Tilray (TLRY) FY2026 Earnings: The $2.1B Impairment Behind a 95% Smaller Loss
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The Hook
Tilray Brands $TLRY filed its FY2026 10-K on July 28, 2026, and the headline is spectacular: a net loss of $105.2 million against $2,181.4 million a year earlier. The loss fell 95 percent.
Here is what the filing says produced that. In FY2025 Tilray booked a single line called "Impairment of intangible assets and goodwill" worth $2,096,139 thousand. In FY2026 that line reads zero. The company's entire operating loss improved by $2,219.7 million, and $2,096.1 million of that improvement - 94.4 percent - is one charge not happening twice. Revenue over the same stretch grew by $94.1 million. Operating cash flow stayed negative at minus $69.1 million. The improvement is real arithmetic; it is not a turnaround.
Company Snapshot
Tilray Brands is a Nasdaq-listed, US-incorporated company with Canadian roots and four reportable segments: cannabis, beverage, distribution (purchase and resale of pharmaceutical and wellness products, largely in Germany) and wellness (hemp foods and CBD). It is not a US plant-touching multi-state operator and does not carry a Section 280E tax burden. The filing under review is the annual report on Form 10-K for the fiscal year ended May 31, 2026, filed July 28, 2026, covering FY2024 through FY2026. All figures below come from that filing unless labelled otherwise.
The Financial Story
The top line grew, and thinner. Net revenue rose to $915.5 million from $821.3 million, up 11.5 percent. Gross profit rose only 8.3 percent to $260.4 million, so gross margin fell from 29.29 percent to 28.45 percent. That gap is the tell: Tilray sold $94.1 million more and kept a smaller share of each dollar.
| Metric | FY2024 | FY2025 | FY2026 |
|---|---|---|---|
| Net revenue | $788.9M | $821.3M | $915.5M |
| Gross profit | $223.4M | $240.6M | $260.4M |
| Gross margin | 28.31% | 29.29% | 28.45% |
| Impairment of intangibles and goodwill | $0 | $2,096.1M | $0 |
| Operating loss | $(174.7)M | $(2,282.7)M | $(63.0)M |
| Net loss | $(222.4)M | $(2,181.4)M | $(105.2)M |
| Loss per share, basic and diluted | $(3.30) | $(24.56) | $(1.09) |
| Cash used in operating activities | $(30.9)M | $(94.6)M | $(69.1)M |
| Adjusted EBITDA (company-defined, non-GAAP) | $60.5M | $55.0M | $61.1M |
What the $2.22 billion actually is. The impairment note and the goodwill note decompose the FY2025 charge exactly. Goodwill took $1,248.2 million of it: $1,070.0 million of cannabis goodwill, $120.8 million of beverage, $53.2 million of wellness and $4.2 million of distribution. Intangible assets took the other $847.9 million: $334.2 million of customer relationships and distribution channels, $327.1 million of intellectual property, trademarks, know-how and brands, and $186.6 million of licenses, permits and applications. Beverage, wellness and distribution goodwill went to nil. Nothing was sold, nothing was closed, no cash moved.
Strip the impairment out and the operating loss still narrowed, from $186.6 million to $63.0 million, a $123.5 million improvement. That sounds like the turnaround. Read the individual expense lines and it mostly is not.
| Line | FY2025 | FY2026 | Change |
|---|---|---|---|
| Impairment of intangibles and goodwill | $2,096.1M | $0 | $(2,096.1)M |
| Amortization | $88.6M | $19.6M | $(69.0)M |
| Other than temporary loss, convertible notes receivable | $21.7M | $0 | $(21.7)M |
| Restructuring costs | $34.3M | $13.1M | $(21.2)M |
| Change in fair value of contingent consideration | $0 | $(15.0)M | $(15.0)M |
| Litigation costs, net of recoveries | $17.3M | $3.9M | $(13.4)M |
| General and administrative | $167.3M | $203.6M | +$36.3M |
| Total operating expenses | $2,523.3M | $323.5M | $(2,199.8)M |
The single largest non-impairment saving is $69.0 million of amortization, down 78 percent. That is not cost discipline. Amortization collapsed because the $847.9 million of intangible assets that were generating it had just been written to nothing; the gross carrying value of finite-lived intangibles fell from $1,628.4 million to $58.0 million. The writedown is still doing the work a year later. Behind it sit three more items that are one-time by nature on one side or the other: a convertible-note fair value loss that did not repeat, restructuring costs that halved, and a $15.0 million contingent-consideration gain booked as negative expense. The one line that reflects the ongoing cost of running the company, general and administrative, went the wrong way: up $36.3 million, or 21.7 percent. Stock-based compensation inside it nearly doubled, from $24.3 million to $45.9 million, as the company granted 4,562,669 RSUs at a weighted-average grant-date fair value of $5.94 against 1,350,513 the prior year.
