the end of the fourth quarter, we made an additional $100 million U.S. early prepayment against our senior secured term loan. Those steps reduced our annual interest expense by approximately $13 million U.S. Together, these actions are creating the space we need in our P&L and balance sheet to gradually reinvest in the business. including strategic M&A when the right opportunities arise. For fiscal 26, our focus is on accelerating profitable growth across all businesses by executing with discipline and aligning resources to the highest potential opportunities. In global medical, we're prioritizing supply consistency and deepening engagements with clinics, healthcare providers, and patients. In Canada, adult use, we're focused on winning in high-demand formats and straightening our presence of retail. And at stores in Bickel, we're enhancing margins to production procurement efficiencies and preparing to launch a new device later this calendar year. Looking down south, we continue to believe in the long-term potential of the U.S. market, with Canopy USA now fully operational under the leadership of Brooks Jorgensen. The team is focused on streamlining operation and leveraging its people, products, and footprint to drive growth and scale. As Canopy USA is navigating financial challenges, particularly related to acreage, we're monitoring the current situation closely and will provide further updates as necessary. Judy will speak more to the financial details and value of investment in more detail shortly. As I wrap up, I want to be clear that my immediate focus as CEO is on the areas where Canopy Growth has the clearest path to near-term value creation. Our financial priorities remain unchanged, achieving positive adjusted EBITDA and generating positive free cash flow. These are the critical milestones for Canopy, and we're acting decisively to ensure that our structural and operational improvements translate into stronger performance i believe that canopy growth does drive brands products people and assets to lead in all the markets we serve i look forward to sharing further updates as we move through fiscal 2026 thank you and with that i'll turn it over to judy to walk through our financial results and outlook thank you luke and good morning everyone

