Canadian cannabis giant Aurora Cannabis Inc. (Nasdaq: ACB) (TSX: ACB) saw fiscal first-quarter net revenue for medical cannabis fall 23% year-over-year to C$36.6 million, and down 14% over the quarter, while adult-use cannabis revenue fell 28% year-over-year to C$13.7 million.
The company released its financial and operational results for its first fiscal quarter ended Sept. 30.
Sequentially, sales were up 9% from last quarter’s C$12.6 million, as Aurora materialized its first full quarter worth of Thrive net revenues.
Aurora noted that revenue was negatively affected by the supply and ordering disruptions from a cyberattack at the Ontario Cannabis Store and store closures due to the labor strike in British Columbia.
According to a news release, the revenue dip from the prior-year quarter can be attributed to the company’s pivot from discount, low-margin brands toward premium higher-margin brands, “as Aurora management considers gross profit to be as important as revenue and only participates in Canadian consumer market segments that allow for reasonably positive gross or contribution margins.”
Net loss for the first quarter was C$51.9 million versus C$618.8 million in the prior quarter, and C$11.9 million for the same period last year. The decrease in net loss of C$566.9 million from the prior quarter was primarily due to C$536.2 million in non-cash impairment charges recognized in the previous quarter.
The C$40 million rise in losses from the same period last year, the company said, was mostly due to a C$35.7 million net unrealized fair value gain on derivative instruments recognized in the quarter.
“Our strengthened balance sheet and strong cash position has facilitated early repurchases of convertible debt of approximately US$160 million in 2022,” said CFO Miguel Martin.
Aurora had C$393 million worth of cash, including C$58 million in restricted cash.
Adjusted EBITDA, which Martin said is close to meeting the company’s goal of a net gain in the category, was a loss of C$8.7 million in the quarter, a 25% improvement versus C$11.6 million in the previous quarter and C$11 million in the prior year period.
The decrease in adjusted EBITDA loss is primarily attributable to reductions in SG&A and improvement in adjusted gross margin before fair value adjustments.
Next quarter outlook
Aurora said that it expects to achieve its goal of reaching adjusted EBITDA profitability by the end of the year.
“Having resolved the negative impact of certain cultivar supply and wholesale distribution disruptions affecting our European medical and Canadian consumer business units” during the quarter, the company expects cannabis revenue next quarter be “largely similar” to fiscal 2022’s fourth quarter.
The second quarter will see the first full-quarter contribution of revenue and positive adjusted EBITDA from vegetable grower Bevo Farms, which Aurora recently acquired for C$45 million, despite October-December historically being the weakest contribution quarter.
Aurora forecasts that adjusted gross margins will be consistent with the first quarter and expects to achieve its previously stated objective of a quarterly SG&A expense run rate below C$30 million by the end of the year.
International medical cannabis net revenues were slightly uneven in the quarter, which Martin said is a characteristic of rapidly developing markets.
“However, the long-term growth trajectory remains solid for our unique, portable, and profitable international medical program,” he added. “We continue to identify areas of profitability and growth within the Canadian adult recreational segment, even in the face of a challenging environment, and are proud to have introduced a significant number of new products this fall that will benefit both our adult recreational customers and medical patients.”
Moving forward, the company’s fiscal 2023 will consist of three quarters, with the new fiscal year ending March 31, 2023.