The growth came from the lowest-margin thing Tilray does. Distribution - buying and reselling pharmaceutical products - grew 20.7 percent to $327.2 million and supplied $56.0 million of the $94.1 million of total revenue growth. It carries a 12.4 percent gross margin. Beverage, at a 35.9 percent margin, grew 5.6 percent and its gross profit actually fell, from $93.0 million to $91.2 million.
| Segment | FY2025 revenue | FY2026 revenue | Growth | FY2025 margin | FY2026 margin |
|---|---|---|---|---|---|
| Distribution | $271.2M | $327.2M | +20.7% | 10.81% | 12.42% |
| Wellness | $60.5M | $65.9M | +8.9% | 31.81% | 32.58% |
| Cannabis | $249.0M | $268.3M | +7.8% | 39.76% | 39.91% |
| Beverage | $240.6M | $254.0M | +5.6% | 38.66% | 35.92% |
| Total | $821.3M | $915.5M | +11.5% | 29.29% | 28.45% |
Three of the four segments improved their own gross margin and the consolidated margin still fell. Decomposing the 84 basis points of compression against the filing's segment table, roughly 67 basis points is pure mix - distribution rising from 33.0 percent to 35.7 percent of revenue while beverage fell from 29.3 percent to 27.7 percent - and roughly 17 basis points is rate, essentially all of it beverage giving back 274 basis points. Tilray is not losing pricing power across the board. It is growing fastest where the margin is thinnest.
Two more things the revenue line hides. By geography, EMEA revenue rose $122.3 million to $445.7 million, up 38 percent, while the United States fell $31.3 million to $242.4 million, down 11 percent. EMEA contributed more than 100 percent of consolidated growth because the US shrank underneath it. And the company's own constant-currency table puts FY2026 revenue at $883.9 million against $821.3 million, or 7.6 percent growth. Roughly a third of the reported 11.5 percent was the exchange rate.
Cash tells the plainest version. Operating activities used $69.1 million. Capital and intangible asset purchases took another $33.0 million, so free cash flow was about minus $102.1 million. Financing provided $131.0 million. The mechanism is the at-the-market equity program: Tilray issued 19,625,505 shares in FY2026 for gross proceeds of $161.6 million and net proceeds of $158.0 million. Despite that raise, cash, restricted cash and marketable securities still fell, from $256.4 million to $234.6 million. Weighted-average shares outstanding went from 89.0 million to 111.8 million, up 25.6 percent, and the actual count at May 31, 2026 was 131.7 million, so FY2027 starts from a higher base again. All of those figures are restated for a reverse stock split that took effect on December 2, 2025.
That dilution is why the per-share numbers deserve a second look, and the direction is the opposite of the usual complaint. Loss per share improved 95.6 percent, from $(24.56) to $(1.09), while the loss itself improved 94.4 percent. When a company is losing money, issuing shares spreads the loss thinner and flatters the per-share line. The improvement in loss per share is slightly better than the improvement in the loss, and the extra came from the share count, not the business.
What survived the writedown is the most interesting disclosure in the filing. $752.4 million of goodwill remains on the balance sheet, and after beverage, wellness and distribution were written to nil, all of it is cannabis. In FY2025 the company held that balance using a discounted cash flow with a 14.50 percent discount rate, a 5 percent terminal growth rate, and an average revenue growth rate of 34 percent over five years, based on a stated 65 percent probability of EU cannabis legalization and 25 percent probability of US legalization within five years. The note publishes the sensitivities: a 1 percent higher discount rate adds $133.8 million of impairment, a 1 percent lower terminal growth rate adds $93.5 million, a 5 percent lower EU legalization probability adds $44.0 million.
For FY2026 the company did not re-run that model. It performed a qualitative assessment, concluded it was not more likely than not that any reporting unit's fair value was below carrying amount, and recorded no impairment. Cannabis segment revenue grew 7.8 percent in the year, against the 34 percent five-year average the surviving balance was underwritten on. Goodwill and intangibles together are $795.2 million of the balance sheet, and the company's own risk factors say a further decrease in market capitalization or profitability could increase the risk of additional impairment.
Valuation: What It Is Worth As a Normal Business
Market data below is dated and attributed; everything else in this brief comes from the 10-K.
TLRY closed at $4.38 in the session around the July 28, 2026 filing (Yahoo Finance), down roughly 55 percent year to date (24/7 Wall St., July 28, 2026), against a 52-week range of about $3.80 to $23.20 on a split-adjusted basis (aggregator data, July 2026). Against the 131.7 million shares the 10-K reports outstanding at May 31, 2026, that is roughly $577 million of equity value. Adding the filing's $138.6 million net long-term debt and $88.0 million of convertible principal and subtracting $234.6 million of cash, restricted cash and marketable securities gives an enterprise value near $0.57 billion, excluding lease liabilities. On that basis Tilray trades at about 0.6 times revenue and about 9.3 times its own adjusted EBITDA of $61.1 million. There is no meaningful price to earnings multiple, because there are no earnings. Published analyst targets are unusually scattered: TD Cowen cut to $5 from $7 in July 2026, while aggregator consensus figures sit near $10 to $11.69 with a Hold rating (MarketBeat, Simply Wall St., July 2026). That spread is itself the story - the sell side does not agree on what this is.
