Aurora Cannabis Generates $56 Million Revenue in Fiscal Q2

Aurora Cannabis Announces Second Quarter 2020 Results
  • Net Revenue of $66.6 million, excluding provisions of $10.6 million
  • Net Cannabis Revenue, excluding provisions, of $63.2 million, In Line With Recent Guidance
  • Cash Cost to Produce Per Gram Sold of $0.88
  • Successful Launch of Cannabis 2.0 Products Across Canada
  • Consumer Cannabis Net Revenue, excluding provisions, Grows at 11% Over Prior Quarter

EDMONTON, Feb. 13, 2020 /PRNewswire/ – Aurora Cannabis Inc. (the “Company” or “Aurora”) (NYSE | TSX: ACB), the Canadian company defining the future of cannabis worldwide, announced today its financial and operational results for the second quarter of fiscal 2020 ended December 31, 2019.

Despite delivering modest growth in our core medical and consumer business in Q2, we took immediate and deliberate actions to align our Company to current market conditions.

Michael Singer, Executive Chairman and Interim CEO, Aurora Cannabis.

As announced last week, being a profitable cannabis company for our investors is the singular near-term focus for Aurora and we have begun to implement a business transformation plan where we intend to manage the business with a high degree of fiscal discipline.

Second Quarter 2020 Highlights

(Unless otherwise stated, comparisons are made between Fiscal Q2 2020 and Q1 2020 results and are in Canadian dollars)

  • Cannabis net revenue of $63.2 million, excluding provisions, in Q2 2020 compared to $70.8 million in Q1 2020:
    • Canadian and international medical cannabis net revenue of $27.4 million, with Canadian medical net revenue sequentially flat at $25.6 million, and international medical net revenue down from $5.0 million to $1.8 million due to a temporary sales interruption
    • Consumer cannabis net revenue, excluding provisions, of $33.5 million was an increase of 11% from $30.0 million in the previous quarter. Including the $10.6 million provision for returns and price adjustments for prior quarter sales, reported consumer cannabis net revenues were $22.9 million. Also affecting Q2 consumer cannabis net revenue was slower provincial ordering during the quarter, a shift in the market to value brands (Aurora launched “Daily Special” in early February 2020), and the industry-wide impact from the slow pace of retail store licensing
    • Wholesale bulk cannabis net revenues of $2.4 million, a decline from $10.3 million in the previous quarter, due to overall volume declines and the wholesale of lower potency (priced) product
  • Production volume in fiscal Q2 was 30,691 kilograms, in-line with previous expectations as Aurora realigned its cultivation strategy to produce a greater amount of higher value and higher potency strains
  • Cash cost to produce per gram sold remained relatively consistent at $0.88 per gram versus $0.85 per gram last quarter – Aurora intends to maintain this metric below $1.00 per gram
  • Aurora’s medical patient base remained relatively consistent at 90,307
  • Successfully launched Cannabis 2.0 products with sales to provincial distributors commencing on December 17, 2019

Subsequent Events & Business Transformation Plan

Subsequent to the quarter end, the Company made several decisions designed to strategically transform its operations and provide financial flexibility in response to a changing market and regulatory environment, while supporting its long-term growth:

  • Announced CEO succession plan and expansion of the Board of Directors
  • Executive Chairman Michael Singer appointed Interim CEO, effective February 6, 2020; search for permanent successor underway
  • Two new Independent Directors joined the Board for a total of 10 directors, including 7 Independents
  • Announced comprehensive transformation plan to significantly reduce the Company’s expense base, rationalize capital expenditures, and better align its balance sheet with current market conditions
  • Secured credit facility amendments that remove EBITDA ratio covenants and provided additional financial flexibility as Aurora executes transformation plan

The transformational actions we announced last week have already positively impacted SG&A expense and we are confident that our run-rate will be approximately $40 million – $45 million as we exit the fiscal fourth quarter of 2020.  This is a very important step toward EBITDA profitability.

Glen Ibbott, CFO

In addition, our credit facility was amended to provide greater flexibility to Aurora. More specifically, Aurora chose to downsize the facility by $96.5 million with the elimination of undrawn term loan capacity, and further used $45 million of restricted cash to repay a portion of the drawn term loan balance for the purpose of reducing leverage and cash required for debt service.

Following these facility changes, Aurora’s current credit facility and other debt outstanding includes:

  • $50 million revolving facility, of which $2 million was drawn as of December 31, 2019
  • $162 million of fully drawn senior secured term loans
  • US$345 million of senior unsecured convertible debentures due February 2024

Q2 2020 Key Financial and Operational Metrics

The table below outlines the breakdown of cannabis net revenue between our medical, consumer and wholesale bulk markets, as well as our dried cannabis and cannabis extracts for the three months ended December 31, 2019 and September 30, 2019.

