Aurora Cannabis Inc. (NASDAQ: ACB) (TSX: ACB) lost $87 million in the last quarter primarily due to restructuring costs and challenges in the cannabis industry, including market saturation and regulatory hurdles.
Despite these losses, the company says it has maintained a strong cash position, indicating its potential for long-term sustainability and growth.
On Wednesday, Aurora announced its financial results for the third quarter of fiscal year 2023 three months ended March 31 this year.
The company’s net revenue reached $64 million, marking a 4 per cent increase sequentially and a 27 per cent increase year over year. This revenue growth drove an adjusted gross profit of $30.6 million. The company’s medical cannabis and Canadian consumer cannabis segments held steady, with revenues of $38 million and $14.5 million, respectively.
Aurora Cannabis maintains a robust balance sheet, with a cash position of approximately $230 million. The company also has around $80 million of convertible notes remaining outstanding. This strong financial position is expected to support Aurora’s drive towards achieving positive free cash flow by the end of 2024.
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Losses increased by approximately 29.5 per cent from the previous quarter
Aurora Cannabis Inc. disclosed a net loss of $87 million, a significant increase of 29.5 per cent from $67.2 million in the previous quarter. This escalation in net loss can be primarily attributed to a $60 million surge in other expenses, which were influenced by fluctuations in the fair value of derivative investments.
Despite these mark-to-market changes, the company managed to enhance its gross profit by $34.8 million and reduce operating expenses by $4.1 million, providing some financial relief.
The company’s Adjusted EBITDA stood at $0.3 million, down from $1.4 million in the preceding quarter. This shift in Adjusted EBITDA is largely a result of increased professional and consultant fees as the company sought to maintain regulatory compliance and meet ongoing needs, while simultaneously managing a reduced corporate headcount.
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Transformation plan resulted in significant operational cost reductions
The company has completed its strategic transformation plan, which has resulted in significant operating costs and SG&A reductions. These savings have contributed to two consecutive quarters with positive Adjusted EBITDA.
Aurora Cannabis Inc. has initiated a strategic plan to decrease operational cash usage by at least $5 million each quarter. Additionally, the company aims to eliminate a minimum of $5 million per quarter through various targeted efficiency measures and cost-cutting initiatives in operations and Selling, General & Administrative (SG&A) expenses.
For the first quarter of fiscal 2024, Aurora anticipates that its cannabis net revenue will closely mirror that of fiscal Q3 2023, with a slight geographical shift favouring the international medical segment. The company also plans to uphold its stated goal of maintaining a quarterly SG&A expense run rate below $30 million.
Aurora asserts that its solid financial foundation, bolstered by a substantial cash position of approximately $230 million and continuous cost-saving measures, paves the way towards achieving positive free cash flow by the close of 2024.
Aurora Stock went down by 7.79 per cent on Wednesday to $0.71 on the Toronto Stock Exchange.