The honest valuation question is not what multiple to apply but which number to apply it to. Adjusted EBITDA of $61.1 million sits alongside operating cash flow of minus $69.1 million; the reconciliation between the two is the company's own definition of what to exclude. A scenario frame, with assumptions stated and nothing implied about where the stock goes:
| Scenario | Assumptions | Implied enterprise value |
|---|---|---|
| Bear | Revenue flat to down as US declines outrun EMEA, distribution keeps mixing margin down toward 27 percent, adjusted EBITDA back to $45M, 6x | ~$0.27B |
| Base | Revenue grows 5 to 7 percent on EMEA and distribution, margin stable near 28.5 percent, adjusted EBITDA $65 to $70M, 8 to 9x | ~$0.52B to $0.63B |
| Bull | Cannabis rescheduling and EU access re-rate the cannabis segment, revenue grows 12 to 15 percent, mix shifts back toward 40 percent-margin cannabis, adjusted EBITDA $95 to $110M, 11x | ~$1.05B to $1.21B |
Today's roughly $0.57 billion enterprise value sits inside the base case. Put differently, the market is currently paying for the business as it is reported, and paying nothing for the legalization outcome that the surviving $752.4 million of cannabis goodwill is carried on. That is a coherent position. It is also the reason the balance sheet is exposed: if the qualitative test that passed this year has to become a quantitative one, the sensitivities in the note say what the bill looks like. This is implied value under stated assumptions, not a price target and not investment advice.
Risks
The near-term risk is the funding stack, not the income statement. The TLRY 27 convertible notes carry a 5.20 percent coupon and mature June 15, 2027, with a conversion price of about $26.55 per share. At $4.38 those notes will not convert on their terms, so they get repaid in cash or retired with stock at market. Tilray is already doing the latter: it exchanged $17.0 million of principal for 3,138,878 shares during FY2026, and between June 1 and June 24, 2026 it exchanged another $18.0 million of principal for 3,852,527 shares, which implies roughly $4.67 per share. That leaves $70.0 million of principal outstanding as of the filing date, down from $88.0 million at year end. Meanwhile, on July 24, 2026 the company's American Beverage Crafts subsidiary signed a Sixth Amendment with Bank of America that reduced revolving commitments from $25.0 million to $15.0 million and modified financial covenants. The filing states the company was in compliance with all long-term debt covenants at May 31, 2026.
Two legal matters carry real tail risk. MMIRF, LLC sued Tilray and others in Los Angeles Superior Court on December 31, 2025 over the MedMen transactions, alleging breach of fiduciary duty and seeking damages in excess of $1.0 billion, a figure larger than Tilray's current market capitalization; management states a loss is neither probable nor reasonably estimable. The Aphria securities class action in the Southern District of New York, filed in 2018, has been certified and fact discovery is complete. Total litigation accrual is $11.9 million. Separately, the filing discloses that on July 20, 2026 the US announced additional 50 percent tariffs on certain Canadian imports which would predominantly hit the wellness segment, and flags input-cost exposure on aluminum, hops, barley, malt and vape components.
The Bottom Line
Tilray is a growing, cash-consuming company that spent FY2026 removing the accounting consequences of FY2025 rather than changing the economics of the business. Revenue is up, the mix is worse, the amortization relief is a gift from the writedown, general and administrative costs are up 22 percent, and the equity market funded the gap. The genuine progress is narrow but real: distribution and wellness margins improved, cannabis margin held near 40 percent, the $33.0 million synergy plan was completed, and adjusted EBITDA at $61.1 million is the best of the three years shown.
What to watch is a short list. Does gross margin stabilize once distribution's mix effect anniversaries. Does operating cash flow turn, or does the ATM keep filling the hole. Does the $70.0 million of remaining convertible principal get repaid in cash or in stock. And most of all, whether next year's goodwill test stays qualitative, because $752.4 million of cannabis goodwill is currently held up by a five-year 34 percent growth assumption that the last twelve months delivered 7.8 percent against.
Every figure in this analysis was pulled from Tilray's FY2026 Form 10-K through the RoboSystems SEC Shared Repository: structured XBRL filing data for every public company that files. Point your own tools at it at robosystems.ai/pricing. New customers get 50% off your first month with code ROBO50.
This is not investment advice. No price targets. Market prices and analyst estimates are attributed and dated inline; all filing figures come from the Form 10-K for the fiscal year ended May 31, 2026.