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Healthcare

UPDATE 3-Canopy Growth shrinks losses on $67 mln cost-saving moves, cuts spending plan

(Adds outlook, analyst comment; updates shares)

Feb 9 (Reuters) - Canadian pot producer Canopy Growth Corp reported a smaller quarterly loss on Wednesday as it generated C$85 million ($67 million) in cost savings, and slashed its fiscal spending plan significantly, sending its shares up more than 15%.

Ontario-based Canopy closed some stores, reduced staffing and introduced new offerings such as high-potency flower strains to cater to changing consumer tastes over the past few months.

The company said it would now focus more on its premium Canadian brands and build a tetrahydrocannabinol (THC) ecosystem in the United States, where investor interest has gathered steam on hopes of federal marijuana reform. THC is the cannabis compound that causes a high.

It also expects fiscal 2022 capital spending to be in the range of C$45 million to C$60 million, down from a prior range of C$100 million to C$150 million.

Canopy, however, is yet to set a new timeline for turning profitable.

“I’m not sure we’re going to provide specific targets (in May), and in all honesty, I’m not sure anybody in the cannabis space should be providing targets because there’s so much volatility,” Chief Executive Officer David Klein told Reuters.

Profits have remained elusive for most Canadian marijuana companies due to fewer-than-expected retail stores, cheaper rates on the black market and sluggish overseas growth.

“We expect the market will view the robust q/q sales growth and in-line EBITDA loss with a sense of relief following last quarter’s large miss,” Eight Capital analyst Ty Collin said.

Canopy’s third-quarter core loss fell to C$67.4 million from more than C$162 million in the second quarter and by 1% from a year earlier.

Revenue rose 7% from the September quarter to C$141 million, beating the Refinitiv-IBES estimate of C$135.35 million, driven by its U.S. sports nutrition business BioSteel and vaping unit Storz & Bickel.

$1 = 1.2677 Canadian dollars Reporting by Shariq Khan and Arunima Kumar in Bengaluru; Editing by Ramakrishnan M.

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