Aurora Cannabis Quietly Reveals Impressive Q2 Results

Aurora Cannabis Inc. (TSX:ACB) reported a 200% surge in revenues for its second quarter of 2018

SmallCapPower | February 9, 2018: Aurora Cannabis Inc. (TSX:ACB) Thursday reported a 200% YoY jump in revenues to $11.7 million for its second quarter of 2018, driven by higher patient numbers coupled with higher average sales price as well as strong growth in exports to Germany. Active registered patients surged 78% YoY in the second quarter to 21,718, which increased the grams sold nearly 116% to 1.16 million grams. The volume increase was accompanied by a 40.3% increase in average selling prices to $8.36 per gram in Q2 2018 from $5.96 per gram during the same period last year. In terms of segmental revenue breakdown, dried cannabis accounted for nearly 70% of total revenues at $8.2 million, with Canada contributing $5.7 million (up 24% sequentially and 79% YoY) and Germany $2.5 million (up 10% sequentially).

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Higher business volume combined with higher average prices led to a 374% increase in gross profit to $6.9 million, translating into gross margins of 59%. However, Aurora Cannabis said gross margins on Aurora-produced cannabis was 73.8% for the quarter. Cash costs of sales per gram of dried cannabis produced improved to $1.74 for Q2 2018 from $2.16 in Q1 2018.

Aurora Cannabis reported an operational loss of $16.1 million in the quarter, due to higher general & administration costs and sales & marketing costs as the Company continues to invest in growth in Canada and Germany and expand its operations through its newly-acquired subsidiaries. However, Aurora Cannabis reported net income of $7.2 million for the quarter compared to a loss of $2.7 million in the prior-year quarter, due primarily to the revenue growth as well as a $22.8 million unrealized gain on derivatives related to the Company’s strategic investment in Radient Technologies Inc.

Balance sheet and liquidity also improved significantly, with cash and equivalents increasing from $159.8 million as at June 30, 2017, to $350.8 million as at December 31, 2017, attributable to cash generated from financing activities of $309 million.

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Overall, Aurora Cannabis reported a strong set of results for the second quarter, with robust revenue growth and improving margins. As the second-most valued cannabis company, Aurora Cannabis’ revenues trails only that of Canopy Growth, which reported Q2 2018 (ending September 2017) revenue of $17.6 million. In terms of costs, however, Aurora Cannabis scores over Canopy Growth with cash costs nearly a dollar lower at $1.74 per gram compared to Canopy’s $2.73 per gram. Going forward, the revenue gap between Aurora Cannabis and Canopy Growth should narrow as revenues (~$5.0 million) from Aurora Cannabis’ recent CanniMed Therapeutics acquisition start kicking in Q3 2018. Additionally, aggressive expansion plans coupled with a strong distribution network has ideally positioned Aurora Cannabis to capture the large recreational opportunity opening up in mid-2018.

Aurora Cannabis currently trades at a market cap of $5.24 billion, quickly catching up to Canopy Growth’s $5.38 billion market capitalization.

Disclosure: Neither the author nor his/her family own shares in the company mentioned above.

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