I will start by reviewing our fourth quarter and full year fiscal 2025 results, including performance by key business units. I'll then discuss progress on our balance sheet and cash flow, followed by an update on Canopy USA, and I'll end with a discussion on our priorities and outlook for fiscal 2026. Let's begin with our fourth quarter results. Q4 fiscal 25 fell short of our expectations, driven by lower revenue in stores and Bickel, Poland, and Australia medical businesses. These were partially offset by continued strength in our Canada and Germany medical and our continued cost discipline, which drove year-over-year improvement in adjusted EBITDA. On a full-year basis, excluding the impact of divested businesses and U.S. CBD, net revenue was relatively stable compared to last year, and adjusted EBITDA loss improved significantly compared to the prior year. Free cash flow was an outflow of 36 million for Q4 compared to an outflow of 23 million a year ago as lower interest payment was offset by higher CapEx and increase in working capital in part due to timing. For full year fiscal 25, free cash flow improved by 55 million compared to a year ago. I'd like to now review the results of our key businesses in more detail, starting with Canada. Q4 net revenue was $40 million, up 4% compared to a year ago. Canada medical business maintained its momentum and grew sales 13% versus last year, benefiting from customer mix continuing to shift towards a greater number of insurer patients and larger product assortment in the spectrum online store. Our adult-use business was down 3%. A strong contribution from Claiborne-infused pre-roll joints was offset by lower sales in flour and non-infused pre-rolls. We are seeing improvement in our tweed, flour, and pre-rolls in recent months, driven by increased distribution and stronger velocity. Canada adjusted gross margin in Q4 was 11%. An adjusted cash gross margin, adding back non-cash depreciation costs and costs was 23%. Let me unpack Canada gross margin for Q4, which was negatively impacted by a few factors in the quarter. First, similar to Q3, we experienced higher costs to produce Claiborne, which was launched in November of last year. It's typical to experience higher initial costs for new products, and we had to utilize both internal and external production capabilities to fulfill initial orders that exceeded expectations. We've already implemented measures to improve margins by refining price pack architecture and installing semi-automation capability to lower labor costs and reduce reliance on third-party production. Second, We incurred higher write-down of inventory of select products for Q4 following our typical year-end inventory review and also reflecting our more streamlined product portfolio strategy. We have now stood up new sales and operations planning process and a more stringent procurement control to tightly manage our inventory in fiscal 26. Despite quarterly fluctuations, Canada adjusted gross margin for the full year fiscal 25 was 25% and cash gross margin was 36%. We expect Canada gross margins to show improvement over the course of fiscal 26. International markets cannabis sales declined 35% in Q4 fiscal 25 compared to Q4 fiscal 24, which included approximately 1.7 million in U.S. CBD sales. Excluding U.S. CBD sales, which has been transitioned out, Q4 sales declined 23%. Germany saw another quarter of double-digit growth. However, this growth was more than offset by declines in Poland, which was negatively impacted by a significant drop in the number of medical cannabis prescriptions following a regulatory ban on online prescriptions. Australia also saw a decline in medical cannabis sales due to increasing competition and larger clinics increasingly prescribing their own products. For full year fiscal 25, international market sales decreased 4% with growth in Europe offset by a decline in Australia. International markets gross margin was 25% in Q4 fiscal 25, which was lower than expected due to softer sales in high margin Poland. We are focused on improving gross margins in Europe as we expect to recapture growth in Poland as the market stabilizes. And we're also refining product mix and pricing in Germany. In Australia, we've streamlined costs and expect to launch additional new products in fiscal 26. And we also expect contributions from opportunistic bulk sales to international markets in fiscal 26 as part of our global supply planning initiatives. Stores on Bickel had a soft quarter with revenue of $17 million in Q4, down 23% year over year. Last year's Q4 benefited significantly from having a full quarter of contributions from Venti. Additionally, stores and vehicle sales were pressured by softer than expected vaporizer demands in its key markets, which began in the middle of Q4. We believe that increase of certainty around tariffs and inflation is temporarily dampening consumer demand for vaporizer devices in general. The softness has continued into Q1 fiscal 26, as evidenced by Storrs & Bickel's direct-to-consumer sales declining over 50% during the 4-20 promotional events compared to last year. Storrs & Bickel's Q4 gross margin was 37% compared to 41% last year, driven primarily by lower sales. Looking at our SG&A expenses for Q4 fiscal 25, Sales and marketing, GNA, and R&D expenses have combined declined 28% year-over-year, primarily due to cost reduction initiatives as well as lower bonus compared to Q4 fiscal 2024. Q4 fiscal 2025 adjusted EBITDA loss was $9 million, an improvement of $6 million compared to a loss of $15 million a year ago. Q4 adjusted EBITDA was impacted by lower-than-expected sales in stores in Bickel and Poland, as well as higher inventory write-down in Canada. We are disappointed that we did not achieve positive adjusted EBITDA in fiscal 25, but we're committed to achieving positive adjusted EBITDA in the near term, driven by additional cost reductions, improved growth in global medical, and better commercial execution in Canada adult use. I'd like to now review our cash flow and balance sheet. Free cash flow was an outflow of $36 million in Q4 compared to an outflow of $23 million in Q4 of last year. Cash used from continuing operations was $33 million, which included cash interest payment of $12 million down from $18 million last year. Full-year free cash flow was an outflow of $177 million, an improvement of $109 million compared to fiscal 24. In addition to negative adjusted EBITDA, fiscal 25 free cash flow includes $63 million in interest payments, $40 million of outflow from negative working capital movement, mostly driven by inventory build in Canada, $30 million in restructuring and non-recurring cash payments, including lease payments for facilities not in use, and $11 million in CapEx. For fiscal 26, we expect to achieve significant improvement in free cash flow driven by interest expenses of approximately $38 million for the full year, down from $63 million based on current debt balances and interest rates. Improvement in working capital driven by tighter inventory management and initiatives to improve the timeliness of revenue collection, particularly in the Canada medical business. Lower restructuring and non-recurring cash expenses relative to fiscal 25 and reduction