Aurora Cannabis Hits Monthly Sales Record, Yet Questions Remain

Recent acquisition of Pedanios GmbH by Aurora Cannabis will be partially reflected in its fourth-quarter, full-year financial results

SmallCapPower | June 29, 2017: Aurora Cannabis Inc. (TSXV: ACB) announced on Thursday that it had achieved a new monthly gross revenue record, with more than $2.4 million of sales recorded in May 2017, a 38% increase from January of this year. Contributing to this revenue milestone was the first full month in which sales of the Aurora Drops line of ingestible cannabis oils, launched in April 2017, supplemented sales of dried cannabis. Cannabis oils are a higher-margin product, with profit margins up to 60%, which could help drive Aurora Cannabis towards consistent profitability in the future.

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As well, as of June 29, 2017, Aurora Cannabis surpassed 16,000 active registered patients less than 18 months after its first product sale, with about 3,000 patients being added in May and June alone.

Aurora Cannabis announced its Q3 2017 financial results on May 15, 2017, in which its revenue soared 2,500% from the same quarter last year to $5.2 million, with 33.3% growth from the previous quarter (Q2 2017).

Investors will be closely watching the fourth-quarter, full-year financial results from Aurora Cannabis, expected later this summer, given that Canopy Growth Corporation (TSX: WEED) recently reported Fiscal 2017 financials that fell short of the consensus revenue and EPS estimates.

On May 26, 2017, Aurora Cannabis said it had acquired Germany’s Pedanios GmbH, a medical cannabis wholesaler in the European Union. Revenue from Pedanios is expected to be consolidated into the financial results of Aurora Cannabis beginning June 1, 2017.

Leading up the acquisition, Pedanios, over the last 90 days, had achieved cash-flow positive operations, with gross revenues of approximately C$1.15 million, and costs of about C$1.00 million. If those sales were projected over a full year, it would translate to C$4.6 million in annual revenue for Pedanios GmbH.

This number could prove conservative, though, as Pedanios saw sales of C$500,000 in May (up to May 26), up 70% from April and 108% from March of this year. A new medical cannabis law that came into effect in Germany in March 2017, which introduced full insurance cost-coverage for medical cannabis patients in that country, leading to the immediate doubling of Pedanios’ monthly sales, and the company claims that its growth is accelerating. Germany currently has about 80 million citizens.

Disclosure: Neither the author nor any of the principals at Small Cap Power, or their family members, own shares in any of the companies mentioned above.

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