S Aurora Cannabis Stock Advances Despite Poor Q3 Financial Results

Aurora Cannabis Inc. (ACB), announced its financial and operational results for the third quarter fiscal 2022 ended March 31, 2022, on Thursday, May 12th, 2022, as follows:


Q3 Financial Highlights

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

  • Net Revenue: declined 17% to $50.4m
    • Medical: declined 14% to $39.4M
    • Consumer: declined 28% to $10.3M
  • Adj. Gross Margin: increased to 54% from 53%
  • Adj. EBITDA: declined by 36% to $(12.3)M
  • Net Profit (Loss): was not made available
  • SG&A Incl. R&D: declined by 3% to $39.6M
  • Cash on Hand: $480.6M


Operational Highlights

  • Kilograms Sold: declined 25%
  • Ave. Net Selling Price: increased 20%


Management Commentary

Miguel Martin, Chief Executive Officer, stated:

  • “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.
  • 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.”

Resulting from the strategic changes mentioned above, 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.


Stock Performance

Aurora's stock price has increased 13% so far today (Friday) but remains DOWN 49.4% YTD and still remains DOWN 85.5% from its 2021 high.

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