Aurora Cannabis Shares Soar After Canadian Firm Beats Revenue Expectations

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Aurora Cannabis Inc. yesterday announced its 2020 fiscal third quarter earnings, reporting higher than expected net revenue of more than C$78 million – an 18% improvement from the previous quarter.

Aurora’s adult-use sales grew 24% versus last quarter, to C$41.5 million, driven by the launch of value brand "Daily Special" and a full three months of cannabis 2.0 (vapes, edibles, and drinkables) sales.

"I am incredibly proud of the Aurora team for working through these challenging times in order to maintain uninterrupted operations at all of our production facilities and ensure we continue to meet the needs of our patients and consumers,” Michael Singer, Aurora’s executive chairman and interim CEO said via a press release.

Shares of Aurora (NYSE:ACB) skyrocketed Friday, at one point climbing nearly 80% to $11.88 from yesterday’s close of $6.61. The stock closed the trading day up 64%, to $10.89.

Recall that Monday, when ACB stock closed at $7.40, was the first day of trading following the Edmonton, Alberta-based company’s 1-for-12 reverse stock split which was executed to avoid delisting by the NYSE.

Despite the revenue growth, and excitement from investors, Aurora reported a net loss of C$137 million during the quarter, or about C$1.37 per share.

Speaking to CNBC on Friday, Singer said the quarterly results demonstrate that “Aurora is on the right track.”

“We started to deliver against our reset plan that we announced back in February, and it put us squarely on a path to profitability,” he said.

Earlier this year, Aurora cut 500 jobs and unveiled a sweeping financial revitalization plan that included $750 million in write-downs and asset impairment charges and a $100 million reduction in capex spending.

Nevertheless, “profitability remains elusive,” according to Cowen analyst Vivien Azer.

In a note to investors, Azer maintained an outperform rating but noted that Aurora’s scale currently outstrips demand for cannabis, forcing the company to “pause its capacity expansion plans.”

Singer told CNBC that the “long-term view” of the cannabis sector hasn’t changed, but conceded that the “path to getting there is very different.”

“What it’s forced companies like Aurora to do is take a step back and actually rationalize the business where it is today,” he said.

Indeed, Aurora has sold a greenhouse facility in Exeter, Ontario and unloaded “non-core investment holdings in marketable securities,” according to the press release. The company has also reached an agreement to divest “several non-core subsidiaries.”

Last month, the firm announced plans to launch a $350 million at-the-market (ATM) offering aimed at strengthening its balance sheet.

In a filing, Aurora said it “did not incur any significant disruptions to its operations during the third quarter of 2020 from COVID-19.” The ATM offering is aimed at giving the company greater flexibility as a result of the “macroeconomic uncertainty caused by COVID-19,” however.

The company said it currently has about $237.9 million in cash on hand, up from the $148 million it had on hand at the end of the quarter.

Additional information is available in the company’s press release.


Tags: Earnings

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