Aurora Cannabis Inc. ACB ACBa Canadian cannabis company, announced Thursday evening its financial and operating results for the third quarter of fiscal 2022 ended March 31, 2022.
Third Quarter Fiscal 2022 Highlights
- Q3 2022 Total Net Cannabis Revenues was $50.4 million, down 17% sequentially. The average net selling price per gram of dried cannabis in Q3 2022, excluding the effect of wholesale bulk sales, increased 20% to $5.41 from $4.52 in Q2 2022.
- Adjusted gross margin before fair value adjustments to Cannabis net income1 was 54% in Q3 2022 compared to 53% in the prior quarter and 44% in Q3 2021. The increase in adjusted gross margin compared to the prior year period is due to the increase in sales in our markets which show significantly higher average net selling prices and margins.
- Adjusted EBITDA loss decreased to $12.3 million in Q3 2022 from $9.0 million in Q2 2022, but decreased from $20.9 million in the prior year period. The change from Q2 2022 is primarily driven by lower revenue which was partially offset by lower general and administrative expenses, net restructuring and one-time costs.
- Net income from medical cannabis was $39.4 million, an increase of 8% over the prior year period, generating 78% of Aurora’s consolidated Q3 2022 revenue and 92% of adjusted gross profit.
- Adjusted gross margin before fair value adjustments to medical cannabis net income was 64%, compared to 63% sequentially and 53% in the prior year period.
The revenue increase was driven by growth in the international medical business, up 55% year-on-year as the company continued to develop new high-margin medical markets, but in down 26% sequentially. The sequential decline in revenue was primarily the result of $8.5 million in net sales generated by our supply agreement with Israel in the prior quarter.
Excluding the impact of Israeli sales, net international medical revenue increased sequentially by $1.8 million and was driven by growth in key markets such as Germany, Poland, UK and Australia.
- Net income from cannabis consumption was $10.3 million compared to prior quarter net revenue of $14.4 million, the decline being primarily due to industry-wide pricing pressures across our portfolio and exacerbated by retail store closures in key provinces for the company’s high-end offerings.
- Adjusted gross margin before fair value adjustments on net cannabis consumption revenue1 was 29% compared to 23% sequentially and 33% for the prior year period. “The 6% increase over Q2 2022 was driven by the company’s continued evolution toward a premium product portfolio,” the company said in a press release.
- SG&A, including research and development, was $39.5 million (excluding $2.0 million of restructuring-related costs and $0.7 million of accrued liabilities related to prior period employees) compared to $40.9 million in the prior quarter and $43.0 million in the prior year period, presented on a comparable basis. The SG&A for the third quarter of 2022 is now at the lowest level in almost four years.
“We continue to focus our differentiated global cannabis business on creating long-term shareholder value. This is accomplished by focusing only on the most profitable growth opportunities, streamlining our cost structure in Canada and disciplined use of capital. Our plan is working and we remain firmly on track to achieve a positive adjusted EBITDA run rate by the first half of fiscal 2023,” said Michael MartinCEO of Aurora.
“Further cost savings will allow us to increase our savings range under our business transformation plan from $60-80 million to $150-170 million. Our balance sheet also remains among the strongest in the sector, enabling the early redemption of $141.4 million of convertible debt, while providing significant working capital to support organic growth and pursue strategic mergers and acquisitions, such as our recent acquisition of Thrive Cannabis,” added the CEO.
“During the third quarter, we continued to focus on our global medical cannabis business as it is both defensive and stable, with gross cash margins above 60%. With respect to the Canadian adult consumer market, we are committed to advancing our premiumization strategy,” he concluded.