Consolidated net revenue, excluding provisions, was $66.6 million in Q2 2020 as compared to $75.2 million in the prior quarter. Medical cannabis net revenues decreased to $27.4 million in Q2 2020, down 10% over the prior quarter due to a short-term permit issue in Germany (since resolved). Consumer cannabis revenues were $33.5 million ($22.9 million net of provisions) in Q2 2020. The provisions included in cannabis net revenues are comprised of $6.1 million of actual returns and price adjustments and a $4.5 million provision for future returns and price adjustments.

Average net selling price of cannabis, including provisions, decreased to $5.54 per gram over the prior quarter of $5.68. This decrease is attributable to the previously mentioned provision for returns and price adjustments impacting Q2 2020 which did not affect Q1 2020, lower kilograms sold in Q2 versus Q1, and lower wholesale bulk volume and pricing.

Gross margin before fair value adjustments on cannabis net revenue, excluding provisions was 48% in Q2 2020, compared to 58% in the prior quarter.  Including the impact of the return and price adjustment provisions, gross margin before fair value adjustments on cannabis net revenue was 44%.

During Q2 2020, Aurora produced 30,691 kilograms of cannabis as compared to 41,436 kilograms in the prior quarter. The 26% decrease in production output was primarily due to previously announced changes to cultivation strategies, including a pivot to high-value, high-potency strains which are lower yielding. With continued refinement of our cultivation techniques, we expect to achieve quarterly harvest volumes leading to an average of 150,000 kgs annually or better.

Q2 2020 SG&A increased by 23% to $99.9 million from the prior quarter. The increase was primarily driven by a rise in salaries and benefits due to targeted growth in corporate headcount and annual merit increases, investments in educational marketing campaigns related to the launch of Cannabis 2.0 products, and marketing initiatives related to the launch of the Aurora Drift brand.  On February 6, 2020, Aurora announced decisive action effective immediately to reduce SG&A expenses from the Q2 2020 levels, and expects to manage the business with an SG&A expense run-rate of between $40 million to $45 million per quarter exiting Q4 2020 (June 30, 2020).

Adjusted EBITDA(1) loss was $80.2 million in Q2 2020 compared to $39.7 million in Q1 2020. The decline in adjusted EBITDA loss is primarily due to the quarter over quarter decrease in revenue (including provisions), an increase in production costs relating to the ramp up for the legalization of Cannabis 2.0, and the increase in SG&A expenses. Developing a profitable cannabis company in the near term is extremely important to Aurora. While the Company strongly believes the global market opportunity for cannabis is robust, there is uncertainty in the timing of revenue ramp-up in our core markets.  Therefore, the Company has taken action to materially reduce SG&A expenses focused on achieving positive adjusted EBITDA.


Consistent with Aurora’s release dated February 6, 2020; the Company is bullish on the long-term potential for the global cannabis opportunity. However, due to several short-term factors, there is likely to be a slower than previously expected rate of industry growth in the near-term. The Company has outlined a number of fiscally responsible steps it has already taken to realign its business operations to this expected industry growth rate. Aurora reiterates its outlook for fiscal third quarter that cannabis revenue will be impacted by previously mentioned industry headwinds, and as such will likely show modest to no growth relative to fiscal Q2’s cannabis revenue, excluding provisions, of approximately $65 million.


¹This term is defined in the “Cautionary Statement Regarding Certain Non-GAAP Performance Measures” section of this MD&A. Refer to the “Adjusted EBITDA” section for reconciliation to the IFRS equivalent.

Conference Call

Aurora will host a conference call today, February 13, 2020, to discuss these results. Michael Singer, Executive Chairman and Interim Chief Executive Officer, and Glen Ibbott, Chief Financial Officer will host the call starting at 8:00 a.m. Eastern time. A question and answer session will follow management’s presentation.

DATE: Thursday, February 13th, 2020

TIME: 8:00 a.m. Eastern Time | 6:00 a.m. Mountain Time


REPLAY: (844) 512-2921 or (412) 317-6671Available until 11:59 p.m. Eastern Time Thursday, February 27, 2020

PIN NUMBER: 13699134

About Aurora 

Aurora is a global leader in the cannabis industry serving both the medical and consumer markets. Headquartered in Edmonton, Alberta, Aurora is a pioneer in global cannabis dedicated to helping people improve their lives. The Company’s presence spans 25 countries across 5 continents with a brand portfolio that includes Aurora, Aurora Drift, San Rafael ’71, Daily Special, AltaVie, MedReleaf, CanniMed, Whistler, and ROAR Sports. Providing customers with innovative, high-quality cannabis and hemp products, Aurora’s brands continue to break through as industry leaders in the medical, performance, wellness and recreational markets wherever they are launched. For more information, please visit our website at

Aurora’s Common Shares trade on the TSX and NYSE under the symbol “ACB”, and is a constituent of the S&P/TSX Composite Index.

Original Press Release

Published by NCV Newswire
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