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EDMONTON, Feb. 11, 2019 /CNW/ – Aurora Cannabis Inc. (NYSE: ACB) (TSX: ACB), announced today its financial and operational results for the second quarter ended December 31st, 2018.
(An abbreviated version of the statements is presented here. For the full statements and MD&A, visit SEDAR https://www.sedar.com/ -Ed)
Q2 2019 Financial and Operations Highlights
Q2 2019 and Subsequent Highlights
• Net revenue of $54.2 million, up 83% sequentially, and up 363% compared to the same period in 2018, driven by Aurora’s strong performance in the launch of the Canadian consumer market with sales of $21.6 million, and the Company’s continued strength in the Canadian and international medical markets with sales of $26.0 million, up 8% in revenue and 23% in volume sold.
• Average selling prices were impacted by the introduction of excise taxes across all Canadian sales channels on October 17, 2018, as well as lower wholesale pricing realized in the Canadian consumer market. Going forward, Aurora intends to continue prioritizing medical patients in Canada and globally where margins continue to exceed those achieved on the wholesale consumer market.
• Q2 2019 kilograms produced and kilograms sold of 7,822 and 6,999 were up 57% and 162%, respectively, driven by continued and significant scale-up of Aurora’s cultivation operations and strong demand across all the Company’s markets.
• Gross margin on cannabis sales of 54% was temporarily down from 70% in the prior quarter. The decrease was primarily due to a lower average selling price per gram of dried cannabis, the impact of excise taxes on medical cannabis net revenues, and a temporarily lower proportion of cannabis oil sales in the Company’s sales mix ratio. Also impacting gross margin were increased packaging requirements under the Cannabis Act and one-time ramp up and optimization costs as our Sky facility was brought up to full production. The Company anticipates that the launch of new derivative product lines, once allowed under Health Canada regulations, will contribute to improving margins.
• The company is performing well in the Canadian consumer market, recording $21.6 million of revenue in Q2 2019. Based on available data released by Health Canada for the Q2 2019 period, Aurora accounted for approximately 20% of all consumer sales across the country.
• Cash cost to produce per gram of dried cannabis sold temporarily increased from $1.45 in the previous quarter to $1.92 in Q2 2019. This change was primarily due to ramp-up and optimization costs as the Company scaled-up Aurora Sky to full production. One-time additional costs incurred related to the launch of the Canadian consumer market, as the Company waited for its Sky sales licence (received October 17, 2018), also contributed to the increase.
• Aurora Sky is now fully complete and commissioned, and is expected to reach its full production capacity, based on Health Canada approved planted rooms, shortly. Recent harvests completed to date at the facility have exceeded targeted yields, reflecting that the facility’s commissioning has been successful, all environmental and nutrition systems, and operating protocols are dialed in, and technology components are functioning well.
• Q2 2019 SG&A remained steady compared to the prior quarter as lower sales and marketing costs were offset by one-time public company and acquisition costs, as well as the absorption of a full quarter of SG&A costs from recently acquired companies, including MedReleaf.
• Non-cash expenses including the December 31, 2018 mark-to-market adjustments of approximately $190 million primarily on the Company’s derivative investments contributed significantly to a net loss of $240 million.
• In January 2019, Aurora completed a US$345 million convertible note offering, with the proceeds earmarked predominantly to drive the Company’s continued high pace of growth in Canada and internationally.