Aurora Cannabis Financial Results Not All Good Despite Surging Sales

Aurora Cannabis Inc.’s (TSX:ACB) cash cost to produce per gram rose nearly 9% quarter over quarter

SmallCapPower | May 10, 2018: Aurora Cannabis Inc. (TSX:ACB) Tuesday reported a 211.1% YoY in jump in revenue to $16.1 million for Q3 2018 compared to $10.9 million for Q3 2017. Sequentially, revenue was up 37.6% quarter over quarter from $11.7 million in Q2 2018. The Company sold cannabis totalling 1,352,982 grams in Q3 2018 compared to 1,161,809 grams in Q2, an increase of 16.5% and up 107.2% as compared to the third quarter of 2017. Total cannabis sold comprised 1,183,280 grams of dried cannabis and 169,702 grams equivalent of cannabis oils.

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Aurora Cannabis Inc.’s revenue increase was on the back of higher patient numbers, higher average selling price per gram due to higher selling prices for oils, the development of new markets (Europe), and new revenues streams (product diversification through the acquisitions of Urban Cultivator, BC Northern Lights, ALPS).

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Q3 wasn’t all good for Aurora Cannabis though. Its cash cost to produce per gram rose nearly 9% quarter over quarter to $1.53, which the Company attributed to higher seasonal utility costs and overhead expenses.

As well, Aurora Cannabis’ net loss of $20.8 million for the quarter ended March 31, 2018 was due to increases in business acquisition costs related to the CanniMed Therapeutics acquisition as well as share-based payments offset by net unrealized gains from marketable securities and derivatives of $10.9 million. CanniMed Therapeutics didn’t have much impact on overall revenue growth of Aurora Cannabis as it was only consolidated as of March 15, 2018.

Aurora Cannabis CEO Terry Booth remarked, “More than tripling our revenues year-over-year demonstrates that Aurora continues to execute consistently on its growth strategy, with exceptional performance across all functions, both in Canada and internationally. It’s worth noting that Aurora’s industry-leading revenue growth since starting commercial operations has thus far been driven predominantly by the output of a single production facility, Aurora Mountain, supported by differentiation into additional revenue streams. With production underway at Aurora Vie and Aurora Sky, yield enhancements being implemented at CanniMed, and significant new capacity coming online through 2018, we are targeting further, accelerated growth in subsequent quarters.”

Aurora Cannabis expects further growth in cultivation and sales for the remainder of calendar year 2018 from Aurora Vie and Aurora Sky facilities, subject to licensing, and from a rise in shipments to international markets, cannabis oil’s growth in terms of production and sales, enhanced product availability through strategic wholesale supply relationships, and growth from CanniMed Therapeutics. Additionally, Aurora Cannabis anticipates growth in production as well as sales from the Lachute facility, once completed and licensed, coupled with its initiatives in Denmark.

Aurora Cannabis stock currently trades at market capitalization of $4.39 billion on the TSX with price-to-book ratio of 6.66x.

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

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