Aurora Cannabis Inc Announces Q1 Fiscal 2018 Results

Aurora Cannabis Inc. (ACB.TO) (ACBFF) released its financial and operational results for the first quarter that ended on September 30th.

Operational Highlights

  • As of today, Aurora has more than 20,000 active registered patients. The company added approximately 2,880 active registered patients during the quarter (added 3,500 since the end of the fiscal year).
  • CanvasRx, which now operates 25 facilities nationwide, has more than 31,900 registered patients. Over 8,900 medical doctors across Canada have referred patients to CanvasRx or its affiliated medical clinics.
  • Exports to Germany in September have passed the country’s lab testing requirements for quality control, and were delivered to pharmacies in October. Revenues from exports to Germany will be recorded beginning next quarter. Aurora continues to export ongoing, regular shipments of dried cannabis flower from Canada to Germany.
  • Aurora is executing a significant international expansion as evidenced by the lead participation in Cann Group’s IPO in Australia and the acquisition of Pedanios. Aurora is actively pursuing further international opportunities

Financial Highlights

  • During the quarter, Aurora recorded $4.7 million in net income on $8.2 million in revenue. When compared to the same period last year, revenue increased by approx. 170%. Unrealized gains on marketable securities primarily resulted in in Aurora recording $14.5 million in comprehensive net income.
  • The medical marijuana producer produced over 1 million grams and sold 889,965 grams of cannabis (87,714 cannabis oil gram equivalent). Aurora sold a gram for $8.22 on average and the cash cost per gram was $1.92
  • Revenue growth was achieved across all product lines and territories, driven predominantly by strong growth in Canadian cannabis oil sales, sales in Germany, and an increase in the average price per gram of product sold. The average price of product sold increased by 10.3% from $7.45 to $8.22 per gram, attributable mainly to strong increases in cannabis oils sold and sales through Pedanios in Germany.
  • Gross profit was $8.8 million and is attributable to the gain on the effect of changes in fair value of biological assets in addition to an increase of $5.2 million in revenues.
  • Aurora generated $1.2 million in revenues through the sale of medical cannabis in Germany.

Liquidity Highlights

  • As of September 30th, Aurora had 127.9 million in cash and cash equivalents and $169.7 million in working capital. After the quarter ended, the company raised $75 million through a private placement of units
  • Aurora strengthened its balance sheet and liquidity position during the first quarter of 2018 with $1.5 million in new financings ($1.3 million through the exercise of warrants, options and compensation options and $0.25 million from the conversion of convertible notes). Approximately $200 million in additional gross cash proceeds remain available from future exercises.
  • Aurora anticipates that it has sufficient funds to cover future operating cash flows, to complete the construction of its Aurora Sky facility and to execute its growth strategy for domestic and international expansion based on the current capital resources available.
  • The company received 14,285,714 units and 77,540 units of Radient on conversion of $2.0 million in debentures and payment of final interest, respectively.

Capacity Expansion

  • Continued to progress on schedule and on budget with the construction of the Aurora Sky facility. To date, over 400,000 square feet of structure has been erected, 80% of which has its specialty glass installed, and many sub-systems have been delivered to the site. Aurora anticipates the first bays to be completed and ready for planting before the end of calendar 2017, with the first harvest in the first half of 2018, and full completion of the construction project by mid-2018.
  • Completed the construction upgrades at and received the cultivation license from Health Canada for the 40,000 square foot purpose-built indoor facility, Aurora Vie. Aurora anticipates shipping genetics shortly and first harvest in the first quarter of 2018.
  • The company’s subsidiary, Pedanios, passed the first stage of the tender application process to become a licensed producer of medical cannabis in Germany. Results of the tender process are expected March 2018.
  • The Mountain View facility meets EU GMP certification standards, required by the German government for export to that market, and anticipates receiving the certification shortly.
  • Received its export permit issued by Health Canada, as well as provisional import status from the German Bundesopiumstelle (Federal Narcotics Bureau), to import medical cannabis products into Germany through Pedanios, which currently distributes cannabis to 1,700 pharmacies.

Product Line Expansion

  • Entered a subscription and an option agreement with Hempco and Hempco founders, which, upon exercise, would bring Aurora’s total ownership interest in Hempco to over 50% on a fully diluted basis.
  • Completed the acquisition of BC Northern Lights and Urban Cultivator
  • Entered a technical services agreement with Cann Group Limited of Australia (19.9% owned).
  • Entered an exclusive hardware supply agreement for the Canadian market with Namaste Technologies whereby Aurora, through its website and mobile application, offers a specially curated selection of industry-leading vaporizers sourced through Namaste.

Going Forward

  • Aurora’s business strategy is to continue accelerating its penetration of the Canadian medical cannabis market, leverage its Health Canada sales license for derivative products (cannabis oils), commence cultivation at its Aurora Vie facility in Quebec, and complete the Aurora Sky facility in Alberta for additional production capacity. Upgrades are also being undertaken to the company’s first facility in Cremona, Alberta, to further enhance production.
  • In preparation for the anticipated mid-2018 Canadian federal legalization of adult consumer use of cannabis, the company is building organizational and production capacity to capture a share of the adult use market.
  • Going forward, Aurora will continue to leverage new technologies, aimed at: Improving the customer experience; Delivering industry-leading per square foot production capacity; Substantially increasing the production of cannabis concentrates through the collaboration with Radient; The company is also focusing on delivering further product differentiation, through Aurora’s intended strategic investment in Hempco, its partnership with Namaste Technologies, and the acquisition of homegrow and urban garden companies BC Northern Lights and Urban Cultivator.

Source: Technical 420