in capex compared to fiscal 25. Turning to the balance sheet, As of March 31, 2024, we had $131 million in cash and short-term investments and a total principal debt balance of $316 million. During Q4, we further reduced our term loan balance by USD $100 million by making an early prepayment in the amount of USD $97.5 million, bringing term loan principal balance to approximately USD $150 million and extending maturity to September 2027. During Q4, we completed USD 250 million ATM program that was launched in June of last year and launched a new USD 200 million program in February of this year. We've generated total gross proceeds of USD 27 million under the new program and have USD 173 million left to be completed. I'd like to now provide an update on CanopyUSA. We have previously indicated that we plan to provide more details around the business performance and financials of CanopyUSA when we report our year-end earnings. As a reminder, CanopyUSA was deconsolidated from our financials as of April 2024, and the acquisitions of 77% of Jetty closed in June, Acquisitions of 100% of VANA closed in October, and acquisition of 100% of Acreage closed in December of 2024. Acreage was also a public company until the acquisition closed. Starting with our Q1 fiscal 25 filing, Canopy's non-controlling interest in Canopy USA had been reflected as long-term assets within our balance sheet, with associated changes in fair value recorded through our income statement. The determination of fair value is based upon underlying assumptions, including current and expected business performance. In addition, Canopy also holds investments in the acreage debt. At March 31, 2025, the fair value of Canopy USA investments, including acreage debt, which is presented within the other investments line of our balance sheet, was approximately $178 million on a combined basis. This is comprised of Approximately $33 million of value relative to entities which hold TerraSend investments, which was down from $151 million as of June 30, 2024, driven primarily by the declines in TerraSend's share price. and approximately $145 million of value represented by debt and equity investments in Canopy USA's ownership in Juana, Jetty, and Acreage, down from $289 million as of June 30, 2024, where the decline in value is primarily driven by continued challenges at Acreage. As we have indicated during the prior earnings calls, acreages results were impacted by its credit challenges in 2024 and under performance relative to expectations in the Ohio adult use cannabis market since the third calendar quarter of 2024. In August of 2024 acreage previously disclosed that their Ohio based revenue was expected to double. However, Ohio has still not fully opened up as an adult-use market, and thus, Acreage's revenue is falling well short of their expectations. In addition to underperformance in Ohio, liquidity challenges faced by Acreage have persisted, impairing its ability to invest in its business and negatively impacting performance in its core states, including New Jersey. And primarily as a result of challenges at acreage, for CanopyUSA's fiscal year ended December 31, 2024, on an annualized basis, CanopyUSA is run rating at approximately USD 210 million of annualized revenue, well short of the original estimated 2023 revenue run rate of USD 300 million, as previously indicated during our Q1 earnings call. Turning quickly to Juana and Jetty, Juana's revenue in Colorado and its licensing revenue were pressured by challenging market dynamics and intense price competition in the gummies category. In March of 2025, Juana announced that its hemp-infused, ready-to-drink Juana beverages are available at Total Wine & More locations nationwide. Jetty's shipment was impacted by a distributor transition in mid-year 2024. However, its depletion revenue, which is revenue from distributors to retailers, remained strong, and it maintained its market share leadership in the sovereignless vape category in the U.S. in 2024. For the first time, we've also included summarized balance sheet and income statement information for CanopyUSA in Note 13 of the financial statements in our 10-K. We note that the income statement information included here is for the eight months ended December 31, 2024, and reflects the P&L of Juana, Jetty, and Acreage from the time of the close of their acquisitions, which occurred at different times during 2024. Now I'll speak briefly about Acreage's liquidity challenges. Acreage is currently in default under its credit agreement dated as of September 13, 2024. The lenders, which includes Canopy, have agreed to forbear remedies with respect to such default until June 1, 2025, while potential solutions, including a potential debt extension, are being discussed. I'd like to now provide our key priorities and outlook for fiscal 26. In global medical cannabis, we expect continued strong momentum in Canada medical, growth in Europe, with efforts aimed at maximizing our growth potential in Germany and Poland, driven by increased number of in-demand products and ensuring consistent supply, while we're focused on stabilizing our business in Australia medical cannabis. We note that we now have fully transitioned stores and pickles business in Australia to stores and pickle Germany, which generated approximately $8 million in fiscal 24. In Canada adult use, we expect to show improved performance in revenue and margins driven by a more focused product portfolio driving better sales execution and continued momentum behind our new product, including Claiborne-infused pre-rolls and recently launched Tweed and 7 Acres all-in-one vapes. We're also focused on improving gross margins by lowering program cultivation costs and reducing production costs. For stores and Bickel, we're focused on navigating a challenging macro backdrop by working closely with our key distributors while reducing costs to protect our margins. We expect sales to decline in the first half of the year with improvement expected in the second half of the year driven by a new device launch planned for this fall. And as Luke indicated, we've identified additional cost reduction opportunities in all areas of businesses, and we expect to realize annualized savings of at least $20 million over the next 12 to 18 months through reduction in headcount, a more efficient sales and marketing spend, lower professional fees, and IT expenses. We're committed to achieving positive adjusted EBITDA as soon as possible, but we're not providing the exact timing at the moment due to a heightened macro uncertainty and its potential impact to our stores and Bickel business. In closing, our refined strategy and focus, along with rigorous cost discipline, is expected to position us for accelerated growth, improvement, and improved margins in fiscal 2026 and beyond. This concludes my prepared comments. We'll now take questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. If you are using a speakerphone, please lift the handset before pressing any keys. We do ask that you please limit yourself to one question. Should you have additional questions, you may press star one again to rejoin the queue. First question comes from Erin Gray at Alliance Global Partners. Please go ahead.

