Aurora stands on business when it comes to medical cannabis

The medical cannabis segment is the most profitable part of Aurora's business.

While many of its competitors are pivoting towards the recreational side of legal marijuana, Aurora Cannabis (NASDAQ: ACB) seems to be doubling down on its medical market play.

For the most part, that checks out. The company has maintained its number one position in Canada’s medical market, is expanding sales in Europe to a record seven countries, and has seen strong adjusted gross margins in medical cannabis due to sustainable cost reductions and improved production efficiency.

“If there’s one takeaway for our investors, it would be that strategically and financially, we are in the best shape ever,” CEO Miguel Martin told investors on a Thursday earnings call.

The Canadian medical cannabis market, estimated to be around $400 million annually, is witnessing a slight contraction. Still, management remains optimistic, attributing the company’s ability to counteract the trend.

“We’ve been able to offset [the decline in the total addressable market] by growing our market share,” Martin added. “That being said, we do think there’s opportunities to grow that pie.”

The exec highlighted the distinct advantages of medical cannabis, including reimbursement options not available to recreational users, which maintain its appeal, especially among veteran patients.

Martin also pointed out the untapped potential within the Canadian medical cannabis segment, driven by emerging clinical research and increasing acceptance of cannabis as a medical benefit by unions and other entities. With only 1% of the Canadian adult population enrolled in the medical cannabis system, Aurora sees significant room for expansion.

Aurora’s focus on the medical cannabis sector extends beyond the Canadian market to its international operations, too.

“Our leadership in the Canadian market and being a Canadian medical cannabis company… we get great advantages out of leveraging that exact same system all around the world,” Martin said.

The company has a presence in various international markets, including Germany, Poland, the UK, and now Australia.

“Like Germany, the Australian market is characterized by clinician-led traditional pharma like product distribution model that closely aligns with Aurora’s operational success.”

That financial attractiveness, combined with strategic expansions like the recent acquisition of MedReleaf Australia, positions Aurora as a key player, with a clear focus on the medical sector.

“The medical cannabis business is the highest margin portion of all cannabis globally,” he said. “So, it’s an incredibly compelling piece.”

Adam Jackson

Adam Jackson writes about the cannabis industry for the Green Market Report. He previously covered the Missouri Statehouse for the Columbia Missourian and has written for the Missouri Independent. He most recently covered retail, restaurants and other consumer companies for Bloomberg Business News. You can find him on Twitter at @adam_sjackson and email him at adam.jackson@crain.com.


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