Aurora Cannabis Achieves Second Straight Profitable Quarter and Sets Sights on Positive Cash Flow by 2024
Aurora Cannabis, a leading cannabis producer based in Edmonton, Alberta, reported a net loss of 87 million Canadian dollars ($65 million) for the three months ended March 31, 2023. This represents a slight increase from the previous quarter’s net loss of CA$67.2 million. However, the company also delivered positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of CA$300,000 during the same period, marking Aurora’s second consecutive profitable quarter.
During the third quarter, Aurora generated net sales of CA$64 million, reflecting a sequential increase of 4% compared to the previous quarter’s CA$61.7 million. Although both the revenue and adjusted EBITDA figures fell slightly below analysts’ consensus, CEO Miguel Martin expressed confidence in the company’s “business transformation plan,” citing the consecutive positive adjusted EBITDA as evidence of its effectiveness. He further stated that Aurora’s next financial milestone is to achieve positive free cash flow, a target they aim to reach before the end of calendar 2024.
In the past three fiscal years, Aurora has successfully implemented cost-saving measures, resulting in annual savings of CA$400 million. These measures included the closure of certain facilities. As part of a newly announced plan, Aurora intends to achieve an additional CA$40 million in annualized savings. To achieve this, the company has made the decision to close its leased facility in Denmark. Chief Financial Officer Glen Ibbott explained that Aurora aims to eliminate less efficient operations and concentrate on supplying the global market from their cost-effective and high-quality production facilities in Canada. The goal is to reduce operational expenses by a minimum of CA$5 million quarterly this fiscal year.
Breaking down the revenue by category, Aurora’s medical cannabis net revenue experienced a 4% decline from the previous quarter, amounting to CA$37.9 million. However, CEO Miguel Martin highlighted that insured patients accounted for 82% of Aurora’s medical cannabis revenue in the third quarter. He also emphasized the company’s leading market share, which remains at approximately 25%, double that of their closest competitor.
On the other hand, sales of nonmedical cannabis witnessed a 1% decrease from the previous quarter, totaling CA$14.5 million. Martin acknowledged that Canada’s recreational market still faces challenges, primarily due to price compression. Nevertheless, he identified specific areas where Aurora has seen success and profitability, including concentrates, pre-rolls, and ingestible products. Martin noted that the economics of the recreational portfolio are gradually improving, with some positive signs such as pricing floors implemented by provincial entities like the Ontario Cannabis Store and rationalization of pricing, particularly in the flower category.
In recent years, Aurora, along with a few other cannabis producers, has diversified its sales outside of the industry. The company experienced a significant increase in plant-propagation revenue during the third quarter compared to the second quarter. CEO Miguel Martin highlighted that Aurora’s repurposed 800,000-square-foot Aurora Sky facility in Edmonton, which now focuses on orchid and vegetable propagation, is expected to generate sales in the final quarter of calendar 2023. Additionally, he mentioned the potential financial contribution from Bevo, a Langley-based profitable supplier of propagated vegetables and ornamental plants. Aurora acquired a controlling interest in Bevo for CA$45 million last summer, expanding its production capability and extending its shipping range to Canada and the United States.
In the third and final quarter of Aurora’s 2023 fiscal year, plant-propagation revenue surged by 62% from the previous quarter, reaching CA$10.7 million. This growth indicates the success of the company’s endeavors in plant propagation.
Aurora Cannabis shares trade on both the Toronto Stock Exchange and Nasdaq, offering investors an opportunity to participate in the company’s transformative journey towards profitability and positive cash flow by 2024.