Hi, good morning, and thank you for the question. Appreciate the color. Hi, can you guys hear me okay?

Yeah, we can hear you. Hi, Aaron.

Hi, how are you doing, Judy? Appreciate the color and look that you provided, including kind of the management style that you're looking to take, you know, with the business with streamlining some of the operations. You know, in line with that, you know, it'd be great to get some additional color maybe in terms of what you're seeing as more of the near-term low-hanging fruit opportunities versus actions in place that will benefit you in the long term. And then if we think about, you know, what will be the key, you know, levers that you're going to have to ultimately get to that, you know, positive adjusted EBITDA. I know you're not giving a timeline now, but, you know, we've talked about in the past that it's really going to come down to, you know, getting a growth drive on the top line. So where are you seeing the best opportunity for that? Maybe via stores in Bickel International or Canadian. So I know there's a lot in there, but maybe some high-level commentary on that would be appreciated now that you've been at the helm a little bit longer. Thank you.

Fantastic. For me, I look at the business, I look at fiscal 25. We ended up with minus $23 million of EBITDA. We're focusing. We've identified $20 million of cost reductions. That gives you a bit of dimensions there. We're going after that $20 million very aggressively. as fast as we can. Most importantly, it's about the growth. And the growth, we're very bullish on our medical business. We know this business in Canada is doing extremely well for us, and it was not getting the full attention that it deserves. We're talking about a business that grew up double digits in fiscal 25. We have the engine, we have the right products, we have the right back of the house there. So this business is now reporting directly into me and we're giving it the attention it deserves. At the same time, we combine our medical business in Europe and Australia with the leadership of that Canadian business so now we're fully integrated I you know I'll be honest we're disappointed with our 25 global medical results and the key driver of that was inconsistency of supply we have a great team in Germany we have a great operation in Germany and When we're in stock, we know we can bring a great quality flower at the right price. We know how to distribute it. When we're in stock, we do extremely well. Just too many interruptions in supply has led to a bunch of false starts. So we're focusing on really near to us opportunities that we know will pay back and should pay back relatively swiftly. Then we look at Canadian Rec. We believe in Canadian Rec. It is a big market. It's a $5 billion market. There are significant opportunities for players who are focused. So in the past, we used to be, you know, we played, we tried to play in every single categories and subcategories. So we took decisive action. In recent months, as I said, we streamlined the portfolio, but most importantly, we're focusing with clear intentionality in the large segments where we know we can compete and we can provide consistent, consistent supply. You probably heard about it. We launched Playborn, for example. the end of fiscal 25. The brand is already number three in some regions. So when Canopy focuses, we know Canopy can be successful. So short answer, we're focusing on the opportunities that are the nearest to us with the highest potentials for return.

Next question from Bill Kirk at Roth Capital Partners. Please go ahead.

Hi, thanks for taking the call or taking the questions. You know, we've heard versions of increased focus or streamlining operations, cost savings programs. We've heard those before. So I guess, Luke, what truly makes today's conversation incremental to the programs of the past and the progress of the past?

Yeah, I cannot really comment that much on what was said in the past, but I can assure you that from my perspective, the actions that we're taking are dramatically streamlining the organization. So from my point of view, I narrated an organization that was set up, for lack of a better word, like a large corporation. I've worked at organizations that were billions of dollars. I've narrated what I would qualify as a large corporation structure. We're transforming the organization, its culture, into this fighting business units, focused, streamlined fighting units with just the right amount. of centralized core capabilities to really enable these units to win. I'll give you an example. In Canadian Rec, we eliminated two layers of management between myself and our sales leadership. As you can imagine, decisions are made much faster. We're pushing decision-making down in the organization, and it's allowing us to have the right data at the right time, make the right decision in a much swifter manner than we did in the past. So it's way more than just a cost-reduction strategy. It is really a change in the culture of how we go to market. And I'll tell you honestly, I'm extremely encouraged by the reaction of the organization. These are individuals, talented individuals who want to win. And now we're giving them the tool, most importantly, the structure, the processes that allow them to go out there and compete and win.

Next question comes from Brenna Cunnington at ATP Capital Markets. Please go ahead.

