Aurora Cannabis Inc. (NYSE: ACB) provided an update on its operations with the introduction of new product formats, recent industry recognitions, and updates to existing operations. It didn’t seem to have the intended effect as the stock dropped another 7% to lately trade at $2.06.
Aurora disappointed shareholders last month when the company reported that its consumer cannabis revenues fell 33% sequentially from the previous quarter. The decline in cannabis net revenues was attributed ordering that slowed considerably during the summer as distributors worked through inventories and as the industry was impacted by the slow pace of retail store licenses.
“We have focused our collective efforts to be ready for the successful launch of Cannabis 2.0 as Canada takes the next step in the legalization of newly allowed product forms. We are ready and have launched a diversified portfolio of new product formats and are excited for Canadians to have access to high-quality, safe alternative cannabis products such as edibles, vape pens and other derivatives,” said Terry Booth, CEO of Aurora. “We have prudently deployed capital and we believe that we’re ready with the appropriate combination of technology, scale and consumer insights to have the right products on store shelves in a timely fashion. This was not an easy task and I would like to thank the entire Aurora team for their collective efforts in getting 2.0 across the goal line in time for our provincial regulators.”
The company said it trying to reduce expenses, cut near term debt and bolster liquidity in an effort to position itself for long-term success. The previously announced deferral of construction and commissioning activities is expected to conserve approximately $200 million of cash in the near term. Aurora believes that its existing assets are sufficient to meet current demand at a low cost per gram. The company said it expects to have the flexibility to ramp up projects as global demand dictates.
In late November, the company also retired $227 million of the $230 million 5% unsecured convertible debentures that were due in March 2020 with the issuance of shares and thereby preserving cash. Aurora continues to evaluate multiple sources of capital and currently has access to undrawn capacity under a C$360 million credit facility with a syndicate of banks, in addition to its $400 million at-the-market equity distribution program.
Aurora said it started shipping initial orders received to ten of Canada’s provincial regulators of Cannabis 2.0 products following December 17, 2019, however, the company cautioned that most Canadian consumers will likely not see these products on retail store shelves until early January 2020 due to varied retail operations across the country. Patients can now immediately access a variety of the new product formats.
Initially, the company said it is providing a variety of CBD and THC vape and edible products, such as gummies, chocolates, baked goods, and mints. These new cannabis products are being produced at Aurora Sky in Edmonton, Alberta, Aurora River in Bradford, Ontario and Aurora Vie in Pointe-Claire, Quebec. These centers have been outfitted to provide centralized production, packaging, logistics and distribution capabilities. The Company has prioritized its resources to prepare for a successful initial launch and has built inventories to support an ongoing replenishment strategy to help ensure consumers across Canada have access to a diverse portfolio of high-quality derivative products.