Aurora Cannabis records $75 million loss in second quarter as revenue plunges 10 percent

https://www.newswire.ca/news-releases/aurora-cannabis-announces-ceo-retirement-and-succession-board-of-directors-expansion-and-business-transformation-plan-869307955.html

The chief executive officer (CEO) of Aurora Cannabis Inc., Miguel Martin, is eyeing up the medical market as a tool for company growth. His announcement comes hot on the heels of a $75 million loss in the second quarter of 2021, when revenue sank by 10 percent.

Headquartered in Edmonton, Aurora already has ties with partners across Australia, Europe and Israel. However, the company’s CEO acknowledges revenue-boosting potential in other countries, so long as the cannabis reform trend continues to spread across the planet at the rate it has done in recent years.

We expect a domino-like effect as acceptance grows,” said Martin during a recent call with market analysts. “Where there is money to be made in a federally-regulated structure, Aurora will be there and we will win.”

Martin, believes that medical cannabis markets around the world will also steer the company’s future growth. A report published by Fortune Business Insights pins a $26,920,400 million valuation on the global industry by the year 2026.

Aurora’s CEO describes the recreational sector as “irrational” and “unsustainable”

Financial results from previous quarters have left Martin speculating on a number of evolving trends in the recreational sector, which he says is an “irrational” and “unsustainable” area of the market.

Aurora attributes some of its losses to the coronavirus pandemic, which has stifled market growth; mainly due to supply constraints, “lockdowns” and social distancing measures.

In a bid to contend with one another, cannabis companies have been desperately seeking ways to entice customers, such as with discounted prices. Consequently, profit margins have been starved.

“You’re seeing core SKUs that are selling at a significantly negative gross margin. You’re seeing an exceptional amount of over inventory. [Plus] you’re seeing a situation like with Quebec right now, with the vaccine mandates, where you’re seeing a 16 to 20 per cent drop in sales, so it’s a weird market,” Martin continued.

Aurora has overcome a number of difficulties in recent times. For example, net consumer cannabis revenue dropped by 48 percent to $14.8 million in its most recent quarter. Comparatively, at the same time last year, net consumer cannabis revenue rested at $28.5 million.

According to Martin, the company endured this financial blow as a direct effect of selling low-priced wholesale cannabis a last resort to avoid destroying soon-to-expire plant matter. Additionally, he blamed the loss on recreational market pressures and price compression.

Aurora’s medical cannabis segment has experienced some fresh gains

Notwithstanding the financial damage that Aurora has been forced to deal with in recent times, the Canadian licensed cannabis producer has celebrated some wins, too. One prime example is the net revenue accrued through the company’s medical cannabis segment for fiscal 2022 Q2 $45.7 million. 

When put side-by-side with revenue generated during the same time period in the previous year at which point net revenue amounted to $38.8 million this represents an 18 percent increase. According to chief financial officer Glen Ibbott, strong performance in the medical business reassures Aurora officials of a bright future.

Across all elements of the company, Aurora shifted 14 percent less kilograms of cannabis during Q2. Meanwhile, the average net sale price of dried cannabis, not including wholesale purchases, reduced six percent from the $4.45 that was recorded a year ago to $4.20.

Losses were also reported for the period that concluded on December 31, at which point Aurora reluctantly disclosed a $75.1 million loss. In comparison with the same period the previous year, when the company lost $297.9 million, this is a major improvement.

Aurora officials divulged the company’s basic and diluted loss per share for Q2 38 cents. Conversely, the basic and diluted loss per share for Q2 2021 was $1.77.  Furthermore, net revenue for Q2 2022 amounted to $60.6 million, which is a 10 percent drop from the $67.6 million net revenue logged for Q1 2021.

By the first half of fiscal 2023, Aurora expects to reach the higher spectrum of its annual savings goal, which ranges from $60 to $80 million.