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Aurora Cannabis Announces Q3 Results, Continues Cost Cutting

  • Increasing Original Target for Expense Savings; Management Now Expects $150 to $170 Million in Annualized Cost Savings by H1/2023 versus Stated Target of $60 to $80 Million
  • Reiterating Adjusted EBITDA Profitability Run Rate by the End of Fiscal H1 2023
  • Remains #1 Canadian LP in High Margin Global Medical Cannabis Revenues; International Medical Revenue Increased 55% from Q3 2021
  • Strong balance sheet; Early Repurchase of $141.4 Million in Convertible Debt

Aurora Cannabis Inc. (NASDAQ: ACB) (TSX: ACB), the Canadian company defining the future of cannabinoids worldwide, today announced its financial and operational results for the third quarter fiscal 2022 ended March 31, 2022.

“We continue to steer our differentiated global cannabis business towards long term shareholder value creation. This is being accomplished through a sole focus on the most profitable growth opportunities, rationalization of our Canadian cost structure and disciplined use of capital. Our plan is working and we remain firmly on track to achieving a positive Adjusted EBITDA run rate by the first half of fiscal 2023. Today, we are announcing further cost savings which will enable us to increase our range of savings under our business transformation plan from $60 to $80 million to $150 to $170 million. Our balance sheet also remains among the strongest in the industry, enabling the repurchase of $141.4 million in convertible debt early, while also providing meaningful working capital to support organic growth and pursue strategic M&A, such as our recent acquisition of Thrive Cannabis,” stated Miguel Martin, Chief Executive Officer of Aurora.

“During Q3, we continued focusing on our global medical cannabis business because it is both defensive and stable, with cash gross margins that exceed 60%. We were pleased to have experienced considerable top-line growth in this segment year over year, and with new international markets poised to open, our track record and ability to navigate complex regulatory environments position us ideally for a significant revenue opportunity globally.  In terms of the Canadian adult-use market, we continue to adjust to current conditions, are excited for future contributions from the Thrive team, and are committed to a continuous stream of innovation, including advancing our premiumization strategy,” he concluded.

Aurora Cannabis Announces Q3 Results, Continues Cost Cutting

Third Quarter 2022 Highlights
(Unless otherwise stated, comparisons are made between fiscal Q3 2022, Q2 2022, and Q3 2021 results and are in Canadian dollars)

Medical Cannabis:

  • Medical cannabis net revenuewas $39.4 million, an 8% increase from the prior year period, delivering 78% of Aurora’s Q3 2022 consolidated revenue and 92% of adjusted gross profit.
  • The increase in revenue was driven by growth in the international medical business, up 55% year over year as the Company continued to develop new, high margin medical markets, but down 26% sequentially. The sequential revenue decrease was primarily a result of $8.5 million of net sales generated from our Israel supply agreement in the previous quarter. Excluding the impact of Israeli sales, net international medical revenue increased sequentially by $1.8 million and was driven by growth in key markets including GermanyPoland, the UK, and Australia.
  • Adjusted gross margin before fair value adjustments on medical cannabis net revenuewas 64% compared to 63% sequentially and 53% in the prior year period. The year over year improvement was a result of an increase in international sales which yield higher margins and an overall reduction in production costs due to the closure of non-core facilities as part of our business transformation plan.

Consumer Cannabis:

  • Consumer cannabis net revenue1 was $10.3 million compared to the prior quarter net revenue of $14.4 million, with the decline due mainly to industry-wide pricing pressures across our portfolio and exacerbated by retail store closures in key provinces for the Company’s premium offerings.
  • Adjusted gross margin before fair value adjustments on consumer cannabis net revenuewas 29% versus 23% sequentially and 33% in the prior year period. The increase of 6% from Q2 2022 was driven by the Company’s continuing shift toward a premium product portfolio.

Selling, General and Administrative (“SG&A”):

  • SG&A, including Research and Development (“R&D”), was $39.5 million (excluding $2.0 million of restructuring related costs and $0.7 million of prior period employee-related accruals) versus $40.9 million in the prior quarter and $43.0 million in the prior year period, presented on a comparable basis. Q3 2022 SG&A is now at the lowest level in almost four years.


  • Q3 2022 total cannabis net revenue1 was $50.4 million, down 17% sequentially. The Q3 2022 average net selling price per gram of dried cannabis1, excluding the effect of bulk wholesale sales, increased 20% to $5.41 from $4.52 in Q2 2022.
  • Adjusted gross margin before fair value adjustments on cannabis net revenue1 was 54% in Q3 2022 versus 53% in the prior quarter and 44% in Q3 2021. The increase in Adjusted gross margin compared to the prior year period is due to increased sales in our international medical markets which command significantly higher average net selling prices and margins.
  • Adjusted EBITDA1 loss declined to $12.3 million in Q3 2022 versus $9.0 million in Q2 2022 but narrowed from $20.9 million in the prior year period. The change from Q2 2022 was primarily driven by lower revenue that was partially offset by a decrease in SG&A, net of restructuring and one-time costs.

Operational Efficiency Plan, Balance Sheet Strength, & Cash Use:
Aurora has previously identified annualized cash savings of $60 million to $80 million and now expects to surpass the high end of this range with an additional $70 million to $90 million in savings by the end of H1 fiscal 2023, split evenly between costs of goods sold (“COGS”) and SG&A, for a total of up to $170 million in cash savings under this transformation program. Projected COGS savings now include the closure of the Aurora Sky facility in Edmonton (previously announced to be operating at approximately 25% capacity), in keeping with our diversified business portfolio, prudent approach to capital allocation, and our strategy in the Canadian adult-use market to focus on higher margin premium categories. These cash savings will be reflected in our P&L either as they occur within SG&A savings, or as inventory is drawn down for production-related savings.

Resulting from these strategic changes, management concluded that the carrying value of goodwill in the Canadian market segment was impaired and that asset specific impairments were required for production facilities being made redundant. As a result of these decisions, Aurora recorded a number of one-time non-cash charges in Q3 2022 including a write down of goodwill of $741.7 million, asset-specific impairments of $176.1 million, and an inventory provision charge of $63.6 million.

At March 31, 2022, Aurora had $480.6 million of cash, including $50.7 million in restricted cash, no secured term debt, and access to US$887.6 million of capital under its shelf prospectus, including an at-the-market (ATM) facility, of which currently US$187.6 million remains under the program. As disclosed previously, management considers the ATM to be available for strategic purposes.

During Q3 2022, Aurora repurchased a total of $13.4 million (US$10.6 million) in principal amount of convertible debt at a total cost, including accrued interest, of $11.8 million (US$9.3 million). Subsequent to Q3 2022, Aurora repurchased a total of $128.0 million (US$100.0 million) in principal amount of convertible debt at a total cost, including accrued interest, of $122.9 million (US$96.0 million). Aurora may, from time to time and subject to market conditions, repurchase its convertible debt, including in open market purchases and privately negotiated transactions.

Aurora Cannabis Announces Q3 Results, Continues Cost Cutting

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