Hi, this is Brenna for Frederico. Thanks for taking our questions. Regarding acreages underperformance, so in addition to your earlier commentary on Ohio, New Jersey underperforming expectations based on the companies losing stores in New York, we can hopefully safely assume that that's also been a very challenging market for them. So just curious what other factors have really underpinned the underperformance of acreage and how should we be thinking about Canopy USA more broadly going forward?

Sure. So I think we provided a lot of details already in my prepared comments, but really I think we've said in previous calls that acreage's performance in 2024 was challenged by its liquidity and credit challenges. The company was public until the close of the acquisition in December. Their public filing through September quarter end, I think, shows the performance was challenged. And I think the key driver really was the underperformance in Ohio that I think a lot of the market participants expected to open with a lot of growth potential. And unfortunately, even as we sit here today, it's still not a full adult-use market. So there was a sizable underperformance relativity expectations in Ohio. And based on the underperformance of Ohio, the liquidity challenges really continued to persist, which also then impacted their ability to invest and grow in other parts of their core markets, including New Jersey as well as New York. So that is the situation today. We are still bullish on the long-term potential of the U.S. market. But, you know, I think the situation today is that there's been underperformance relative to really acreage's expectation, primarily because of Ohio.

Ladies and gentlemen, as a reminder, should you have any questions, please press star one. Next question comes from Pablo Zuanek at Zuanek & Associates. Please go ahead.

Thank you. Good morning, everyone. Lou, congratulations on the progress you've made since you started. My question is about, you talked in the call about inconsistencies in the supply chain, especially for international. Can you talk about how you're thinking about in terms of investing on supply chain, whether you need to have more control over supply, own more supply, whether in Canada or overseas? And by the same token, understood in terms of the reorganization, and alignment, but will you need to make more investments downstream in international in terms of route to market, if you can touch on that. And just a separate one, if I may add a second one, we don't hear many companies talk about Canadian medical, and of course, you know, very good performance there. If you can just give us a reminder of how that market is doing, it seems to be declining, but there's more reimbursement. You know, what's the outlook for that market, market share gain potential, if you can give more color there, it would help. Thank you.

Yeah, good morning. There's probably three questions in there. So let me start with the supply. So we don't, you know, as I said earlier, we're focusing on the opportunities that are very near and right in front of us right now. So for Global Medical, it's all about consistency of supply. And I'll simplify what the situation was. We had a global organization that was functioning in great parts of independently of the rest of the organization. And combine that, that we had a supply chain that was pretty much led by our Canadian REC business. And so you can imagine the lack of connections, the conflicting priorities and agendas. So with the restructuring, we've pretty much eliminated what I call dysfunctionalities to characterize a little bit. And we're in a place now where we're way better equipped to decide what we plant, what we cultivate, what we harvest, and where we distribute this flower, allowing the decisions to be made ultimately by myself to allocate the flower to the best opportunity in the market. So, as you can imagine, we're a centralized supply chain team, centralized sales and operations process. we get the demand signals now from across every single business unit units which wasn't the case before which allows us to make the right decisions at every single steps of the growing process as well with centralized resources we now can get flower materials uh in the open markets, which truly will allow us to take our service levels much higher than they've been in the past. So we don't foresee in the near future having to make any investments to allow us to capture these opportunities.

And I guess I'll touch on the medical, Canada medical performance. And Pablo, you're right. We have not in the past spoke a lot about our medical business, which really has been performing in a successful way. From a market perspective, I think you know there's not a lot of data out there, but we think the market was down in the mid-single-digit rate. We think we're number two in the market share. And, you know, I think you have also access to some of the information from some of the leading players in the marketplace. We've outperformed in the market. So we were up 16% in Canada Medical. As I said, market was down kind of in the mid single digit rate. And I think our largest competitor was up sort of in the 4% rate. So we have outperformed and we are gaining market share. The team has really been focused on really growing the patients that provide us with the highest value and really providing that patient, as well as the broader patient group, the best customer experience. Our Spectrum online store is the highest, I think, quality and the feedback we get from the customer experience on the products and And just the broader experience has been really tremendous. And so team is continuing to really focus on going after those and making sure that they're continuing to get that experience from a patient journey perspective. And as Luke said, we're trying to leverage also that experience and that knowledge into our international medical markets.

Thank you. This concludes Canopy's Growth Fourth Quarter and Fiscal Year 2025 Financial Results Conference Call. A replay of this conference call will be available until August 28, 2025 and can be accessed following the instructions provided in the company's press release issued earlier today. Canopy Growth's Investor Relations Team will be available to answer any additional questions. Thank you for attending today's call.